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I am a poker player, and hit a bad beat jackpot, someone's quad aces beat my quad kings. I received about 1600, and was 1099'd for about 1650 with about 50 going to MS state tax.

So a couple of questions: 1) Where do I deduct gambling losses (which can be up to my gambling winnings)? 2) Can I write off the $50 that was paid to Mississippi, on schedule A line 7? I do live in FL though.

I tried a new accountant this year, and his team is quite horrible. There were three errors on my return that I know of, and doing research on if there are more.

Thanks for your help.

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1: Gambling losses not in excess of gambling winnings can be deducted on Schedule A, line 28. See Pub 17 (p 201). Line 28 catches lots of deductions, and gambling losses are one of them. See Schedule A instructions.

2: If the Mississippi state tax withheld was an income tax (which I assume it was), then it goes on Schedule A, line 5a. In the unlikely event it was not a state or local tax on income, but some sort of excise on gambling, then it may be deductible on line 8 as another deductible tax. It probably is not a personal property tax, which is generally levied against the value of things like cars and other movable property but not on receipts of cash; line 7 probably is not appropriate. The most likely result, without researching Mississippi SALT, is that it was an income tax. See Sched A Instructions for more on the differences between the types of taxes paid.

Just to be clear, these statements hold if you are not engaging in poker as a profession. If you are engaging in poker as a business, which can be difficult to establish in the IRS' eyes, then you would use Schedule C and also report business and travel expenses. But the IRS is aware that people want to reduce their gambling income by the cost of hotels and flights to casinos, so it's a relatively high hurdle to be considered a professional poker player.

  • Note that you cannot deduct more than you won! – littleadv Mar 28 '14 at 1:15

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