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Originally Posted by SundaySilence
The worst part is that "signers" are above the line, that is they effect your adjusted gross income and a lot of credits are based on your AGI... so even though you can offset wins with itemizing, you can lose out on other items where you would have qualified such as the child tax credit, college tuition costs, and exemption allowances.
It is total BS that even though you have equal losses to offset wins, your wins are added to your AGI, then your tax credits are based on your AGI, and then you take your standard (or itemized) deduction. Only way to get around that is claim professional gambler status that Dunbar mentioned.
So not only are you getting f'd by the racetrack with 25% takeout on exotics, then the IRS gives it to you if you lucky enough to hit a few signers.
Dunbar mentioned it but you get really royally screwed if you were taking the standard deduction to begin with.
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You hit the nail on the head, total BS. I lost the child tax credit this year, even though I was able to offset my winnings.