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*sigh*
Here we go again. You are taxed on your winnings, not your net gain.
<font color="blue">In your federal taxes, you can claim your losses as itemized deductions.</font> In certain states, (like IL - my current state of residence) itemized deductions do not exist. In that case, you get taxed on your winnings only and just have to suck up your losses.
So yes, if you win 100k and lose 100k, it seems like you break even.
According to the IRS, though, you owe a shitload of money.
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I think this part isn't right -- your state may claim you owe that shitload, but the IRS lets you itemize the losses. They're really only interested in the net gain (
this document seems surprisingly clear to me).
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Yes, you can deduct losses. No, they're not interested in the "net gain".
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The full amount of your gambling winnings for the year must be reported on line 21, Form 1040. If you itemize deductions, you can deduct your gambling losses for the year on line 27, Schedule A (Form 1040). You cannot deduct gambling losses that are more than your winnings.
It is important to keep an accurate diary or similar record of your gambling winnings and losses.
To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.
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