Taxes on winnings

-I keep up with every session I play, how much I bought in for (started with), how much I ended with (often 0), and the net (profit or loss). Can I not just put in that total as additional income on my tax form, have it added to my total income and then tax derived there from? After all, that is what it is, additional income.

Well, its not good news here. The problem is that many gamblers think that because you have enough losses to offset winnings, there is no reason to report either to the IRS. YOU CANNOT NET THESE TOGETHER AND NOT REPORT THEM! You also cannot net them together either. They, unfortunately, have to be separated.

There was a court case about this exact situation involving a judge that was a hobby gambler. The judge testified in tax court that he thought he could “net out” his gambling wins & losses and if losses exceeded wins, nothing needed to be reported on the return. The end result is that the jury found that he willfully failed to report both gambling income and gambling losses. The Court of Appeals upheld the conviction. (US vs. Scholl, No. 97-10143, 97-10248)

A little harsh, yes, but my opinion is that the IRS was making an example out of him for other gamblers. Unfortunately it set a precedent.

Click to expand...

Found this from a post earlier by Fishhead.

This means every single bet I've ever won has to be reported as "other income"? Then I deduct all my lost bets? Or am I reading this wrong and I just report my cash out amount, and my deposit amounts?

If it's the former, isn't that going to make them believe I rake in an extraordinarily high salary?

If gambling is a hobby, then yes, you are supposed to report all of your winnings and all of your losses separately. This does mean every wager, since deposits and withdrawals wouldn't include any money you made since you last withdrew, and it is your money that you earned even if you haven't withdrawn it yet.

If gambling is your profession, then you can use the net profit and report that.

I would suggest you seek professional counsel though, since every case is different, they can give you all of your options for filing.

it also means this. to deduct your losses against winnings, you must
itemize your deductions. if you are already itemizing, it's no big deal just extra paperwork. if you aren't itemizing, then the amount of losses
that you need to get to the itemization dollar threshold can not be applied to your wins and you can only apply losses equal to your wins not more (as i understand it anyway). this means if you don't itemize and have to because you have wins and losses, you could/would incur
extra tax liability even if your losses equaled your wins.

Now check this out for the state of Michigan

http://www.michigan.gov/taxes/0,1607,7-238-43715-154089--F,00.html

<table width="420" border="0" cellpadding="0" cellspacing="0"><tbody><tr><td valign="top" align="left" bgcolor="#f9f3d2">
</td> </tr> <tr> <td valign="top" align="left"> </td> </tr> <tr> <td valign="top" align="left"> [FONT=arial, helvetica, sans-serif][SIZE=-1]Are lottery/casino/gambling winnings taxable? Can I subtract my gambling losses? Do winnings have to be included in household income? If so, on what line?[/SIZE][/FONT] </td> </tr> <tr> <td> </td> </tr> <tr> <td valign="top" align="left"> [FONT=arial, helvetica, sans-serif]Answer:[/FONT] </td> </tr> <tr> <td> [FONT=arial, helvetica, sans-serif][SIZE=-1]Gambling/lottery winnings are subject to Michigan income tax to the extent that they are included in your federal adjusted gross income. The Michigan Income Tax Act has no provision to subtract your losses on the Michigan income tax return. Also, you cannot net the winnings and losses. [/SIZE][/FONT][FONT=arial, helvetica, sans-serif][SIZE=-1]You may exclude the first $300 won from gambling, bingo, awards or prizes from household income. Anything over $300 must be included in household income on line 18, (Alimony and other taxable income) of the MI-1040CR or MI-1040CR-2 form, or on line 19 of the MI-1040CR-7.[/SIZE][/FONT]
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W. T. F.?

So all the bets I've placed, I have to report all bets that I have won, but can't report any bets I've lost?

This essentially is a ban on gambling. I'm all set to move if this is the case.

in oklahoma a couple years ago i was home on leave and went to an indian casino. won 1400 on a slot machine, had to fill out the tax thing in order to get my winnings. i proceeded to gamble back most of that 1400. despite losing 2/3 of that 1400 that same night, i was still obligated for state taxes for the whole amount of the winnings.

governments need money and they go after the groups
that either have no or very weak lobbys or activities of
little social benefit (sin taxes on alcohol, smoking, or
gambling for example). it may seem unfair, but that's the
way our government works to raise revenue.