Tax ? please help

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Im not trying to get out of paying 1 cent on my taxes. lets say you win 10k in sportsbook A. then send that money directly from neteller to sportsbook B. Is this count for winnings, even though Im sending it from one sportsbook to another? If I go to Veges and win at stardust 10000 bucks. then go to the horseshoe with that same money, and play there im liable for the money a won at stardust. Im I wrong? Do I have to claim this money?
 

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All money won is income (report on Form 1040, other income). All money lost is an itemized deduction (report on Schedule A, gambling loss). "Lumping" the two numbers together into one net figure and just reporting that is not allowed. You must report the two figures separately. Not reporting the income at all is of course tax evasion and a felony.
 

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I have to rant a bit here. One thing that kills me about this tax procedure is this...

Let's say you win $500,000 and lose $450,000 for a net profit of $50,000 for the year. By reporting the two numbers separately like you are supposed to, you get kicked up into Alternative Minimum Tax territory due to the $500k income and end up paying a few thousand dollars more in tax that year than you would have had you just earned $50,000 at a job.

It really irritated me when I figured this out. The hard working degenerate gambler is getting screwed here.

Oh well. Have another beer.
 

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fathead said:
All money won is income (report on Form 1040, other income). All money lost is an itemized deduction (report on Schedule A, gambling loss). "Lumping" the two numbers together into one net figure and just reporting that is not allowed. You must report the two figures separately. Not reporting the income at all is of course tax evasion and a felony.
Let me see if I understand what you are saying. For example. During the course of the year I deposit $3500 into a sportsbook. I get back $3000 (use the word "win") and LOSE $500. for the year.
Now are you saying that since I did REPORT the $3000 received back that I can be convicted of a felony?
I am in no trying to be some smart ass. This is SCARY STUFF.
 

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Save the deposit receipt and withdrawal receipt and you don't have to worry, if you cash out less than you deposit.
 

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Faceless--Thank you for replying. I hope to hear from fathead or anyone else that KNOWS.

I agree--I have Bank records going into Neteller of X dollars and of money coming back for less than X dollars in prior years. If what fathead is saying is correct--they better start building a lot of jails.
 

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That's what I though...You worry about taxes only if you win...
 

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Technically, each winning bet is supposed to be reported on the other income line on your tax return, and each losing bet is supposed to be an itemized deduction, fathead is correct. However, I would doubt that an IRS agent would make a huge deal out of netting wins and losses, and putting net wins on the other income line. That's what I do.
 

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WHALE said:
That's what I though...You worry about taxes only if you win...
Me too. But I guess we need to define the word "win". To me it's a Net win or profit. Not the fact that you got back part of the money deposited.


I'm going to go handicap the races and will check this thread tonight.
 

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Redneckman said:
Technically, each winning bet is supposed to be reported on the other income line on your tax return, and each losing bet is supposed to be an itemized deduction, fathead is correct. However, I would doubt that an IRS agent would make a huge deal out of netting wins and losses, and putting net wins on the other income line. That's what I do.
All the IRS requires is that you keep a DETAILED daily diary of your gambling ventures.

This is VERY EASY to do!

redneck- Yes, you can do what you suggested, if audited though be prepared to show how you derived at your figures.

I still recommend, as I always have, to report your GROSS wins and deduct your losses and do so by filing as a NON-PROFESSIONAL.

This is what would be the best route to take for the large majority here that have profits.
 

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is there anyone out there who has not reported gambing income on their personal tax return and had this caught during an audit?

i'd be interested to see if this has ever happened to anyone here.
 

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Good Article About This Subject

Court Rules That Not Reporting Gambling Activity When Net is a Loss is a CRIME!

by Yolanda Smulik-Roche, E.A. and Roger C. Roche, E.A.

Over the years we have tried to inform the gaming public that they must report the total amount their winning sessions separately from their total losing sessions when filing their annual Federal income tax return From 1040. You are not allowed to net your winnings and losses and if the result is a net loss, fail to report either. You think, "why should I report anything my net is zero (or negative, an overall loss) so there will be no effect on my total income tax since I can only deduct losses to the extent of winnings" Read the following recent court case and you will know why you had better start reporting these losing years.

In a decision rendered by a Federal District Court, it ruled that a false return was a crime, though there was no tax deficiency. The case involved, of all people a Superior Court judge in the Arizona court system until his indictment for filing false federal income tax returns. A compulsive gambler, didn't heed his accountant's advice to report both gambling winnings and losses. In years that gambling losses exceeded winnings, he reported neither gambling gains nor gambling losses. In other years, he reported only the small gambling winnings reported to IRS on Forms W-2G.

This taxpayer was convicted in a Federal District Court jury trial on the false return charge. The taxpayer had argued against conviction because he owed no tax on his gambling activities he had just netted losses and winnings. The jury found him guilty of the crime of filing a false return which was recently upheld by the Ninth Circuit Court of Appeals upheld the conviction.

This is a shocking case because we suspect there are many gamblers who do the same thing, only claim winnings if they are reported to the IRS on a W-2G, "Certain Gambling Winnings", then offset that amount with losses of an equal amount. The rest of your gaming activities do not get reported because of the faulty premise that it does not matter because you have enough losses to offset your winnings that were not reported to the IRS. In the years that you do not receive a W-2G, you, as did the judge in the case above, do not report either your winnings or your losses.

The IRS taken a very hard line in this case. Probably because of the status of taxpayer, it would make a good news article. They like to make examples out of high profile taxpayers, hoping the publicity will act as a deterrent. But do not get me wrong, they will and can do it to anyone.

What makes this case a criminal offense rather than a lesser violation of the tax laws. Let's examine the elements of the false return offense under IRC Section 7206(1), which are:

1. Defendant signed a return that was incorrect as to a material matter;

2. The return was made under the penalties of perjury;

3. The defendant didn't believe the return to be true as to every material matter;

4. The defendant signed the return with the specific intent to violate the law.

These elements were present here. The material incorrectness results from the failing to report the winnings which would increase your adjusted gross income which determines the phase out values for certain itemized deductions and other tax breaks. Every return you sign, in the fine print it you have declared "Under penalty of perjury, I declare that I have examined the return and accompanying schedules and statements, and to the best of my knowledge and belief, that the are true, correct and true". Even if you have your return prepared by a preparer, it does not effect This declaration you, as the taxpayer, signed under penalty of perjury. The argument that the net loss from gambling would not effect the amount of tax. In this case court ruled that "Whether there was an actual tax deficiency is irrelevant because the statute is a perjury statute."

IRS instructions on reporting gambling gains and losses aren't ambiguous. Gains go on Form 1040, line 21. Losses go on Schedule A, line 27. Gambling losses aren't subject to the 2 percent floor, or the overall limit on itemized deductions. The IRS Publication 529 (1998) Miscellaneous Deductions says "You cannot reduce your gambling winnings by your gambling losses and report the difference. You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as itemized deductions.".

So we hope this case will motivate those of you may be doing the same thing to report all your gambling activities, even when your loses are limited to your winnings to you too could be facing criminal charges in the near future. And as always, we hope have more wins than losses. Good luck and keep that diary.
 

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Whoson1st said:
Faceless--Thank you for replying. I hope to hear from fathead or anyone else that KNOWS.
Yep, maybe it was good that fathead posted article above. I didn't KNOW that your IRS is so stupid as they seems to be. I am happy that we don't have to pay taxes on gambling wins here. Well, if winnings are from non EU-country we should pay, but no-one has to pay if they use common sense.
 

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Whoson1st said:
Let me see if I understand what you are saying. For example. During the course of the year I deposit $3500 into a sportsbook. I get back $3000 (use the word "win") and LOSE $500. for the year.
Now are you saying that since I did REPORT the $3000 received back that I can be convicted of a felony?
I am in no trying to be some smart ass. This is SCARY STUFF.

I'm guessing that if you had a net loss and did not report you would be charged with filing a false return (perjury). If you had a net win and did not report you would be charged with tax evasion and perhaps perjury also. I suppose it would depend on the amount of dollars in question and how hard ass the auditor was.
 

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i have been gambling since 1996 and have never reported anything. 1996-2001 were losers. the last 3 years have been winners. i think i'll call my accountant...
 

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Bonuses And Rebates

Don't forget to report bonuses and rebates as gambling income also.

Those horse rebates you've been getting from eHorse and Pinnacle... gambling income.

That football bonus you got a couple of months ago from Olympic.... gambling income.

The IRS considers these "comps" which must be added into your gambling income figure for the year.

...and the hits just keep on coming...
 

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A Good Article About "Comps" As Income

"
Initially, the IRS took the position that the value of "comps" received were not gaming income, and therefore taxpayers were not entitled to write off losses against the value of these comps. However, the IRS required these comps to be reported as income, and was subsequently taken to Tax Court by a taxpayer.
The taxpayer in this case played primarily at one casino over a period of three years, during which time he received free automobiles, vacations, jewelry and other complimentary goods and services from the casino. He received Forms 1099-MISC (Miscellaneous Income) from the casino, reflecting the value of these comps as prizes and awards. The taxpayer included theses amounts on his tax returns and also an equal amount as 'gambling losses' on a Schedule A.
The fact that the taxpayer had gambling losses vastly greater than the amount claimed was not disputed by the IRS, but the IRS disallowed his deduction for gambling losses based upon the argument that the comps were not gambling winnings but an "award," thereby preventing the taxpayer from deducting any of his gambling losses. The taxpayer challenged the IRS in Tax Court in 1996 and prevailed when the court ruled that the value of the complimentary goods and services received as an inducement to gamble could be rightfully represented as gains from gambling, and offset by gambling losses.
We believe that coupons and cashback fall under the category of comps, and should be treated as gaming winnings. Although it would be more favorable to reduce losses rather than add to winnings, at least we can treat them as gaming income and get to write off losses against them.
By the way, we checked the status of this case when we wrote this article, and the IRS has not appealed the ruling to date, so it will remain the law unless they appeal and the ruling is overturned.
"
 

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let me ask the question that everyone is thinking:

how the hell does the irs know how much i got for a bonus or rebate at a sports book? how do they even know how much i won gambling on line?

i use neteller...i suppose that they could supeona neteller for my records but, what would make them even do that? would my bank turn me in since i am doing direct transfers from neteller to my bank?
 

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