Take your adjusted gross income, as reported on line 38 of IRS formand multiply it by. Determine whether to deduct state and local income taxes or general sales taxes.golden casino baned in canada BOYD CASINOS SLOT FINDER Yes, you must itemize on Schedule A in order to take a deduction for gambling losses. Gambling losses count as a miscellaneous deduction , but are not subject to the 2% of adjusted gross income limitation that affects most miscellaneous deductions. As an itemized deduction, gambling losses do not lower AGI, which can hurt many low income gamblers, since a higher AGI is not only taxed more heavily but it may lower the amount of tax credits and deductions that depend on AGI, such as the earned income credit. wikiHow to Itemize Deductions. One Methods:Sample Deduction Sheets Community Q&A. Other deductions that may be included on line 28 or Schedule A are gambling losses, to the extent that gambling earnings were reported on your form , casualty and theft losses from income.