Question about Winnings and Taxes

aslan

Well-Known Member
#43
But chances are if you don't itemize, you will receive a refund of some of what IRS took out at the casino, since your incremental tax rate will probably be very low. Not necessarily, but probably.
 

EasyRhino

Well-Known Member
#44
It looks like withholding from a big win would be either 25% or 28%, depending on the circumstance.

However, the amount of tax you actually owe at the end of the year when you do your taxes is your regular income tax rate. 15%, 25%, 33%, whatever. You may get some refunded, or you may have to pay extra. Don't forget the state may take a cut too.
 

toastblows

Well-Known Member
#45
aslan said:
But chances are if you don't itemize, you will receive a refund of some of what IRS took out at the casino, since your incremental tax rate will probably be very low. Not necessarily, but probably.
Yes, you are correct...It doesnt matter if you itemize for wins. Only Losses to offset wins count in the itemization tax filing.

Meaning: if a casino awards you a 10K jackpot for example, and they keep 25% for federal taxes.....you just made $10K and paid $2500 in taxes. When the year is over, if you made no income from working or anything else for sake of ease in this example....your tax bracket is 10% up to 6-7K (or whatever it is) and 15% for the rest. So you really owe about 12% roughly guessing ($600-700 + 15% of the rest up to 10K...so another $600-$450..im not sure of the 10/15% cut off point so im guessing).

That would result in you getting roughly $1300 in a refund from the IRS...if the only taxes taken out were for federal. Add the state and their tax rate if applicable...and that complicates it more
 

aslan

Well-Known Member
#46
toastblows said:
Yes, you are correct...It doesnt matter if you itemize for wins. Only Losses to offset wins count in the itemization tax filing.

Meaning: if a casino awards you a 10K jackpot for example, and they keep 25% for federal taxes.....you just made $10K and paid $2500 in taxes. When the year is over, if you made no income from working or anything else for sake of ease in this example....your tax bracket is 10% up to 6-7K (or whatever it is) and 15% for the rest. So you really owe about 12% roughly guessing ($600-700 + 15% of the rest up to 10K...so another $600-$450..im not sure of the 10/15% cut off point so im guessing).

That would result in you getting roughly $1300 in a refund from the IRS...if the only taxes taken out were for federal. Add the state and their tax rate if applicable...and that complicates it more
Don't submit losing race track tickets with footprints on them to offset your winnings. The IRS has been known to disallow them. LOL :laugh:
 

aslan

Well-Known Member
#47
GeorgeD said:
IRS Topic 419 - Gambling Income and Expenses:

http://www.irs.gov/taxtopics/tc419.html

"However, the amount of losses you deduct may not be more than the amount of gambling income you have reported on your return. It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses."


========================

I don't see anything about expenses, so I wonder if you could deduct expenses over and above gambling winnings IF you establish your BJ playing as a business. The hard part if audited might be convincing the IRS you had a reasonable expectation of making a profit. Otherwise they might decide it's a hobby, not a business .. something I've heard they do with people who have hobby-like businesses that show a loss year after year.
I had a friend, now descease, who claimed to have a Federal gambling stamp, whatever that is. Anyone familiar? It may be a way of establishing oneself as a professional gambler, and hence, all expenses would be deductible. Am I blowing smoke? But I distinctly remember this from the 1960/s. lol
 

toastblows

Well-Known Member
#48
You would need to establish that your "livelyhood"....or money needed to live your life was mostly or all from gambling activity. At that point you would need a lot of documentation of your activities and receipts for everything you spent in your "business" of professional gambling. You could probably then write off your expenses because you are in the business of gambling for income, not entertainment (which is what 99.9% of casino patrons are considered im guessing). :cool2:
 

EasyRhino

Well-Known Member
#49
From google, the primary advantage of declaring yourself a professional gambler is you get to net your wins and losses, rather than reporting gambling income and deductions separately.

Sounds like an assload of paperwork.
 

aslan

Well-Known Member
#50
toastblows said:
You would need to establish that your "livelyhood"....or money needed to live your life was mostly or all from gambling activity. At that point you would need a lot of documentation of your activities and receipts for everything you spent in your "business" of professional gambling. You could probably then write off your expenses because you are in the business of gambling for income, not entertainment (which is what 99.9% of casino patrons are considered im guessing). :cool2:
And you'd have to pass the "hobby" test, by winning, what is it, 3 out of five years, or something like that?
 

toastblows

Well-Known Member
#51
Netting would be nice. If you do a google search on professional gambler IRS or something, you will get tons of info. I was reading a lawsuit that went like this:

The man had a job and made $51k salary.

He argued that he spent over 20 hrs a week playing VP and thus it was considered a job, or second job. Anyway he was trying to play down that it wasnt a hobby and that he was perfecting himself into a pro grambler so anything he won was income and anything he lost was a write off.

So his rationale was that he made 1.3xx million from VP and lost 1.3xx million playing VP, and that his $51K salary paled on comparison to his VP income. So technically he made 1.351 million and lost 1.320 million (for example sake, i dont recall the actual 1.3xx dollar amount) and thus his net income was $31k not $51k. It was tossed out because his job was the consistant paying means of keeping him alive, not gambling.

I dont think you need to win over 3 of 5 years or other back alley rumours. You need to derive most of your income from gambling and do it like you would a job. If you have a 9-5 salary job and then go to the casino from 6-2am , they are still going to say your 9-5 job is stable and providing income no matter what, so you arent a pro gambler. Quit working if you really want to be a pro gambler, then get a good accountant :cool2:
 

aslan

Well-Known Member
#52
toastblows said:
Netting would be nice. If you do a google search on professional gambler IRS or something, you will get tons of info. I was reading a lawsuit that went like this:

The man had a job and made $51k salary.

He argued that he spent over 20 hrs a week playing VP and thus it was considered a job, or second job. Anyway he was trying to play down that it wasnt a hobby and that he was perfecting himself into a pro grambler so anything he won was income and anything he lost was a write off.

So his rationale was that he made 1.3xx million from VP and lost 1.3xx million playing VP, and that his $51K salary paled on comparison to his VP income. So technically he made 1.351 million and lost 1.320 million (for example sake, i dont recall the actual 1.3xx dollar amount) and thus his net income was $31k not $51k. It was tossed out because his job was the consistant paying means of keeping him alive, not gambling.

I dont think you need to win over 3 of 5 years or other back alley rumours. You need to derive most of your income from gambling and do it like you would a job. If you have a 9-5 salary job and then go to the casino from 6-2am , they are still going to say your 9-5 job is stable and providing income no matter what, so you arent a pro gambler. Quit working if you really want to be a pro gambler, then get a good accountant :cool2:
Right. My friend was a full-time high stakes gambler at billiards, poker, blackjack, and other gambling endeavors. He had passive income as a non-operating partner in a small fast food chain, and he owned a very profitable poolroom. For him, gambling was possibly his main source of income, although probably not as "stable" as that derived from his businesses.

I remember the 3 to 5 years rule since it applied to my home tax business, which was a second source of income to my main job. It didn't gross much, but it was additional income and it did benefit from all the advantages of a small business as long as I could show a profit in 3 of 5 years. Otherwise, it would be deemed a hobby and I could not file a schedule C and write off expenses of doing business.
 

Paradox

Well-Known Member
#53
Where the hell do you get this HORRIBLE tax advice from?

I've never seen so much illegal and WRONG tax information.

I don't know where to start.

NO, You don't get a SAR for refusing ID. Check the FinCEN website!

Don't screw this up, get an accountant or tax attorney.

Almost EVERY SINGLE post is incorrect!
 

Paradox

Well-Known Member
#55
I don't have a license to practice law

Nor am I a Certified Public Accountant.

Do not ever take legal advice from ANYONE who doesn't have the proper credentials.

I did meet with James Freis, the Director of The Department of the Treasure Financial Crimes Enforcement Network recently. His biggest concern, after the obvious, is education. The public chooses to commit crimes rather than get professional advice. He is a stern believer in "Ignorance is no excuse to break the law".

I learned about paying my taxes before I turned 18. As adults EACH of us is INDIVIDUALLY responsible for knowing all applicable laws. This is as simple as it gets. Follow the laws of our land or be punished.

Get legal advice form a licensed attorney, get tax advice form a CPA or tax attorney.

Why choose to get an ugly audit and possible jail time if you can simple do the right thing with the right way the first time by hiring a professional to advise you properly.

Frankly, I'm a bit surprised that so many people are giving legal advice without a license to do so. Income Tax evasion is a serious crime, even for a very very small amount of money. If you intend to defraud the government they don't seem to care for how much.

Good "Luck" and hire an attorney.

At the risk of "outing" myself I will not respond to this thread again.
 

aslan

Well-Known Member
#56
I am a CPA

I am a CPA, and I advise everyone to always stay within the law. Unless, of course, you like small shared condos in outlying areas replete with free meals, free clothing, free haircuts, and shared same-sex rooms with barred windows.
 
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