Thanks for the response, Terry. That is good information for clients. I can't say I have many clients I know who gamble, or at least not ones who tell me about it, but a letter to that effect sounds like a good idea.

As your info says, gambling winnings are all taxable. The only recourse is to deduct the losses, which of course only happens if she itemizes, and the winnings inflate her AGI so much that it eliminates any deductions for her medical expenses, and makes her lose out on what would otherwise be a standard deduction which would be better to take. It seems to me her last guy was just ignoring the wager/loss report because it was more beneficial for her to just pay the tax on the amount reported on the W-2Gs and take the standard deduction. But that is not correct, since she can't just net out her winnings for the year and not report them. Unless someone is aware of a provision I'm not that allows that.

So I'll tell her to either go back to her last guy, or we report it the proper way with the winnigs and losses as best I can calculate and she is going to pay a bit more in taxes.