 So you wanna be tracking your losses so that you might be able to get some benefit from them, but you're probably only gonna get a benefit from them if you're itemizing because the gambling losses themselves aren't usually gonna kick you over. So remember, the general idea of a loss from a natural loss for an income tax perspective would be if it was something to help you generate revenue, it would be a legitimate loss for income taxes, which you could see on a Schedule C, for example, where, which is basically an income statement with income and then expenses. These expenses are the most natural kind of thing that you would expect from an income tax system to be able to deduct because it's fair to tax people on the net income, not the gross income. But when you look at most people that have W-2 income, the thought process is that the employer is taking care of the expenses and therefore all the deductions that we usually look at, these Schedule A deductions are actually kind of incentives often time that aren't like natural deductions that you would expect in an income tax type of system. Now with gambling losses, you might say, hey, look, I'm trying to earn money through gambling, I should be able to deduct the expenses, which kind of makes sense, but it's not really something that the government wants to incentivize and it's not like an act that you're doing for profit generally over here. It's kind of more like a hobby or a specific area, so therefore you don't typically get the deduction over here, but you might be able to get the deduction on the Schedule A, which is of course much worse because you'd have to be clearing the itemized deductions before you can take that. Other times you might be dealing with people that just basically went to Vegas and they happened to win something and they got a W-2G or something like that. In that case, same kind of thing applies, you only get the losses up to the winnings and it's a Schedule A type of thing. So the situation would be, as we saw before, they would probably have a W-2G of income that's on Schedule One that we'd have to say, okay, now they had gambling winnings, W-2G, I'm just gonna say, okay, W-2G winnings, let's say 5,000 or whatever, they didn't withhold anything, let's say, and now we've got that included in income and the question is whether they're gonna say, yeah, but I spent a lot more than that much, maybe they might say, on gambling, maybe not 5,000, I don't know how much they spent on gambling, but depends on what you're doing. So I've watched the movie, Rounders, and that's nothing, man, the swings are huge on the poker table, but in any case, then if I go to the Schedule A, we can have the losses over here if I jump to, then won't let me jump to, let's go over here and just go, deductions for Schedule A, miscellaneous, itemized deductions, and there we have them, the gambling losses, so gambling losses, actually that's an override right here, it goes in the same area as the gains, so I can put them in here, the gambling losses. So there they are, all right, let's say I lost like 8,000, I spent 8,000 to win 5,000, well then if I pull that on over to the Schedule A, it's gonna cap it, gambling losses to the extent of the winnings, notice it writes it in here because there wasn't just a category for it, writes it in here, 5,000, but that 5,000 isn't enough to clear the 12,000 itemized deduction threshold, so if I go back on over, then it's not being pulled over here, obviously if the losses were less than the winnings, then it would take like 4,000, it would take the 4,000 up to cap at the number of the winnings, so if I go back down, there's the 4,000, so clearly the thing that would push people over to be able to itemize are the interest on the home, so if they own a home, then their gambling habit, maybe they can support their gambling habit more because they can take the deductions, so we're gonna say then we've got, let's say there was 12,000 here, and then the taxes, we've got real estate 3,000, and so then if they're already itemizing, then it's gonna become more relevant to pick up those gambling losses, if they had gambling winnings, they can pull into the first page of the 1040, and so the general idea is if you're dealing with someone that gambles a lot, then you might want to tell them that yeah, you should be tracking your losses, especially if you're itemizing so that you can take the losses, and if you gamble a whole lot, then maybe the losses will be sufficient enough to kinda push you over to itemizing, but usually they're not because they would have to clear the 12,950 or the 25,009, so if they don't own a home, they might not be able to do that if there's someone that doesn't gamble a lot, but they're just going to Vegas and they're gonna go gamble, and maybe you wanna say, well, might be worth holding onto your losses, receipts of your losses or something like that, in the event that you happen to get just one windfall win for whatever reason, so that you might have the information to support the losses, because remember that if you get audited for the deduction of the losses, they're gonna wanna know the evidence of the losses, so then the question is, is it worthwhile for you to track the evidence of the losses if you're going to Vegas or something, or if you're doing some kind of gambling where you might be able to deduct the losses, if you happen to actually win something, and it kinda depends on how much you might win and whether or not you'll be able to deduct the losses and whether or not you are itemizing. If I put that over here on our worksheet over here, by the way, we had gambling winnings before, I thought, did we have gambling winnings before? On other income, maybe not. So let's just add schedule one gambling winnings. Is that how you spell gambling? I'm gonna gamble that that is correct. It is correct. I win, I didn't put any money down, dang it. I'm not that good at gambling anymore. Anyway, so let's say, what did I say it was? We won 5,000, and then we'll say that this is boom. And let's put some borders around this. Gambling winnings, that would pull over to the 1040, and then the losses would be part of the itemized deductions. So if I went into the schedule A in our worksheet and we said, let's say we had gambling, casualty, other items, let's just add it here. I'm gonna add some space. Give me some room, man. Crowded me, you're crowding me over here. All right, so we're gonna say this is gonna be gambling losses. And then let's say that was 4,000, we said. 4,000 total other itemized deductions. Summing that up on this side, boom, shaka laka. And then is the spelling okay? Medical, medical, change it, change it. Okay, I wasn't even checking that part, but whatever. So that only adds up to 4,000 right now, so it doesn't pull over. So now it's not over. So we would be taking the lesser of still the standard. But if I had my other ones here, the mortgage interest, which I said was 12,000, real estate taxes, which I think I said, what, 3,000? And then the state taxes are gonna be calculated. I'll let the software do that for me. 1,017, 1,017, that brings us up to the 20,017, scrolling down 20,017, pulling over to the page one of the 1040, 100,000 minus the, or plus the income 105, minus the 20,017 gives us the 84, 983. So let's see if that matches up. 105 minus the greater of 12,950 or 20,017, gives us the 84, 983. So there it is. So there's just an example. I won't get into the second half of the tax calculation at this point because we're really kind of focusing in on that first half of the formula. We'll get into that second half in future sections, which will be great.