1. Kirk Richaards says:

    Actually it doesn’t treat gamblers fairly at all. It would tax all gambling wins over the threshold without allowing a deduction for losses, as the Federal Income Tax does. So an unmarried poker player who pays $350,000 in entry fees and wins $360,000 in prize money would pay tax on $160,000 (plus any other income, as the gross wins would push him over the threshold), an 80% rate just for the state. High-limit slot players who rack up a few hundred thousand in W-2Gs while losing money overall would be socked with a phantom tax on their non-winnings.

    Extraordinary medical expenses are also not deductible.

    • A professional gambler (such as the example you gave) will file as a self-employed business using Schedule C, which means entry fees and other business expenses will count against adjusted gross income, while winnings count toward it. Your hypothetical gambler would have an additional $10,000 of net income, which may or may not push him/her over the income threshold, depending on their other income. For recreational players, losses are deductible (as an itemized deduction), up to the amount of winnings declared.

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