Please help. Just won $26k progressive on BJ
I recently won roughly $26,500 after hitting
a Royal Match at a Blackjack table. They automatically
withheld state tax, but I didn't have them withhold a federal
tax in hopes of using losses to help cover the tax.
My question is this, if I owe $7,300 in federal tax on my winnings, could
I essentially gamble that $7,300 at the casino and use it's losses to
cover the tax I owe? Does it cover $1 for $1? So would it be better to
buy $7300 in lottery tickets instead of just giving the $7300 to Uncle Sam?
Please help this is very confusing to me.
Currently I have won around $28,000 altogether and loss around $3000 on
My players card.
Picture
Picture
Thanks,
Kyle
Assuming you were given a W-2G form, the $26,500 amount would be reported on your tax return as "other income" and be included in your adjusted gross income. Basically you would pay your normal federal tax rate on this income just as if it had been paid to you through a job.
In terms of losing money or spending money in order to avoid taxes, your ideas would not work. The only thing you can do on your personal taxes is report "losses not in excess of winnings". So in your case you said you have $3,000 in losses and $28,000 in winnings, so you could deduct $3,000 on your tax return as a miscellaneous itemized deduction. This amount would be reduced by 2% of your total AGI because you are not a professional gambler, meaning you wouldn't get close to $3,000 and maybe not anything depending on your AGI. If you do not itemize deductions at all on your personal tax return because the standard deduction is greater, you wont see any benefit from doing this. I would also caution that you will need to provide horribly detailed information in order to prove your losses, and most people do not keep records that will actually support the losses if you get audited.
The best answer I can give you is this: do not try and spend money to pay less taxes. Gambling away $7,300 at the casino WILL NOT eliminate the taxes from your win, and in fact it may not even reduce them depending on your specific tax situation.
Disclaimer : I work for a tax firm and believe that I have given you appropriate information based on the limited information you provided. The above information should not be considered advice and you should consult a tax professional before making any decisions.
Quote: GazrealHello KV,
Assuming you were given a W-2G form, the $26,500 amount would be reported on your tax return as "other income" and be included in your adjusted gross income. Basically you would pay your normal federal tax rate on this income just as if it had been paid to you through a job.
In terms of losing money or spending money in order to avoid taxes, your ideas would not work. The only thing you can do on your personal taxes is report "losses not in excess of winnings". So in your case you said you have $3,000 in losses and $28,000 in winnings, so you could deduct $3,000 on your tax return as a miscellaneous itemized deduction. This amount would be reduced by 2% of your total AGI because you are not a professional gambler, meaning you wouldn't get close to $3,000 and maybe not anything depending on your AGI. If you do not itemize deductions at all on your personal tax return because the standard deduction is greater, you wont see any benefit from doing this. I would also caution that you will need to provide horribly detailed information in order to prove your losses, and most people do not keep records that will actually support the losses if you get audited.
The best answer I can give you is this: do not try and spend money to pay less taxes. Gambling away $7,300 at the casino WILL NOT eliminate the taxes from your win, and in fact it may not even reduce them depending on your specific tax situation.
Disclaimer : I work for a tax firm and believe that I have given you appropriate information based on the limited information you provided. The above information should not be considered advice and you should consult a tax professional before making any decisions.
Thank you both very much. I figured if it was as easy as that, nobody in their right mind would pay the Federal Tax upfront if they could essentially gamble it away for free. Thanks for the quick response, ill now leave the casino before i give it all back lol
Quote: BozBest advise is to ask a local C-Store to save losing instant scratch tickets if your state has a lottery. Collect enough to offset the win and be able to keep them as documentation if needed. This will only work if you can show regular annual income to cover your regular expenses. Spending the cash on a new car and only making $10K a year will be a huge red flag. You might have to slide a few bucks to a clerk or 2 but most stores have players who scratch everyday and throw losers away.
You are basically, publically advising someone to or at least how to commit a felony. I don't think that is appropriate, Boz.
Quote: Kvhawkins88ill now leave the casino before i give it all back lol
Yes! Do that. :)
Quote: kewljYou are basically, publically advising someone to or at least how to commit a felony. I don't think that is appropriate, Boz.
Forum Rule 8.
A little more info;
'I will be filing with roughly $30k made through working along with claiming my three children. I usually see around $8-$10,000 returned each year.
Thanks so much
Quote: 1BBForum Rule 8.
I don't know the rules and am not trying to get anyone in 'trouble'. Just seems inappropriate to me.
Quote: Kvhawkins88I have asked friends and family to collect lottery tickets to help, although I am still confused on how exactly this helps? If i collect the $7g in lottery tickets does it offset the $7g owed in taxes?
For God's sake, don't do this. What Boz suggested to you is tax fraud. He's suggesting you round up a bunch of losing scratch tickets that aren't yours and pass them off as your own gambling losses. Whatever you do, don't do that.
Quote: DeucekiesFor God's sake, don't do this. What Boz suggested to you is tax fraud. He's suggesting you round up a bunch of losing scratch tickets that aren't yours and pass them off as your own gambling losses. Whatever you do, don't do that.
The IRS would want to know how he had so many losing lottery tickets but not even one small winnner.
Quote: DeucekiesFor God's sake, don't do this. What Boz suggested to you is tax fraud. He's suggesting you round up a bunch of losing scratch tickets that aren't yours and pass them off as your own gambling losses. Whatever you do, don't do that.
Strictly amateur. It's the oldest trick in the book and the easiest to see through.
Quote: Kvhawkins88if I owe $7,300 in federal tax on my winnings, could
I essentially gamble that $7,300 at the casino and use it's losses to
cover the tax I owe? Does it cover $1 for $1?
Congratulations on the nice win.
As others have pointed out, no. Losses do not cancel out the taxes on wins, losses cancel out the wins. If you won $26k, you need to lose $26k in order to nullify the tax due. (In that sense, yes, it's $1 for $1.)
The best thing to do at this point is to say "I've been playing rated all year, slots and tables..." and get your player win/loss statement from the casino(s). With a little luck, your losses will be enough to knock down your taxable amount.
There's nothing you can do to un-win the $26k, but if you previously lost $12k, you should only get taxed on the $14k difference. (If you already lost $25k, I might consider carefully losing $1000 on slots in a documented (rated) manner.)
Also, start keeping a diary of your daily win/loss.
Caveat: I am not a tax advisor, and I'm not your tax advisor. Go talk to your tax advisor.
Quote: BozDeleted by poster due to concerns about forum rules. Will accept any required punishment.
I doubt if they saw it. Babs hasn't been here
at all today and Face and Mission aren't
around much either.
Quote: PokeraddictIt is a very broken portion of our tax code.
No kidding. I am of the opinion that proceeds from gambling on dice or cards ought to be treated the same as proceeds from gambling on stocks or real estate.
If you get audited, trying to pull that is not only going to get you fines and penalties, but you'll look like a retarded asshole too.
Quote: EvenBobI doubt if they saw it. Babs hasn't been here
at all today and Face and Mission aren't
around much either.
I saw it. Didn't seem to require action. Boz posted some poor advice and, as always, others immediately pointed out the folly.
For the rule fans out there, I suppose I draw the line at intent. There's plenty offered here that's skirted that line, from drug use to structuring to locating "more than a handy". If you want to discuss the best place to turn on and tune out, have at it. If you advertise blotter and arrange to distribute it, then we might have a problem.
Boz's response is far, far from the line I'd have drawn. Carry on.
@sc15, do tone it down, please.
In my line of work I usually wind up with between $20k and $30k in 1099s. The first time that happened I didn't have anything set aside. It was not good.
And, CONGRATULATIONS! It's a nice problem to have!
Quote: AxelWolfIs it just me or are there 2 threads saying the same thing?
There is. Both sort of took off, which is unusual. Usually the dupe gets pointed out and killed immediately. In this case, both got responses. Not wanting to kill one and lose the info, and figuring it would be a short lived topic, I just left it.
Now pay attention class:
just deduct the whole thing in your itemized tax return and pay no taxes on it.
The deduction goes on line 28 of Schedule A, I think.
The best part -> Don't worry about having to prove the loses!
if the IRS doesn't audit you, you're golden.
If they do, you're screwed.
And this concludes Gambling with the IRS 101 :)
Quote: EvenBobI doubt if they saw it. Babs hasn't been here
at all today and Face and Mission aren't
around much either.
It's been quoted, at least, partially, but I'm not inclined to dish out a Suspension over it.
What if you use your JP money (or double ) and make a bet ( or bets, hopefully low vig) that didn't resolve until after you file? Obviously if you win the bet(s) it would be added to the taxes for that year. Since you normally play and lose, wouldn't that be a better option? Or just keep doing it(disregard the vig for this discussion) until you have a big losing year?.
"Legitimate" way of extending your taxes until you can write off the losses?
Quote: AxelWolfLets say you win big right before you were supposed to file making it a profitable year(no chance of legitimately losing under your normal playing richuals.
What if you use your JP money (or double ) and make a bet ( or bets, hopefully low vig) that didn't resolve until after you file?
It would seem to me that you still have a win for the current year that is taxable.
Even if you bet double the amount? I do get your point. But technically you spent the money on gambling.Quote: DieterIt would seem to me that you still have a win for the current year that is taxable.
Perhaps a sports bet was a bad example.
Lets pretend they have another Revel 100k loss rebate at a successful casino, now you actually lose before you file and then pick up the next year. Or you pre buy into a + EV Tournament of some kind (poker possibly). tournament is Not resolved I understand that but you have a proof of the money spent for gambling.
I can think of a few other situations however you have to use your imagination and it would be a stretch.
assume you are an AP and you have a plus EV situation already
and you can save thousands in taxes with risk but value.
Like let's say you win a tournament in december and get paid in january. There's probably some rule that says when you're supposed to file that, but if you file it either this year or next year (unless you receive a tax form, in which case you need to file it for the year stated on that form), the IRS generally won't nitpick on when you claimed it. They have bigger fish to fry than that.
Same goes for minor shit like rounding. Don't EVER put cents on a 1040. Just drop the cents amount from all your numbers. You're just making extra work for yourself.
I would not have had a mod problem with Boz over his post, either, FWIW.
Quote: AxelWolfEven if you bet double the amount? I do get your point. But technically you spent the money on gambling.
My simplified understanding here is that if I place a bet now that is resolved in the next tax period (rather than the current tax period), I don't win or lose in the current tax period, and the win or loss cannot be used to offset wins or losses in the current tax period.
Assuming you were given a W-2G form, the $26,500 amount would be reported on your tax return as "other income" and be included in your adjusted gross income. Basically you would pay your normal federal tax rate on this income just as if it had been paid to you through a job.
In terms of losing money or spending money in order to avoid taxes, your ideas would not work. The only thing you can do on your personal taxes is report "losses not in excess of winnings". So in your case you said you have $3,000 in losses and $28,000 in winnings, so you could deduct $3,000 on your tax return as a miscellaneous itemized deduction. This amount would be reduced by 2% of your total AGI because you are not a professional gambler, meaning you wouldn't get close to $3,000 and maybe not anything depending on your AGI. If you do not itemize deductions at all on your personal tax return because the standard deduction is greater, you wont see any benefit from doing this. I would also caution that you will need to provide horribly detailed information in order to prove your losses, and most people do not keep records that will actually support the losses if you get audited.
The best answer I can give you is this: do not try and spend money to pay less taxes. Gambling away $7,300 at the casino WILL NOT eliminate the taxes from your win, and in fact it may not even reduce them depending on your specific tax situation.
Disclaimer : I work for a tax firm and believe that I have given you appropriate information based on the limited information you provided. The above information should not be considered advice and you should consult a tax professional before making any decisions."
Wow.....just wow. LOTS of bad info here. First of all, the deduction for gambling losses is not subject to the 2% AGI rule. Everyone gets to deduct gambling losses from gambling wins if they itemize, has nothing to do with being a professional gambler. I do it every year. And if he were to gamble money and lose, then it WOULD reduce the amount of taxes he owes from the prior win. Because he has more losses to claim, obviously. Work for a tax firm do ya? Ok.
For someone working a normal job who doesn't own a home. Does it make sense for them to itemize? assuming its not a significant amount.Quote: pelotari"Hello KV,
Assuming you were given a W-2G form, the $26,500 amount would be reported on your tax return as "other income" and be included in your adjusted gross income. Basically you would pay your normal federal tax rate on this income just as if it had been paid to you through a job.
In terms of losing money or spending money in order to avoid taxes, your ideas would not work. The only thing you can do on your personal taxes is report "losses not in excess of winnings". So in your case you said you have $3,000 in losses and $28,000 in winnings, so you could deduct $3,000 on your tax return as a miscellaneous itemized deduction. This amount would be reduced by 2% of your total AGI because you are not a professional gambler, meaning you wouldn't get close to $3,000 and maybe not anything depending on your AGI. If you do not itemize deductions at all on your personal tax return because the standard deduction is greater, you wont see any benefit from doing this. I would also caution that you will need to provide horribly detailed information in order to prove your losses, and most people do not keep records that will actually support the losses if you get audited.
The best answer I can give you is this: do not try and spend money to pay less taxes. Gambling away $7,300 at the casino WILL NOT eliminate the taxes from your win, and in fact it may not even reduce them depending on your specific tax situation.
Disclaimer : I work for a tax firm and believe that I have given you appropriate information based on the limited information you provided. The above information should not be considered advice and you should consult a tax professional before making any decisions."
Wow.....just wow. LOTS of bad info here. First of all, the deduction for gambling losses is not subject to the 2% AGI rule. Everyone gets to deduct gambling losses from gambling wins if they itemize, has nothing to do with being a professional gambler. I do it every year. And if he were to gamble money and lose, then it WOULD reduce the amount of taxes he owes from the prior win. Because he has more losses to claim, obviously. Work for a tax firm do ya? Ok.
Quote: AxelWolfFor someone working a normal job who doesn't own a home. Does it make sense for them to itemize? assuming its not a significant amount.
Without the deductions for a home, it may or may not. I guess it would all depend on the amount of their losses. The info about having to provide very detailed info on the losses is true, but that is IF you get audited. When filing your tax return you just put down the loss number, you don't document anything at filing time. Honestly, I don't think the IRS would bat an eye at someone who hits for $26,000 and uses losses to offset all or part of that win. They get tax returns from slot players who have millions of dollars in W2G wins just from regularly playing $25-100 denom games. And most end up down for the year and zero out their wins. A single $26,000 hit isn't gonna raise a lot of eyebrows. I would itemize and count losses and every penny. If the IRS asks for proof you've got bank records, ATM receipts, etc. Plus a win/loss statement from the casino. Plus your gambling log....and if you didn't do one yet then when they audit you just buy a notebook and go back and match up your bank records and W2G forms etc and log your casino visits. It's pretty easy. You can go back and track whether you had a winning weekend or not...that sort of thing. It's not like they audit someone then show up the next day on their doorstep. They send you a letter and you have weeks to respond....and to get your stuff together.
For part time medium stakes AP's working with low edge plays this can be very tricky. In reality they might not have an advantage if they factor in taxes.Quote: pelotariWithout the deductions for a home, it may or may not. I guess it would all depend on the amount of their losses. The info about having to provide very detailed info on the losses is true, but that is IF you get audited. When filing your tax return you just put down the loss number, you don't document anything at filing time. Honestly, I don't think the IRS would bat an eye at someone who hits for $26,000 and uses losses to offset all or part of that win. They get tax returns from slot players who have millions of dollars in W2G wins just from regularly playing $25-100 denom games. And most end up down for the year and zero out their wins. A single $26,000 hit isn't gonna raise a lot of eyebrows. I would itemize and count losses and every penny. If the IRS asks for proof you've got bank records, ATM receipts, etc. Plus a win/loss statement from the casino. Plus your gambling log....and if you didn't do one yet then when they audit you just buy a notebook and go back and match up your bank records and W2G forms etc and log your casino visits. It's pretty easy. You can go back and track whether you had a winning weekend or not...that sort of thing. It's not like they audit someone then show up the next day on their doorstep. They send you a letter and you have weeks to respond....and to get your stuff together.
Same holds true with BJ players or so called break even craps players. There is no way some guys who are counting part time have and advantage, if they file properly. 30k win one year 25k loss next year and so on.
I have seen some guys on BJ forums who publicly document their BJ play and trips for years.They are positive over all from BJ however once you add in the taxes it eats all the profits.
Quote: GazrealDisclaimer : I work for a tax firm and believe that I have given you appropriate information based on the limited information you provided. The above information should not be considered advice and you should consult a tax professional before making any decisions.
Every reason to believe you hit the nail on the head.
BTW this standard deduction thing is a monumental factor that had escaped my attention till lately. For one thing, my mortgage interest and taxes are very low now compared to the past, and I come close myself to having to take it.
And I would be willing to bet the OP will pay the standard deduction. The odds are on my side as per the below!
Quote: linkMore taxpayers claim the standard deduction than itemize: Tax Policy Center [estimated] that about 70 percent of taxpayers [would] claim the standard deduction on their 2010 tax returns.
http://www.taxpolicycenter.org/publications/urlprint.cfm?ID=1001486
Quote: AxelWolfFor part time medium stakes AP's working with low edge plays this can be very tricky. In reality they might not have an advantage if they factor in taxes.
Same holds true with BJ players or so called break even craps players. There is no way some guys who are counting part time have and advantage, if they file properly. 30k win one year 25k loss next year and so on.
I have seen some guys on BJ forums who publicly document their BJ play and trips for years.They are positive over all from BJ however once you add in the taxes it eats all the profits.
That's true. If the best you can hope for is to get a game as close to 50/50 as possible or maybe a slight, slight edge then the taxes factor can surely be enough to eliminate any positive. I've always thought that an AP or "break even" table player basically ends up doing just that or close to it overall....but along the way gets the comps as their positive. If you broke even or made a little in the long run (minus taxes) but you get all the comped suites you wanted, food/bevs covered, show tickets, concerts, spa treatments, and in some cases travel reimbursement....then you basically got a bunch of "free" vacations. In accomodations that were probably nicer than a hotel room you might pay for on your own. The value of those comps could be your real win so to speak, even if the gambling ended up even or slightly ahead or behind net of taxes.
Quote: pelotari"Hello KV,
Assuming you were given a W-2G form, the $26,500 amount would be reported on your tax return as "other income" and be included in your adjusted gross income. Basically you would pay your normal federal tax rate on this income just as if it had been paid to you through a job.
In terms of losing money or spending money in order to avoid taxes, your ideas would not work. The only thing you can do on your personal taxes is report "losses not in excess of winnings". So in your case you said you have $3,000 in losses and $28,000 in winnings, so you could deduct $3,000 on your tax return as a miscellaneous itemized deduction. This amount would be reduced by 2% of your total AGI because you are not a professional gambler, meaning you wouldn't get close to $3,000 and maybe not anything depending on your AGI. If you do not itemize deductions at all on your personal tax return because the standard deduction is greater, you wont see any benefit from doing this. I would also caution that you will need to provide horribly detailed information in order to prove your losses, and most people do not keep records that will actually support the losses if you get audited.
The best answer I can give you is this: do not try and spend money to pay less taxes. Gambling away $7,300 at the casino WILL NOT eliminate the taxes from your win, and in fact it may not even reduce them depending on your specific tax situation.
Disclaimer : I work for a tax firm and believe that I have given you appropriate information based on the limited information you provided. The above information should not be considered advice and you should consult a tax professional before making any decisions."
Wow.....just wow. LOTS of bad info here. First of all, the deduction for gambling losses is not subject to the 2% AGI rule. Everyone gets to deduct gambling losses from gambling wins if they itemize, has nothing to do with being a professional gambler. I do it every year. And if he were to gamble money and lose, then it WOULD reduce the amount of taxes he owes from the prior win. Because he has more losses to claim, obviously. Work for a tax firm do ya? Ok.
Lots of bad info is a bit of a stretch. I did check the IRS website and you are correct that a casual gambler may indeed deduct gambling losses NOT subject to 2% of AGI. I had believed this provision was only available to those filing as professional gamblers.
For this particular gentleman's situation, I still believe I gave him the best information possible regarding his next steps. He laid out a clear plan to "lose money in order to not pay taxes", which is faulty logic. Yes he could lose $5,000 of his winnings in his casino, then deduct it(if he already itemizes), and then "save" his nominal tax rate x $5,000. If he isn't already itemizing, he is seeing diminishing returns because of letting go of the standard deduction. This doesn't even scratch the surface of him CERTAINLY not having proper documentation for the losses and probably raising a large red flag if he does not normally itemize. And again someone suggests borderline if not outright fraud by just claiming you lost the entire amount and "it wont raise eyebrows". I can't argue against the monetary benefits of tax fraud, just advise against it.
i asked the dealer the last time i played he said hes never seen one
one lucky dude
Quote: GazrealLots of bad info is a bit of a stretch. I did check the IRS website and you are correct that a casual gambler may indeed deduct gambling losses NOT subject to 2% of AGI. I had believed this provision was only available to those filing as professional gamblers.
For this particular gentleman's situation, I still believe I gave him the best information possible regarding his next steps. He laid out a clear plan to "lose money in order to not pay taxes", which is faulty logic. Yes he could lose $5,000 of his winnings in his casino, then deduct it(if he already itemizes), and then "save" his nominal tax rate x $5,000. If he isn't already itemizing, he is seeing diminishing returns because of letting go of the standard deduction. This doesn't even scratch the surface of him CERTAINLY not having proper documentation for the losses and probably raising a large red flag if he does not normally itemize. And again someone suggests borderline if not outright fraud by just claiming you lost the entire amount and "it wont raise eyebrows". I can't argue against the monetary benefits of tax fraud, just advise against it.
Not once did I suggest he take losses that he didn't actually have. I said I would count losses and every penny. Meaning that you add up your LEGIT losses and take all of them. Don't be "afraid" to deduct losses that REALLY happened. And I said that if someone did offset that win with losses, fully or partially....whatever their situation calls for....then it isn't going to be some huge red flag for the IRS. That is routine, and they get MANY tax returns with much larger amounts of wins and losses. How do you know he doesn't have proper documentation for his losses? He can't write down what happened? That's called a gambling log. He can also produce bank statements, ATM receipts and a win/loss statement if needed. Given the fact that you didn't even know about the 2% AGI rule....one would do well to not let you "advise" them on gambling related tax issues. That is pretty basic stuff. Really really basic. Don't put words in my mouth, and next time maybe try knowing what you are talking about before dishing out advice. If you choose to just shoot from the hip and post INACCURATE info on something as basic as the 2% AGI rule then don't get mad when someone corrects you. And don't accuse me of suggesting fraud just because I was right and you were wrong. And I don't even work at a tax firm. Imagine that.
Quote: pelotariNot once did I suggest he take losses that he didn't actually have. I said I would count losses and every penny. Meaning that you add up your LEGIT losses and take all of them. Don't be "afraid" to deduct losses that REALLY happened. And I said that if someone did offset that win with losses, fully or partially....whatever their situation calls for....then it isn't going to be some huge red flag for the IRS. That is routine, and they get MANY tax returns with much larger amounts of wins and losses. How do you know he doesn't have proper documentation for his losses? He can't write down what happened? That's called a gambling log. He can also produce bank statements, ATM receipts and a win/loss statement if needed. Given the fact that you didn't even know about the 2% AGI rule....one would do well to not let you "advise" them on gambling related tax issues. That is pretty basic stuff. Really really basic. Don't put words in my mouth, and next time maybe try knowing what you are talking about before dishing out advice. If you choose to just shoot from the hip and post INACCURATE info on something as basic as the 2% AGI rule then don't get mad when someone corrects you. And don't accuse me of suggesting fraud just because I was right and you were wrong. And I don't even work at a tax firm. Imagine that.
For the last time, I gave the man good advice. He is not an AP, just a guy who got lucky and won a bunch of money. He doesn't get tons of W2-Gs, he probably doesn't itemize, his train of thought involved gambling away only the taxable portion of his win. There is literally a 0% chance he would be able to cobble together a gambling log at some future date that would pass an IRS audit. You need Date, time, machine number, bet amount, for ALL ACTIVITY. ATM receipts prove nothing, bank statements prove nothing, casino win/loss is not accurate.
I didn't want this to turn into a pissing match, just trying to help the guy understand he shouldn't go lose money in some attempt to "save" himself from paying taxes. You obviously know more about taxes and are a better man than I. God bless.
Quote: GazrealFor the last time, I gave the man good advice. He is not an AP, just a guy who got lucky and won a bunch of money. He doesn't get tons of W2-Gs, he probably doesn't itemize, his train of thought involved gambling away only the taxable portion of his win. There is literally a 0% chance he would be able to cobble together a gambling log at some future date that would pass an IRS audit. You need Date, time, machine number, bet amount, for ALL ACTIVITY. ATM receipts prove nothing, bank statements prove nothing, casino win/loss is not accurate.
I didn't want this to turn into a pissing match, just trying to help the guy understand he shouldn't go lose money in some attempt to "save" himself from paying taxes. You obviously know more about taxes and are a better man than I. God bless.
Part of your advice was that the gambling losses are subject to the 2% of AGI rule. If he had taken that advice and acted on it, that would have cost him money. So if that's considered "good" tax advice according to you....fine. We will just have to disagree on that part. The bank statements and records and win/loss statement from the casino are all supporting evidence to go along with your gambling log. And yes, the IRS will consider that data IF they audit you. You can't just hand the IRS a casino win/loss statement and say here's your proof. They will not accept a win/loss statement BY ITSELF as your only proof of wins and losses. You are supposed to track your wins and losses in a log. That does NOT mean a win/loss statement or bank transaction records are meaningless. They can't stand alone, but they are part of your evidence of what took place. I assisted a friend who got audited in a year when he had a few W2G wins and had to deal with the IRS. As for needing date, time, machine number and all that for your gambling log....baloney. He had only dates, no exact times and no machine numbers. And his log still resolved the issue which involved the amount of his losses. The IRS will not automatically rule your gambling log invalid if you don't have the machine number of every game you played and lost money on during the year. They can say that a log should contain that....sure.....but that doesn't mean a log without that will be completely ignored. And in all my years of being in a casino....not once have I seen any player write down the machine number or table number and say they are recording that info for their log. Which means that every person in the country who deducts losses would be denied by the IRS in an audit. Nobody has that info. For most people that would include dozens if not hundreds of machines.
The reality is that many tax professionals will caution people against deducting losses or even deducting things like charitable contributions....for fear of an IRS audit. Even though the losses or charitable contributions are legit. In many cases the firm looks out for their own best interests...better to have a client voluntarily pay more in taxes and steer clear of any supposed "increased" audit chance. Because if they did get audited then the firm feels like the client will blame them and leave them next year. So as a firm....let's advise them against taking legit deductions for that reason. It may be better for the firm but is worse for the taxpayer. You don't have to worry about "red flags" if you just report what actually happened and are ready to show supporting documentation if they ask for it. It is really pretty easy to do in this age of being able to access online statements, reports, transaction history etc.
Quote: odiousgambitwould it be the case that gambling losses to offset a $26k win automatically puts the player able to itemize deductions?
Correct. Now this guy told us he didn't have that much in losses. So we can't assume he should definitely itemize. But yes....suppose someone did win a $26,000 jackpot in a certain year but also ended up down in their gambling for that year. Well then like you said....the large losses they could legitimately take to offset that win would make itemizing the better choice. So for most people, that takes care of itself. Especially on a large win, coupled with equivalent losses. Even if they had never itemized before, the large win and large amount of losses would mathematically make itemizing the better way to go. For that year anyhow.
