Taxes and Brovada

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Brovada? Is that where Samuel L. Jackson plays?

Quote: jdrewm

hi. i live in a state where online gambling is illegal and i like playing at brovada. Is it not silly to report winnings and losses as far as taxes go seeing as how that would let everyone know that you are participating in something that is "illegal"? I don't want to stop playing at brovada but don't want to get arrested either. Any advice is greatly appreciated, thanks

If you are in Washington, I would be careful, I think its a felony. I don't know that you have to tell the IRS exactly where you are gambling. As long as you pay your taxes I doubt they will care. Just file gambling winnings. If you are winning a fair amount and depositing checks in your bank account, I don't know how you will explain that if you are ever questioned. Find a way to Pay the taxes period.

I'm going to give you the benefit of the doubt by not suggesting that you'd do better to play at Bovada, bro.

Okay, here are a couple of things:

1.) With respect to Federal taxes, gambling losses can only be used to offset gambling winnings, thus, if you have lost money overall, then you have nothing to report in the first place.

2.) In the case of (strictly legal) B&M casinos, there are certain types/amounts of wins that they must report, and generally, you would use any off-setting losses against the wins that those casinos are obligated to report. With respect to taxes, again, the only thing losses are good for is offsetting wins.

3.) Technically, an individual is legally bound to report ALL winnings to the IRS and then offset their winnings with losses as appropriate. I'm not saying not to report all of your winnings to the IRS, but in reality, most people don't. They only report the winnings that the casinos themselves are required to report, anyway, and then offset those with losses, as appropriate.

4.) It is highly unlikely that you would get arrested for gambling on-line, in any case.

5.) There is no Federal law against the act of an individual placing wagers on-line. It is illegal for a website to be taking Sports Bets on-line or over the phone from a U.S. Citizen, however, even poker/casino bets are considered legal. What makes it difficult for players is that it is illegal (under Federal law) for banks to handle on-line gambling transactions.

Your individual State may have laws that you are breaking, there have been a few limited cases of a State taking action against an individual player, so you may want to look into your State laws and case history on that.

---So, the short answer is that you are not doing anything Federally illegal, either way, and would only ever be under a tax obligation if your winnings exceeded your losses. I am not suggesting that, if your wins did exceed your losses, that you NOT report your winnings, (because you have a legal obligation to report them) but the fact remains that most people do not report such winnings, or even winnings from a B&M casino that said casino would not otherwise be reporting themselves.

I think the tax advice here on the forum tends to be overly cautious. I recall helping a friend with some online gambling. Her net winnings for the year were about 10k, plus she had regular earned income. We consulted her tax CPA, and I insisted that she should report winnings, but the CPA thought I was insane. Ordinary people do not report winnings unless W-2Gs are involved, and even then they only report the total of the W-2Gs.

If you don't report, the question is what happens if you get caught. As long as you can plausibly claim ignorance, then the risk should be minimal (i.e., interest and penalties only, no criminal charges). Especially if the winnings blend with other sources of income.

The legality of playing online should be a non-issue. It's hollow government intimidation. You're not doing anything wrong, and no one has been prosecuted.

If you do choose to report the income, the challenge is to interpret the vague tax code. In theory, your gambling income is the total of all winning sessions, but the definition of a session is unclear, so you'll need to use your own judgment. Of course you can deduct losing sessions against the declared winnings, but only as an itemized deduction.

You probably don't have to report, more than likely would not benefit by reporting ... in case of some whopping situation, you can always pay separately into the Conscious Fund rather than on your return. Most people without CPAs over pay. Most gamblers don't owe taxes on a net situation.

Quote: Mission146

1.) With respect to Federal taxes, gambling losses can only be used to offset gambling winnings, thus, if you have lost money overall, then you have nothing to report in the first place.

Sorry Mission, this is not true. If you win $100 in January but lose $500 in March, officially you are still required to report that $100 as gambling income, and then deduct $100 (out of your $500 loss, since you can only offset wins) as an itemized deduction. Your net tax liability on gambling is $0, but your AGI will blow up if you gamble a lot as an amateur. It sucks.

Now if you your numbers are actually $100 and $500, then don't bother. But if they were $30,000 and $40,000, I would probably bother. But that's me.

Quote:

3.) Technically, an individual is legally bound to report ALL winnings to the IRS and then offset their winnings with losses as appropriate. I'm not saying not to report all of your winnings to the IRS, but in reality, most people don't. They only report the winnings that the casinos themselves are required to report, anyway, and then offset those with losses, as appropriate.

I report all of my winnings and losses from table games. I've never had a W-2G. I mostly do this because I generate several CTRs each year (generally 2 per Vegas trip) and I fear the audit. Keep good records, etc.

So I see these posts are a few years old.

I want to figure this out before I get serious and play.

Is there any change in receiving on line gambling slot wins?
And is it any different if you live in the few states that still say that it is illegal?

I understand that for sure on big wins that you have to claim for taxes, but have these states ever pressed charges on anyone, and have they held up in court?

Assume the win is over $50,000 and from a Canadian casino on line in Las Vegas, can there be any legal problems if you are a USA citizen and claim it on your taxes?

Thanks for updated reply's.

I literally can't name a single instance in the history of the US where someone was charged with a crime for declaring income on their tax returns from "illegal" sources. But maybe you'll be the first.

I just read the thread from post #1.
Mostly accurate advice, as amended.
State where you live is first consideration.
Making sense of the Federal regulations is next ( they are vague, either stupid or intentionally vague ).

For a couple K, don't sweat it. Keep good records, keep immaculate records, then try to follow the Regs as best you can and be prepared to explain your logic. There is nothing illegal, as far as I know, about keeping multiple sets of records which don't necessarily drill down to the truth. What is the truth? For tax audit purposes the truth is what you turn over and they accept ;-)

Get into tens of thousands, hire a professional who specializes in this area of tax law ( most don't have a clue ).

Press your bets, buy an island, declare a new republic, and ask the USA for assistance as you become an Ally.

Quote: Addicted2slots

So I see these posts are a few years old.

I want to figure this out before I get serious and play.

Is there any change in receiving on line gambling slot wins?
And is it any different if you live in the few states that still say that it is illegal?

I understand that for sure on big wins that you have to claim for taxes, but have these states ever pressed charges on anyone, and have they held up in court?

Assume the win is over $50,000 and from a Canadian casino on line in Las Vegas, can there be any legal problems if you are a USA citizen and claim it on your taxes?

Thanks for updated reply's.

If you are from NV and dont already have a BV account... good luck getting one. If you do play at BV get a Bitcoin account. I wouldn't deposit or cash out using any other method until they get their payment processors figured out. From what I can tell they are having more and more problems with US banks as well.

I heard they (whoever they is)are going after 5dimes. Who know who they will go after next or what can happen.

Quote: TwoFeathersATL

For tax audit purposes the truth is what you turn over and they accept ;-)

As a bureaucrat, this is true for all government bureaucracy. As long as the letter of the law is not violated and/or nobody will notice or care, we just want to get done with the day too.