· Linda and her spouse have decided to file ther tax retums as Mamed Filing Sepa
ID: 2590942 • Letter: #
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· Linda and her spouse have decided to file ther tax retums as Mamed Filing Separately. Linda and her spouse agreed to clam the standard deduct on · Linda worked as a clerk and earned $47,000 in wages . She had a Form W2G showing gambling winnings of $1,000 She tells you she won an additional $400 for which she did not receive a Form W-2G. She also mentions she had $1,200 in gambling losses. In 2017, she took a computer class at the community college to improve her job skills. She has a student account statement showing she paid $300 for turtion. Linda does not have any dependents. . · Linda a US citizen with a valid Social Security number. 12. What amount of gambling winnings should be reported as other income on Linda's return? OB $200 OC $1,000 OD. $1,400 Back Next Skip First Skipped Question Next Skipped Question HelpExplanation / Answer
Option B $200 is correct
Let’s examine this from the eyes of law:
It’s Linda responsibility to keep accurate records of all gambling income. Linda should even be tracking and tallying every $1 scratch-off ticket win. Remember, a payer is only required to issue Form W-2G if Linda receive certain gambling winnings. But regardless of whether the payer has to issue a W-2G and report directly to the IRS, winnings are still considered taxable income and it must included in Federal tax return as “Other Income.”
On the other hand Linda also have lose money gambling, which Linda might be able to deduct it on her tax returns. However, before Linda can claim the deduction, She will have to meet two important requirements. First, itemize all deductions. Second, deduct gambling losses to the extent gambling winnings.
Since Linda have $1400 Wining and $1200 loses, So she can deduct the losses (1400-1200) from wining and report her income tax return winning $200
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