How Do I Elect the Session Method for Gambling Wins/Losses?

Forum|Forum|1 year ago
January 29, 2025
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I've gathered bits and pieces of this through various threads, still with no clear answers as to how to enter it IN TURBOTAX:

I need to know where in TurboTax I choose to select the Session Method for gambling wins/losses for casual gamblers, not Professional gamblers. My state (Wisconsin) requires the Session Method to be used; therefore, I am required to elect the Session Method for the Federal portion as well.

I have documented wins/losses and W2G's in the following format/example:

Date	Establishment	Wager Type	Beginning Cash	Ending Cash	Session Win/Loss	Session W2Gs issued
1/1/2024	XYZ Casino	Slot	$100	$100	$0	$2,000

As you see, I started my session with $100 cash, won $2,000 which triggered a taxable W2G, continued gambling in the same session and lost the $2,000 I won, and walked out of the casino with what I started, $100. My net session gain was $0.

My question:

I have dozens of gambling sessions (like the example above) throughout 2024. I need to enter my total gains for those gambling sessions in TurboTax. Federal publication 529 states, "You must report the full amount of your gambling winnings for the year on your Schedule 1 (Form 1040). You deduct your gambling losses for the year on your Schedule A (Form 1040)." It also states on Federal publication 525, for W2G’s received, “Include the amount from box 1 on Schedule 1 (Form 1040), line 8b.”

If my total net Session wins are the same as my total net Annual wins for 2024, there really isn’t an impact on the Federal portion. However, I must elect to use the Session Method on the Federal portion in order to use the Session Method on the State (Wisconsin) portion. Where in TurboTax do I elect the Session Method??

Going a step further to the State portion (once I make the declaration of the Session Method on the Federal portion); Where do I adjust my income IN TURBOTAX STATE portion to account for any offsetting losses against the W2G income (as shown in the example above)?

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dhuber24Author

New information - now I just need to know how to enter this is TurboTax!
Directly from the Wisconsin Department of Revenue:

"Since you are allowed to deduct losses for your federal return but not for the state return, there would be a difference in the reported federal adjusted income. To account for this difference, you would need to create a "Wisconsin Only" form 1040 Schedule 1. Report only the winnings on line 8 of the 1040 Schedule 1. The totals of the 1040 Schedule 1 will then flow to line 8 of the 1040. This will create a new federal adjusted gross income, as losses will not be included.

The new adjusted gross income of the 1040 will flow directly to line 1 of the Form 1.

When filing your return, submit both versions of the federal income tax return, plus the schedule calculating the session method."

AmeliesUncle

@dhuber24 wrote:

"Since you are allowed to deduct losses for your federal return but not for the state return, there would be a difference in the reported federal adjusted income.

That is not true. As I said before, losses are NOT on the Federal Schedule 1 and would NOT affect Federal Adjusted Gross Income. As I said before, that response doesn't make sense.

dhuber24Author

So even the entity enforcing the laws can't explain how to report gambling session wins?

I guess I just close my eyes, click something random in TurboTax, enter the adjustment and hope I don't get audited. At this point I'm yet to hear anyone provide guidance on how to do this in Turbotax.

AmeliesUncle

@dhuber24 wrote:

If my total net Session wins are the same as my total net Annual wins for 2024, there really isn’t an impact on the Federal portion.

Where in TurboTax do I elect the Session Method??

No necessarily. It would only break even if you were already Itemizing your deductions. If you were using the Standard Deduction, the gambling losses on Schedule A may only offset some (or none) of the tax from the gambling.

There is no "election". You just report it that way.

Add up all of the session/days that have a gain (don't include sessions/days that have a loss). Add up all of your W-2Gs. Which one is larger?

The part of the Wisconsin Department of Revenue makes no sense. You DON'T have any gambling losses on your Federal Schedule 1 (the losses are only on Schedule A).

dhuber24Author

That's why the Wisconsin DOR said "Wisconsin only" Schedule 1. They way I read that, is that I wouldn't enter it on Schedule 1 Federal form, only on the Wisconsin return.