Let's talk taxes - specifically for Blackjack
I've read the book 'tax help for gamblers' by Scott/Chien as advised by the Wizard. Leaves as many questions as it provides answers. Not really the authors' fault, the tax guys both Federal and State don't really have their act together in many instances.
I'm having a hard time reconciling my diary with my win/loss statements. When I did actually win, the statements 'estimate' that I won more than I did. When I lost, the statements 'estimate' that I lost less than I did. Is the whole 'skim off the top' thing still in play?
Couple of specific questions, I will not quote you as qualified legal tax advice, probably ;-)
- I play ten hours, walk in with 1K, walk out with 2K, left $50/hr in dealer tips ($500). Did I win 1K or 1.5 K?
- I walk in with $200 in 'casino cash' that was comped and 1K of my own. I walk out with 2K, ten hours later (let's assume I didn't tip at all). What are my winnings?
- I go on a 'free cruise' offered because the cruise line thinks I'm a casino sucker, I buy 2 additional staterooms for the rest of the big family, whether I won or lost, does that 'free stateroom' become part of my 'winnings' for the year?
There are other similar questions, but I gotta go now, late again... All opinions are welcomed and appreciated.! Youse guys rock! War Feathers
-Free Play Comps have no cash value, can't be directly exchanged for cash. So they add +EV to whatever game you're using them on, but can't be counted as money in wins/losses for either a pro or a player.
-Free stateroom also has no cash value; can't be sold or used by anyone other than the person accepting them. If you don't book, they're worth nothing. So I wouldn't count them as winnings any more than any other comp, like a Centennial dinner (value $100 - extra perk from CET that doesn't use comps), or a buffet served in the back of a high-limit private game room, or the comp rooms themselves. They're comping you the base rate to get on board the boat, same as RFB at a casino, and I don't know anyone who shows their RFB as winnings.
This advice is free, which should tell you its value during an audit. But that's how I've done it in the past (as a player, never as a pro) and it's worked without comment from the IRS.
I wouldn't write freeplay as winnings of face value. For example, a $500 free play voucher, I don't say I won $500. I play it through, and whatever amount I cash out when I finish playing, that's how much I won. Because, that's really what happened. You put zero real dollars into the machine and you cashed out some amount a little while later, maybe $475. That's a $475 win. Not a $500 win and not a $25 loss.
Quote: TwoFeathersATLIt's that time of year again and the CFO is giving me a hard time about my 'diary' . I told her, don't worry Honey, it'll all be OK. She gave me that mean look....
I've read the book 'tax help for gamblers' by Scott/Chien as advised by the Wizard. Leaves as many questions as it provides answers. Not really the authors' fault, the tax guys both Federal and State don't really have their act together in many instances.
I'm having a hard time reconciling my diary with my win/loss statements. When I did actually win, the statements 'estimate' that I won more than I did. When I lost, the statements 'estimate' that I lost less than I did. Is the whole 'skim off the top' thing still in play?
Couple of specific questions, I will not quote you as qualified legal tax advice, probably ;-)
- I play ten hours, walk in with 1K, walk out with 2K, left $50/hr in dealer tips ($500). Did I win 1K or 1.5 K?
- I walk in with $200 in 'casino cash' that was comped and 1K of my own. I walk out with 2K, ten hours later (let's assume I didn't tip at all). What are my winnings?
- I go on a 'free cruise' offered because the cruise line thinks I'm a casino sucker, I buy 2 additional staterooms for the rest of the big family, whether I won or lost, does that 'free stateroom' become part of my 'winnings' for the year?
There are other similar questions, but I gotta go now, late again... All opinions are welcomed and appreciated.! Youse guys rock! War Feathers
To answer your questions in order:
1. You won 1K, tips don't count. The house makes no effort to track them. At least as it relates to your win loss.
2. You won 1K again. "Casino cash" doesn't count until, or if, it's turned into actual american money. If you get $200 in free play and lose it all your loss is Zero. If you get $200 in free play and turn it into $500 your win is $500.
3. The value of comps thing is tricky. I would argue if a casino gives you something for free...it's value is therefore zero. At least to you. But it might be arguable. I would think you should just stick to cash in, cash out as a basis for win loss.
I'm talking strictly federal schedule A stuff here. State to state varies so much i'm not going there.
Really the only thing you need to do is keep a written diary. With dates, times, location, game(s) played, $in, $out. Back that up with casino win loss statements. The two should be close I would hope. In the event of a significant difference. I'd go with whatever # helps you. I'd also bet that, if you are at all a careful person, that your records are better than the casinos. They are often guessing, subject to the whims of pit critters, and their attention or lack thereof. If you have some kind of written record to back it up. You'll be fine. Besides less than one half of one percent of returns are audited. So the odds are with you. :)
Quote: RSI disagree on the freeplay portion, BBB (I think).
I wouldn't write freeplay as winnings of face value. For example, a $500 free play voucher, I don't say I won $500. I play it through, and whatever amount I cash out when I finish playing, that's how much I won. Because, that's really what happened. You put zero real dollars into the machine and you cashed out some amount a little while later, maybe $475. That's a $475 win. Not a $500 win and not a $25 loss.
I agree with you and thought I said the same thing; if I didn't, then I didn't say it very well.
Quote: beachbumbabs-My (non-tax professional opinion) is that tips are expenses just as much as meals and other incidentals. Are you filing as a business (professional gambler) or as a loss against winnings? If as a professional, dealer tips should be expenses against play, and you won 1.5K and expense out the .5K, because if you're hosting a client at a meal, you expense the entire check, including tip. If as a loss against winnings, you won 1K, because you don't expense your costs of winning or losing, just the dollar amounts.
-Free Play Comps have no cash value, can't be directly exchanged for cash. So they add +EV to whatever game you're using them on, but can't be counted as money in wins/losses for either a pro or a player.
-Free stateroom also has no cash value; can't be sold or used by anyone other than the person accepting them. If you don't book, they're worth nothing. So I wouldn't count them as winnings any more than any other comp, like a Centennial dinner (value $100 - extra perk from CET that doesn't use comps), or a buffet served in the back of a high-limit private game room, or the comp rooms themselves. They're comping you the base rate to get on board the boat, same as RFB at a casino, and I don't know anyone who shows their RFB as winnings.
This advice is free, which should tell you its value during an audit. But that's how I've done it in the past (as a player, never as a pro) and it's worked without comment from the IRS.
Thanks for the non-professional advice, THX a bunch. I am filing as a 'casual gambler' so a lot of expenses are not deductible that would be if I was filing as 'pro', hotels/meals, mileage, etc. But then I don't have to file quarterly, w/estimated tax payments, self-employment tax, and such that would come into play if I were filing as a 'Pro'. Your opinions, and those from the next post or two, , coincide with how I'm planning to present my winnings and losses on the 1040, and I have a pretty good 'diary' to back up my conclusions. I ran out of time in the original post to add, "I was born and raised as an American, I pay taxes as best as I can figure them out (well, at least for the last 20 years or so), pay them gladly. It's still a bummer that you can't carry over losses from last November to offset winnings in January of this year. If you strided into the year down 10K, now you gotta win 13-14k just to be back to even #€¥%[_\€£!. But I wouldn't want to live anywhere else, if I did, well then, I'd already be there ;-). 2F
Like I said rely on your records and you will be fine.
For example, if the floor counts the chip rack at exactly 50,000 in chips before you sat down and 40,900 once you leave, your account will show as a 9,100 winner for that casino day if no other games are played regardless if you tipped or not. He will simply go by the rack.
At crowded tables, floors must make estimates and go by what the dealer says, so it's best to double check when leaving and he is "closing you out" to make sure it's not an overstated win or understated loss. The opposite is quite fine, though.
Quote: RSWhat's the difference in a professional gambler and a regular person / recreational gambler? Of course, professional gambler gets better write-off stuff or w/e (write off expenses for example). Why wouldn't everyone file as a professional gambler? Is there something you gotta do to be a "pro", legally?
It has to be your sole or main source of income.
I don't think anyone does all that since I never see anyone writing in a notebook. The more info you have the more believable your numbers will be.
Quote: RSI disagree on the freeplay portion, BBB (I think).
I wouldn't write freeplay as winnings of face value. For example, a $500 free play voucher, I don't say I won $500. I play it through, and whatever amount I cash out when I finish playing, that's how much I won. Because, that's really what happened. You put zero real dollars into the machine and you cashed out some amount a little while later, maybe $475. That's a $475 win. Not a $500 win and not a $25 loss.
The original Post said "blackjack specifically", wasn't by accident. I get an offer for $1K in 'casino cash' to lure me into the place. I go, present the offer at the cage, and they hand me 10 nice crisp hundred dollar bills as my 'casino cash'. I could just walk out with that 1K, no strings attached, well maybe some tax strings, but I haven't, and they have, $1K, $500, $100 and $200 at once, etc. I always walked to the table and sat down and played, not slots, not craps, not anything other than BJ. Just to clarify....2F
Quote: TwoFeathersATLThe original Post said "blackjack specifically", wasn't by accident. I get an offer for $1K in 'casino cash' to lure me into the place. I go, present the offer at the cage, and they hand me 10 nice crisp hundred dollar bills as my 'casino cash'. I could just walk out with that 1K, no strings attached, well maybe some tax strings, but I haven't, and they have, $1K, $500, $100 and $200 at once, etc. I always walked to the table and sat down and played, not slots, not craps, not anything other than BJ. Just to clarify....2F
Ah, usually it's done via promo chips or free bets. Not straight up cash. (Promo chips or free bets, which I thought you were talking about, would play the same way VP freeplay would, at least the way to log it for records.) As for straight up cash, I'm afraid you'd likely have to either count it as a "gift" (which is taxed), or as a win.
One advantage of living in the UK: The tax authorities ( and there's no state taxes as such ) have zero/zip/nil interest in a player's casino winnings or losses. They don't even acknowledge the concept of a professional player unless he owns the betting establishment or gets paid an appearance fee.
Quote: TwoFeathersATLThe original Post said "blackjack specifically", wasn't by accident. I get an offer for $1K in 'casino cash' to lure me into the place. I go, present the offer at the cage, and they hand me 10 nice crisp hundred dollar bills as my 'casino cash'. I could just walk out with that 1K, no strings attached, well maybe some tax strings, but I haven't, and they have, $1K, $500, $100 and $200 at once, etc. I always walked to the table and sat down and played, not slots, not craps, not anything other than BJ. Just to clarify....2F
Yeah, agree with RS again; that's entirely different, because now you have a negotiable instrument valid outside the casino and transferrable; even if you are expected to go gamble it, as you said, you could walk right out with it (though they may never offer it or anything again if you do). It's a taxable gift, and legally should be counted as income/part of winnings against losses. Again, JMHO-YMMV.
Quote: dummyWhy is it a taxable gift... must my daughter report the $100 I gave her forChrisrmas...
I think she is supposed to, yes.
Who pays the gift tax?
The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement.
What is considered a gift?
Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return.
Why do I think the casino as the donor NEVER pays a gift tax ?
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Frequently-Asked-Questions-on-Gift-Taxes#1
Quote: RSI think she is supposed to, yes.
Has to be over $15,000 to be taxable to either party, I believe.
Quote: beachbumbabsYeah, agree with RS again; that's entirely different, because now you have a negotiable instrument valid outside the casino and transferrable; even if you are expected to go gamble it, as you said, you could walk right out with it (though they may never offer it or anything again if you do). It's a taxable gift, and legally should be counted as income/part of winnings against losses. Again, JMHO-YMMV.
Thx for the advice. Wasn't actually a 'negotiable instrument' and wasn't 'transferable'. Only redeemable by me, in person. So I take the whatever, call it $500, put it with my 2K buy in, and then determine whether I won or lost by the amount I walked back to the cage with, away from the cage with. Good food for thought, the CFO is still looking at me with that mean look. And she's usually so sweet. I am going into the basement now to hide the axes, I'll leave the baseball bats where they are. I can survive (maybe) an attack in my sleep from a baseball bat. 2F
Quote: TwoFeathersATLThe original Post said "blackjack specifically", wasn't by accident. I get an offer for $1K in 'casino cash' to lure me into the place. I go, present the offer at the cage, and they hand me 10 nice crisp hundred dollar bills as my 'casino cash'. I could just walk out with that 1K, no strings attached, well maybe some tax strings, but I haven't, and they have, $1K, $500, $100 and $200 at once, etc. I always walked to the table and sat down and played, not slots, not craps, not anything other than BJ. Just to clarify....2F
Hmm...now you've peaked my nerdy tax interest. I've never been part of a promo where "casino cash" was actually given to me in real money BEFORE I played, it's usually a coupon, a free bet slip, promo chips etc. I would guess if you took the 1K and walked. You won 1K for tax purposes. If you gamble it, whatever you cash is winnings. You started with $0 of your own money(for this example anyway), gambled for an hour and cashed say $1200. Then you won 1200. If you cashed 800. You still "won" 800. It was 800 more than you started with. So it's income. If you managed to lose it all. Then that's a big fat 0 for income purposes.
Now lets say you called the IRS(if you're a masochist and have about 4 hours to kill) and talked to a tax specialist. They are called that, or used to be last time I talked to one. If you asked them the above question. I guarantee you'd get put on hold at least twice and get an overly complicated answer that only has about a 50% chance of being right. If you repeated this process the next day(boy you really are a masochist) and spoke to a different rep, I'd say you'd get a different answer 50% of the time. So good luck.
Quote: TwoFeathersATL
- I play ten hours, walk in with 1K, walk out with 2K, left $50/hr in dealer tips ($500). Did I win 1K or 1.5 K?
- I walk in with $200 in 'casino cash' that was comped and 1K of my own. I walk out with 2K, ten hours later (let's assume I didn't tip at all). What are my winnings?
- I go on a 'free cruise' offered because the cruise line thinks I'm a casino sucker, I buy 2 additional staterooms for the rest of the big family, whether I won or lost, does that 'free stateroom' become part of my 'winnings' for the year?
1. You won $1,000, the dealer is taxed on the $500 in tokes.
2. The $200 is a non-taxable discount/incentive no different from a $200 off coupon at Best Buy. You won $800.
3. No, it's a comp no different from a comp meal at the Steakhouse or a free hotel room in Vegas.
