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Clarification on this: They can still take 100% deduction of winning as long as losses are are 11% higher than winnings. “(1) IN GENERAL.—For purposes of losses from wagering transactions, the amount allowed as a deduction for any taxable year— “(A) shall be equal to 90 percent of the amount of such losses during such taxable year, and “(B) shall be allowed only to the extent of the gains from such transactions during such taxable year. “(2) SPECIAL RULE.—For purposes of paragraph (1), the term ‘losses from wagering transactions’ includes any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.”. (b) Effective date.—The amendment made by this section shall apply to taxable years beginning after December 31, 2025.

Once again, JOA has done a wonderful job of taking legislative text and turning it into real language. https://www.journalofaccountancy.com/news/2025/jun/tax-changes-in-senate-budget-reconciliation-bill/

The window for claiming a refund for 2021 has closed.

Yeah, in general people don't like truth that makes them question their poor choices.

The barn door is closed on that horse

I'm well aware of the fact that the tax on SS benefits goes from general fund to trust funds. I'm just saying I can't find anything as to how they actually calculate the amount. The extra 6K doesn't affect how much is thrown into the taxable column since it's an after AGI adjustment. So, if they just use that amount times a rate nothing will change. I highly doubt they have the computers look at each return and say xx% of the actual tax on return was a result of SS benefits and then use that amount for reimbursement. Personally I've never understood why someone should have a higher standard deduction simply because of being 65. Most of us at that age should not have a mortgage or rent, yet we are allowed to pay less FIT than a young person trying to get a start making the same income. I was just livid about the email SSA sent out. Waaayyyy too political of a statement and extremely misleading coming directly from an agency that's supposed to be apolitical.

https://taxpolicycenter.org/briefing-book/what-are-social-security-trust-funds-and-how-are-they-financed https://sgp.fas.org/crs/misc/RL33028.pdf https://www.congress.gov/crs-product/RL33028

I think a lot depends on how they calculate the amount of "tax" on benefits that goes back to trust funds. That seems to be a well guarded secret. Example age 65+ with 30K SS and 50K other income taxed at regular rates. Max 85% or 25,500 falls into taxable column. Taxable income w/ std is 58.5K as is or 52.5K with add'l 6K. Either way it's in 22% marginal bracket, although w/ add'l 6K tax will decrease it by 1,320. If they take the taxable amount of 25.5K times 22% it's not going to change. if they do some kind of proration (which I doubt) it will go down some. I don't have a lot of faith in an organization that makes a statement like this: "Under current law, Social Security benefits are 50 percent taxable for seniors with over $25,000 ($32,000 for couples) of annual income, and 85 percent taxable for seniors with over $34,000 ($44,000 for couples) of income. That 50 percent is deposited into the Social Security trust fund, and the additional 35 percent into Medicare’s Hospital Insurance (HI) trust fund."

If your client qualifies to amend 2021, then the 2021 Recovery Rebate for his son may also be in play.

The Committee For a Responsible Federal Budget and a number of other analyses that I have read say otherwise. https://www.crfb.org/blogs/obbba-would-accelerate-social-security-medicare-insolvency "However, OBBBA would impact Social Security and Medicare indirectly, mainly by reducing the revenue collected from the income taxation of Social Security benefits, which is deposited into the Social Security and Medicare trust funds.1"

I don't think it will. If that were true they would have needed to change the code section that authorizes payment from general fund to trust fund and the formula used.

Wow, I had totally forgotten about those

Twitter was abuzz about that yesterday. Some guy was going on why if he won 400K but lost 500K why he now has to pay tax on the 40K. He didn't like my answer that it's a stupidity tax on people that throw away money gambling.

I see what you are saying but I disagree because this deduction will reduce the taxes paid on social security benefits which are dedicated to the Social Security Trust Fund.

Seriously wish people would stop equating the 6K deduction to taxes on SS benefits. 1. People who are age 65 but not drawing benefits get the deduction. 2. People under 65 with benefits will see no change. 3. Taxable income is taxable income. You could just as easy say they are receiving 6K of interest tax free. Or, 6K of wages. Or any other line item that makes up taxable income. 4. If it is reducing SS taxation, then it would have needed to be set up the the only way a person receives it is if there is taxable SS benefits and age would not matter.

I still have, in deep files under lock & key, a set of tax forms sent to me in the mail - with the little sticker with my name, address, and ssn on it. Remember those? (That year I had moved so I did not use the sticker.)

Garnishment is for those who have been overpaid - and there are several ways to get it waived or the payback rate lowered. https://www.fool.com/retirement/2025/07/04/social-security-garnishment-begin-july-24-avoid-it/ As for those who are delinquent on student loans, either cancel them all, or everyone has to pay them back. Picking & choosing winners & losers (who skates & who pays) sets up anger on all sides at all sides.

Under the OBBB, only 90% of gambling losses will be deductible. I'm sure there are other tax tidbits that will pop up.

Different analyses that I have read say that it reduces the percentage of seniors who will pay taxes on their social security benefits from about 40 % down to about 12 %. The same analyses say that the social security trust surplus will be gone in 7 years (2032) since taxes on social security benefits are dedicated to the trust fund

Some people are going to be in for a world of hurt.

It doesn't change the standard deduction, as it's a separate line item. Also available to those that itemize.

“(C) DEDUCTION FOR SENIORS.— “(i) IN GENERAL.—In the case of a taxable year beginning before January 1, 2029, there shall be allowed a deduction in an amount equal to $6,000 for each qualified individual with respect to the taxpayer. “(ii) QUALIFIED INDIVIDUAL.—For purposes of clause (i), the term ‘qualified individual’ means— “(I) the taxpayer, if the taxpayer has attained age 65 before the close of the taxable year, and “(II) in the case of a joint return, the taxpayer's spouse, if such spouse has attained age 65 before the close of the taxable year. “(iii) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME.— “(I) IN GENERAL.—In the case of any taxpayer for any taxable year, the $6,000 amount in clause (i) shall be reduced (but not below zero) by 6 percent of so much of the taxpayer's modified adjusted gross income as exceeds $75,000 ($150,000 in the case of a joint return). “(II) MODIFIED ADJUSTED GROSS INCOME.—For purposes of this clause, the term ‘modified adjusted gross income’ means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.

I am a little confused about what I am reading. I think what it says is if you are: 1. Over 65 2. Income below 75K S / 150K MFJ You get an additional 6K standard deduction. My Questions: 1. Do both spouses have to be over 65? 2. Do both spouses get 6K? 3. Does this affect the additional over 65 Std Deduction? 4. How does the phaseout work? Is it a cliff? What is the basis for phaseout income? MAGI? I am sure I will get all my answers when I do my CPE in Nov. Tom Longview, TX

Garnishment for up to 50 % of their benefits will begin on July 24th for more than One Million Social Security recipients.