• Michael is 49 years old and files as single. His 2021 adjusted gross income (AGI) is $49,500, which includes gambling winnings of $1,000. Michael would like to itemize his deductions this year.
• Michael brings documentation for the following expenses:
  • $8,200 Hospital and doctor bills
  • $700 Contributions to Health Savings Account (HSA)
  • $2,500 Long Term Care Insurance premiums before age limitation applied
  • $3,400 State withholding (higher than Michael’s calculated state sales tax deduction)
  • $300 Personal property taxes based on the value of the vehicle
  • $400 Friend’s personal GoFundMe campaign
  • $275 Cash contributions to the Red Cross
  • $100 Fair market value of clothing in good condition donated to the Salvation
    Army (Michael purchased clothing for $800)
  • $7,500 Mortgage interest
  • $820 Real estate tax
  • $230 Mortgage Insurance Premiums (PMI) on a home he purchased in 2017.
  • $150 Homeowners association fees
  • $2,000 Gambling losses

Question:

1. What amount of gambling losses is Michael eligible to claim as a deduction on his Schedule A?

A. True

B. False

2. What amount of gambling losses is Michael eligible to claim as a deduction on his Schedule A?

A. $0

B. $500

C. $1,000

D. 2,000