Are gambling losses an allowable subtraction?

Gambling/lottery winnings are subject to Michigan individual income tax to the extent that they are included in your adjusted gross income. For 2020 and prior the Michigan Income Tax Act has no provision to subtract your losses on the Michigan individual income tax return. You cannot net the winnings and losses for tax years 2020 and prior.

Starting in 2021 if you elected to itemize deductions on your federal return (you did not take the standard deduction) and deducted wagering losses from casual gambling, you may be eligible to deduct wagering losses. You must include the U.S. Form 1040 Schedule 1 and U.S. Form 1040 Schedule A.

• Residents: report the amount of wagering losses you deducted on U.S. Form 1040 Schedule A.
• Nonresidents: report the amount of wagering losses you deducted on U.S. Form 1040 Schedule A.  Losses are limited to the amount of wagering gains from wagering transactions placed at or through a casino or race track located in Michigan.

You may exclude the first $300 won from gambling, bingo, awards or prizes from total household resources. Include gambling/lottery winnings on the line for "Alimony and other taxable income" on the MI-1040CR, MI-1040CR-2, or MI-1040CR-7.