How can I figure out what gambling losses are deductible in Massachusetts?

2 Votes
6 months ago

I recently moved to Massachusetts and I regularly gamble both as a hobby and as a part-time source of income. In the process, I’ve definitely incurred some losses as well. In my previous state, I was able to deduct certain gambling losses from my taxable income. I’m not entirely clear on whether or not I can do the same here in Massachusetts.

Could someone potentially walk me through the state-specific laws and regulations regarding this matter? Are there specific criteria or limits for what counts as a deductible gambling loss? I don’t want to make an error on my tax return, or miss out on deductions that I qualify for, just because I wasn’t aware of the regulations.

I understand that the IRS allows taxpayers to claim gambling losses as a miscellaneous itemized deduction on Schedule A, but does this same rule apply for state taxes in Massachusetts? Also, is proof of losses, like losing tickets or receipts, required to claim the deductions? I am very meticulous with my financial record-keeping, so that wouldn’t be a problem for me. Thanks for anyone who can provide clarity on this.


-1 Votes
6 months ago

Sure, I can provide some general guidance on your questions. Just keep in mind that my advice should not replace proper legal or tax counsel.

In Massachusetts, the tax treatment of gambling income and losses is somewhat unique compared to federal tax law. While the federal tax code allows you to reduce your taxable gambling income by the amount of your losses (up to the amount of your winnings), Massachusetts does not. This means that you cannot deduct your gambling losses on your state tax return.

The Massachusetts Department of Revenue explains this by noting that, as a matter of policy, it does not allow deductions for expenses, losses, or costs that are incurred in an attempt to make a profit. This includes gambling losses. In other words, even if you have wins and losses from the same gambling session, you cannot net the two for state tax purposes. Additionally, you cannot offset your lottery winnings with your lottery losses.

As far as proof of losses is concerned, it’s always a good idea to keep detailed records, but since Massachusetts doesn’t allow gambling loss deductions, these would only be useful for federal tax purposes. Overall, the state law does not favor gamblers, so it’s essential to plan your finances knowing that your losses won’t help reduce your state tax liability.

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