If he's honest he'll pay taxes on his winnings....then on years when the gambler loses, since he cannot claim more losses than winnings, he gets screwed....
In light of that fact and the fact that the government doesn't know how to spend tax money......realistically and out of complete fairness I would recommend paying little or no tax at all.....
Keep a diary of gambling activity and sprinkle it with losing tickets from lottery, pickle card machines....horse race tickets....keep the tickets as evidence of losers to offset the sports winnings you may incur.....maybe a cancelled check or two paid out to a local casino.....the government can't prove that they're not actually your own receipts.....
....if they look at the checks coming in and claim you're making a profit....then have some evidence to wash the profit away....tell them you're just an average Joe that likes to gamble and make it look like you have a gambling problem...
In light of that fact and the fact that the government doesn't know how to spend tax money......realistically and out of complete fairness I would recommend paying little or no tax at all.....
Keep a diary of gambling activity and sprinkle it with losing tickets from lottery, pickle card machines....horse race tickets....keep the tickets as evidence of losers to offset the sports winnings you may incur.....maybe a cancelled check or two paid out to a local casino.....the government can't prove that they're not actually your own receipts.....
....if they look at the checks coming in and claim you're making a profit....then have some evidence to wash the profit away....tell them you're just an average Joe that likes to gamble and make it look like you have a gambling problem...
OMT, dont worry about it.
it seems every view months you come in here with your panties in a bunch worried about the legality of gambling.
simple solutions pay you taxes and you have nothing to worry about the IRS could careless if you were a crack dealing pimp as long as they get their cut
it seems every view months you come in here with your panties in a bunch worried about the legality of gambling.
simple solutions pay you taxes and you have nothing to worry about the IRS could careless if you were a crack dealing pimp as long as they get their cut
Take the Judges advice.
Pay your taxes on the income, declare them as gambling winnings and be done with it. Nothing to worry about. If you don't pay then you might have something to worry about.
I guess it all depends on how much you won. LOL
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Beezelbub's Tales to his Grandson...
Pay your taxes on the income, declare them as gambling winnings and be done with it. Nothing to worry about. If you don't pay then you might have something to worry about.
I guess it all depends on how much you won. LOL
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Beezelbub's Tales to his Grandson...
I think much depends on if one has a normal job besides the gambling activities. Or if one's income is completely gaming related!
If I were American, which I am not (Thank God), I would make sure that I have at least some regular income type of job just to make the IRS comfortable that I am not making much money 'elsewhere'.
By the way I am ok paying taxes, as long as I get something in return for it. Here in Macau the maximum tariff is 7%. I want to pay this, but they will not let me, as they then will have to give me the benefits too, so I am left with 0%. Yes, in some places paying taxes is considered a privilege.
If I were American, which I am not (Thank God), I would make sure that I have at least some regular income type of job just to make the IRS comfortable that I am not making much money 'elsewhere'.
By the way I am ok paying taxes, as long as I get something in return for it. Here in Macau the maximum tariff is 7%. I want to pay this, but they will not let me, as they then will have to give me the benefits too, so I am left with 0%. Yes, in some places paying taxes is considered a privilege.
The right thing to do by the IRS and to keep you out of trouble is to pay your taxes. But, what can benefit you is that the money that is offshore can be considered as a (loss) until it comes back home. So, if you start your first year of gambling by sending 20k offshore and take out 10k from accounts, you would still be down 10k. Do not count any money at books as a profit because the money that is offshore is not yours until that check clears. Too many failures to count it any other way.
<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by The General:
Where I reside, I will charged with a gambling offense.<HR></BLOCKQUOTE>
Impossible General, it's against U.S. Law for the IRS to give you up on a "silver platter" for paying taxes. Just claim it as income and NO CITY, STATE or FEDERAL Government will ever charge you.
Where I reside, I will charged with a gambling offense.<HR></BLOCKQUOTE>
Impossible General, it's against U.S. Law for the IRS to give you up on a "silver platter" for paying taxes. Just claim it as income and NO CITY, STATE or FEDERAL Government will ever charge you.
>Impossible General, it's against U.S. Law for the IRS to give you up on a "silver platter" for paying taxes. Just claim it as income and NO CITY, STATE or FEDERAL Government will ever charge you.<
You are correct. Otherwise, nobody would report offshore wagering income citing their 5th amendment rights preventing self incrimination.
Of course, the current administration doesn't really care about rights.
You are correct. Otherwise, nobody would report offshore wagering income citing their 5th amendment rights preventing self incrimination.
Of course, the current administration doesn't really care about rights.
Firstly, I would like to preface my post by saying this is my first one. The topic of taxes on gambling winnings is one that I have investigated thoroughly, and I am disgusted by the unfairness. I finally felt compelled to sign-up to TheRX and toss my two cents into the mix.
Whether you win or lose, all gambling winnings are supposed to be reported. Unfortunately, win or lose, the reporting of gambling activities reeks havoc on tax liability because of its impact on Adjusted Gross Income (AGI).
Here is some examples:
Example #1:
John is single and does not gamble. His only source of income is the 25,000 he made at the factory in 2003. His total income is 25,000. He has no exclusions and his AGI is 25,000. From there he takes the Standard Deduction of 4750 and the personal exemption of 3,050 per dependent (which in his case is only himself). His federal taxable income is 17,000 and his tax liability is 2,230.
Bob is also single. He gambles but not very well. He made wagers totaling 300,000 at the OTB and only cashed 295,000 for a net LOSS of 5,000. He works at the same factory as John and also makes 25,000. Net profit or loss, Bob MUST report his total income as 320,000 (25,000 + 295,000). He has no exclusions and his AGI is 320,000. Bob can not take the standard deduction because he has to now itemize and needs to report the gambling losses as Miscellaneous Itemized Deductions. Unfortunately for Bob, he can only deduct an amount up to his winnings, which are 295,000. He can NOT deduct 300,000. Additionally, the personal exemption of 3,050 is gradually phased-out (reduced) between AGI’s between 139,000 and 262,000. Bob’s AGI is above the phase-out range so he can not take a personal exemption. So he has AGI of 320,000 and can take an itemized deduction of 295,000 but no personal exemption. His federally taxable income is 25,000 and his tax liability is 3,400. He owes 1,170 more than John all because he likes the ponies. For simplicity, I used an extreme example of someone who bets 300,000 a year. However, the impact is similarly harmful even if you bet much less.
It gets even more unfair because numerous tax credits are phased-out based on your AGI. Say John and Bob go to the local University and pay tuition of 5,000 a year. John can take a Lifetime Learning Educational Credit of 20% of his tuition and reduce his tax liability by 1,000 to 1,230. Bob gets screwed again because the education credits are phased-out for AGI’s between 41,000 and 51,000. He gets no credit all because he spends time at the track and loses. Child Tax Credit, Adoption Credit, IRA’s and more are similarly phased-out.
Example #2:
James is a skilled gambler. In fact, he makes money wagering on horses. It is his only source of income. He made wagers totaling 1,000,000 in 2003 and cashed 1,025,000 for a net profit of 25,000. He has two options.
He can declare Total Income of 1,025,000. He has no exclusions and his AGI is 1,025,000. He can not take the personal exemption because of the AGI phase-out and must itemize his deductions totaling 1,000,000. His taxable income 25,000 and tax liability of 3,400 are the same as John’s.
James’ other option is to file as a professional gambler. He meets all the requirements. What he can do now is treat his gambling activities as a business. Above, AGI he reports only 24,000 in Total Income (1,025,000 minus 1,000,000 minus 1,000 for his Daily Racing Forms). He has no exclusions and his AGI is only 24,000. He can now take the 4,750 Standard Deduction and 2,900 personal exemption. His taxable income is 16,350 and his liability is 2,102. He is eligible for various credits now. HOWEVER, James must now pay the Self-Employment Tax of 15% for Social Security/Medicare on his income because he reported it as business income. The other two guys only had to pay 7.5% because there employers had to pitch in the other 7.5%.
Which option a professional should elect depends on there eligibility for various deductions and credits and their desire to be eligible for Social Security/Medicare.
That’s all for now. And keep in mind that if you gamble and don’t report it (even if you have a net loss), you are technically violating IRS Tax Codes. It ain’t right but it is the way it is and it could really complicate matters if you audited.
Hope you found my post informative.
Whether you win or lose, all gambling winnings are supposed to be reported. Unfortunately, win or lose, the reporting of gambling activities reeks havoc on tax liability because of its impact on Adjusted Gross Income (AGI).
Here is some examples:
Example #1:
John is single and does not gamble. His only source of income is the 25,000 he made at the factory in 2003. His total income is 25,000. He has no exclusions and his AGI is 25,000. From there he takes the Standard Deduction of 4750 and the personal exemption of 3,050 per dependent (which in his case is only himself). His federal taxable income is 17,000 and his tax liability is 2,230.
Bob is also single. He gambles but not very well. He made wagers totaling 300,000 at the OTB and only cashed 295,000 for a net LOSS of 5,000. He works at the same factory as John and also makes 25,000. Net profit or loss, Bob MUST report his total income as 320,000 (25,000 + 295,000). He has no exclusions and his AGI is 320,000. Bob can not take the standard deduction because he has to now itemize and needs to report the gambling losses as Miscellaneous Itemized Deductions. Unfortunately for Bob, he can only deduct an amount up to his winnings, which are 295,000. He can NOT deduct 300,000. Additionally, the personal exemption of 3,050 is gradually phased-out (reduced) between AGI’s between 139,000 and 262,000. Bob’s AGI is above the phase-out range so he can not take a personal exemption. So he has AGI of 320,000 and can take an itemized deduction of 295,000 but no personal exemption. His federally taxable income is 25,000 and his tax liability is 3,400. He owes 1,170 more than John all because he likes the ponies. For simplicity, I used an extreme example of someone who bets 300,000 a year. However, the impact is similarly harmful even if you bet much less.
It gets even more unfair because numerous tax credits are phased-out based on your AGI. Say John and Bob go to the local University and pay tuition of 5,000 a year. John can take a Lifetime Learning Educational Credit of 20% of his tuition and reduce his tax liability by 1,000 to 1,230. Bob gets screwed again because the education credits are phased-out for AGI’s between 41,000 and 51,000. He gets no credit all because he spends time at the track and loses. Child Tax Credit, Adoption Credit, IRA’s and more are similarly phased-out.
Example #2:
James is a skilled gambler. In fact, he makes money wagering on horses. It is his only source of income. He made wagers totaling 1,000,000 in 2003 and cashed 1,025,000 for a net profit of 25,000. He has two options.
He can declare Total Income of 1,025,000. He has no exclusions and his AGI is 1,025,000. He can not take the personal exemption because of the AGI phase-out and must itemize his deductions totaling 1,000,000. His taxable income 25,000 and tax liability of 3,400 are the same as John’s.
James’ other option is to file as a professional gambler. He meets all the requirements. What he can do now is treat his gambling activities as a business. Above, AGI he reports only 24,000 in Total Income (1,025,000 minus 1,000,000 minus 1,000 for his Daily Racing Forms). He has no exclusions and his AGI is only 24,000. He can now take the 4,750 Standard Deduction and 2,900 personal exemption. His taxable income is 16,350 and his liability is 2,102. He is eligible for various credits now. HOWEVER, James must now pay the Self-Employment Tax of 15% for Social Security/Medicare on his income because he reported it as business income. The other two guys only had to pay 7.5% because there employers had to pitch in the other 7.5%.
Which option a professional should elect depends on there eligibility for various deductions and credits and their desire to be eligible for Social Security/Medicare.
That’s all for now. And keep in mind that if you gamble and don’t report it (even if you have a net loss), you are technically violating IRS Tax Codes. It ain’t right but it is the way it is and it could really complicate matters if you audited.
Hope you found my post informative.
