Re: Listing Gambling Losses as Itemized Deductions: Why is this different?
There are other consequences:
1. unless your other (excluding gambling losses) itemized deductions exceed (or equal) the standard deduction, you will not be getting the full benefit of your deduction for gambling losses.
In an extreme example, let's say you have no deduction besides gambling losses, and your gambling losses do not exceed the standard deduction which anyone can take. It would be better for you to simply take the standard deduction rather than itemize. You will in effect then not be able to deduct your gambling losses at all in this case.
2. Another problem is that certain exemptions get phased out as your GROSS income rises. Hence if your poker winnings were $1 million dollars and your poker losses were $950K. Even tho you netted only 50K, the amount of your exemptions allowed would be as if you actually made $1 million. In essence, you would not be entitled to the exemptions that another 50K salary person would get.
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