I am filing as a professional gambler using schedule c. Where do I report my casino tax withholdings

BOBBYLEE57
BOBBYLEE57 Member Posts: 2 Newcomer
in Income

When I go to Extensions and Other Tax Payments - Federal Income Tax Withheld it is grayed out and unable to change. Then I was told to "enter your W-2G forms under the standard gambling section, but zero out the income portion so it doesn't duplicate your Schedule C gross receipts" but doing this gives me an error that the tax withheld cannot exceed the reportable winnings. To bypass this I was then navigated to file Form 1099-MISC for each withholding and enter $0 in income and the full amount in withholding. Doing this I ran into the same issue as the previous step.

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Best Answer

  • MatthewD
    MatthewD FreeTaxUSA Admin, FreeTaxUSA Agent Posts: 1,007 image
    edited June 3 Answer ✓

    Hi BOBBYLEE57,

    First, keep in mind you cannot skip ahead at first in the software. That is why the MISC menu is gray.

    I think I understand your issue. You are a professional gambler and so your income is reported on a Schedule C as business income, but you got a W2-G from the casino or online gambling portal. The W-2G reports your federal withholdings and you need to make sure those are reported.

    Here is a way to report that income and withholdings. You'll report the W-2G and then an Other Income contra-income amount (negative amount) to zero it out. Then a Schedule C income amount and any expenses. Keep in mind this is not a standard method but will work and get the withholdings and income reported correctly.

    1. Report the W-2G on the Gambling Income W-2G page.
    2. Go to the Other Income page (last option under Income > Uncommon Income.)
    3. At the bottom of that page answer, YES to the Miscellaneous Income question.
    4. Enter a description like "W2-G income reported on Schedule C"
    5. Enter the amount as a negative amount. This is a contra-income entry to zero out the W-2G reported.

    Here is an example:

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    Then enter the amount on the Schedule C on the line, "Enter any income, gross receipts, or sales that were NOT reported to you on a 1099-NEC or 1099-MISC:"

    Keep in mind that you cannot report a loss for gambling income. Your gambling business expenses cannot exceed your gambling winnings. Internal Revenue Code Section 165(d).

    You may want to speak with your gambling establishment and see if they can report the income on a 1099-MISC in the future.

Answers

  • BOBBYLEE57
    BOBBYLEE57 Member Posts: 2 Newcomer

    Thank you so much MatthewD that absolutely solves my dilemma, I was about to give up all together, I tried so many other suggestions, and even sought advice from a couple ChatGPT programs. You are brilliant, I can't thank you enough.

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