Part 1 Income: Wages, Interest, Dividends and Other Income question: Pat itemizes

Part 1Income: Wages, Interest, Dividends and Other Income

In 2025 Pat won $5,000 at a casino and lost $7,000 at other casinos, and kept a log of both. If Pat itemizes, how much of the losses can Pat deduct?

A $0
B $3,000
C $5,000
D $7,000

Show the answer and explanation

Answer: C. $5,000

For 2025, gambling losses are an itemized deduction on Schedule A, limited to gambling winnings reported as income: $5,000. The rest is lost; non-itemizers deduct none. The One Big Beautiful Bill Act's 90% limit starts in 2026. Source: IRC 165(d); 2025 Schedule A instructions, line 16; Pub. 525 (2025). Tax year: 2025 (law as of 31 Dec 2025).

Common mistake

Allowing losses above winnings or netting them without itemizing.

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Original study material mapped to the public IRS SEE content outlines; not a real exam question.Not affiliated with or endorsed by the IRS or PSI. Verify figures and rules against current guidance before relying on them.