Taxes
Any and all advice is appreciated. I’m literally freaking out right now.
I plan on calling some accountants that work with gamblers tomorrow to see if they have any insight.
Please tell me the casino got it wrong and I’m not on the hook for all these “jackpots”.
-BV
Quote: BV3273I just got a packet in the mail and I am about to have a heart attack. It is a W2G from the Borgata for my online gaming in 2018. It shows I have wins of $318,000. It is listing all of the big blackjack hands I won as jackpots. Obviously this is incorrect. A jackpot in my mind is a win which is 300 times your original bet. None of these wins qualify for that. I never cashed out any of this money. I just continued playing till it was gone. The question is now what do I do? These are not slot wins that should be considered as jackpots. I am not sure why they were registered as such on this W2G.
Any and all advice is appreciated. I’m literally freaking out right now.
I plan on calling some accountants that work with gamblers tomorrow to see if they have any insight.
Please tell me the casino got it wrong and I’m not on the hook for all these “jackpots”.
-BV
According to the instructions for form W2g, you should receive one for Table Games if the win is:
a) At 300:1 odds or greater
b) Over $600
If the total winnings minus the wager are over $5000, then Federal Taxes must be withheld.
https://www.irs.gov/pub/irs-prior/iw2g--2019.pdf
I think they sent you the wrong form.
Will they give you a win/loss statement?
What they sent me was basically a list of all the large hands I played on one day with a few exceptions. All of the transactions, “wins”, took place on one day in August 2018. Some of my bets did reach over $1,000 each but I lost that money right back.
I live in New York and not New Jersey if that matters.
I am totally at a loss. They only recorded the big hands I won and listed them on this report. I wonder if I can get a list of all the large hands that I lost which would totally offset this amount.
Any thoughts?
It would be the same if you played a Blackjack machine at a casino and won over $1200.
Quote: BV3273So do I have to pay taxes on these “wins”?
You will be able to write off your losses against wins on your Federal return but I don't think New York state taxes allow deducting gambling losses. Check with an accountant but you may be taxed on the whole $318,000 for your state taxes.
It's kind of crappy.
Quote: BV3273I am so confused. These big blackjack hands don’t qualify as a jackpot based on the definition by the IRS. How would I have to pay taxes on these winning hands?
Because what you are reading pertains to playing a live table game, read the sections about slot machine jackpots. Any payout of $1200 or more is a W2G. I think they consider playing on an electronic device the same as a slot machine.
https://ttlc.intuit.com/questions/3447424-is-blackjack-online-casino-winning-taxable
Quote: BV3273So in theory they are saying I won $318,000 playing blackjack hands online and since I lost all of that money I’d have to say I lost $318,000 as well. Therefore my loses would offset my wins. Do I have this correct?
Yes, that is how the federal taxes work.
Casino Game Activity
Monies taken to: $1,310,528.73
Monies taken from: $1,299,835.52
Total: ($10,693.21) - This is a loss for 2018
W-2G Total: $318,684.50
Who is doing your tax return? Try to find someone who knows something about gambling wins/losses
By the way, try not to win $1200 on any individual hand next time. If that includes splits/doubles, then probably a $200 max bet is safest.
Quote: FCBLComishWow, this sucks.
Who is doing your tax return? Try to find someone who knows something about gambling wins/losses
Yeah. probably cost you a few thousand to find an expert. Please tell me you won't be playing on line anymore....
Did you look at the T&Cs for the site to see what they say about taxes? Are you playing in New Jersey?
Based on what I have found while reading about gambling wins in NJ the IRS only requires the casinos to report wins over $1,200 on slots and video poker machines or other games such as keno, lottery or horse racing. No mention of online gaming at all. When you have a win equal to or greater than $1200, you are issued a W-2G form. This form lists your name, address and Social Security number. The casinos are not required to take out withholding tax on jackpots under $5,000 as long you supply your Social Security number. If you don’t provide your Social Security number, the casinos withhold 28 percent on small jackpots. You can request a specific amount of withholding tax to be taken out of any jackpot you win. Some players like to do this to avoid a big tax payment in April when they file their income tax returns. The additional withholding may not be necessary if you keep a log book. The law allows you to deduct gambling losses up to the amount of your winnings. You can only do this if you have documentation of your losses. Keeping a diary or log book is the way to do this.
My logbook shows that I lost more than this amount on the W2G.
Quote: jackmagic777The old standard "You can always deduct your losses " seldom applies now. As the Wiz stated the $24,000 standard deduction changes all that, And 318K on your AGI Wow. That affects Earned Income Credit, Child Tax Credit,Dependent Child Care, American Opportunity Credit, Adaption Credit, etc. Plus ability to get student loans for you or kids, also AGI used to set your repayment monthly amount for your own student loans.
Not to mention the cost of explaining/defending from his state of New York. What a mess.
Anybody know how many states do likewise ?
Quote: jackmagic777The old standard "You can always deduct your losses " seldom applies now. As the Wiz stated the $24,000 standard deduction changes all that, And 318K on your AGI Wow. That affects Earned Income Credit, Child Tax Credit,Dependent Child Care, American Opportunity Credit, Adaption Credit, etc. Plus ability to get student loans for you or kids, also AGI used to set your repayment monthly amount for your own student loans.
Really creepy and disturbing that money you ended up losing anyways could effect your ability to get loans for yourself or your family Members and get Tax Credit and all that other stuff. In that case I could see a Gambler wishing he never won that huge Jackpot. :/
Quote: NathanI'm pretty sure you could honestly claim that you LOST that money , and you played/lost it all in games and didn't cash it out. I think you'll have to pay not nearly as much in taxes, but I'm not sure.
And just WHAT are you basing your opinion on? Have you read through the IRS rules on W2G's? Have you consulted with a tax professional? Have you read any or all of the publications on gambling tax rules? Have you actually needed to file a return that had W2G's so you are personally aware of the procedure?
If you need to end your post with "but I'm not sure" then why are you even posting?
You do this quite frequently, posting about something you seemingly know nothing about. Why? Not only does it not help anyone, but if someone was to follow your "sage advice" they could find themselves in an even worse situation.
Quote:Better to remain silent and be thought a fool than to speak and to remove all doubt.
— ABRAHAM LINCOLN.
I don't play online, but I've got to think there is a record of all your wagers somewhere, and you might be able to piece together a detailed log of your sessions, assuming you don't already have one.
If this was the stock market, that would be unrealized gains. But I guess gambling tax laws are different.
Quote: JoemanI am not an accountant, or know anything about taxes, but MBJ posted recently about this, saying a total of "session wins," and not an aggregate of your W-2G's are what you put down for gambling income. I'm sure this would make for a more palatable figure for your AGI. There is also a link to his article there that goes into more detail.
I don't play online, but I've got to think there is a record of all your wagers somewhere, and you might be able to piece together a detailed log of your sessions, assuming you don't already have one.
This.
Quote: JoemanI am not an accountant, or know anything about taxes, but MBJ posted recently about this, saying a total of "session wins," and not an aggregate of your W-2G's are what you put down for gambling income. I'm sure this would make for a more palatable figure for your AGI. There is also a link to his article there that goes into more detail.
I don't play online, but I've got to think there is a record of all your wagers somewhere, and you might be able to piece together a detailed log of your sessions, assuming you don't already have one.
Yeah, we just talked about this extensively about a month ago. Read that thread ^^ from the start.
Short answer, you will probably be okay on your fed return as long as you can construct a journal showing losses. You're supposed to do this contemporaneously, but given that you have a win/loss statement and it's all trackable online, you can probably get by after the fact.
I don't know anything about New York State. Even if they don't allow you to deduct gambling losses (common for many dumb states), you may be able to use the same session accounting to show a gross win much lower than that total. You said most of the big hands happened on one day right? That could be one session, and if you didn't win that session, then your gross gambling winning will be much lower than the $318k.
Good luck.
Quote: TigerWuDoesn't seem fair to tax someone on money they never cashed out.
If this was the stock market, that would be unrealized gains. But I guess gambling tax laws are different.
That's exactly what I'm saying. Seems beyond messed up to tax money that was LOST.
Quote: TigerWuDoesn't seem fair to tax someone on money they never cashed out.
If this was the stock market, that would be unrealized gains. But I guess gambling tax laws are different.
from http://www.taxabletalk.com/2016/02/13/north-carolina-added-to-bad-states-for-gamblers/
Quote:CT, IL, IN, KS, MA, MI, NC, OH, RI, WV, and WI do not allow gambling losses as an itemized deduction. These states’ income taxes are written so that taxpayers pay based (generally) on their federal Adjusted Gross Income (AGI). AGI includes gambling winnings but does not include gambling losses. Thus, a taxpayer who has (say) $100,000 of gambling winnings and $100,000 of gambling losses will owe state income tax on the phantom gambling winnings. (Michigan does exempt the first $300 of gambling winnings from state income tax.)
I have been screaming about this in this forum for a year!!! These tax rules are going to have a negative effect on the gaming industry.
23.1% of the US population currently live in states where gambling losses cannot be itemized so as to off-set gambling winnings on state tax returns.
And with a $24,000 standard deduction on federal returns . . .
Quote: gordonm888CT, IL, IN, KS, MA, MI, NC, OH, RI, WV, and WI do not allow gambling losses as an itemized deduction. These states’ income taxes are written so that taxpayers pay based (generally) on their federal Adjusted Gross Income (AGI). AGI includes gambling winnings but does not include gambling losses. Thus, a taxpayer who has (say) $100,000 of gambling winnings and $100,000 of gambling losses will owe state income tax on the phantom gambling winnings. (Michigan does exempt the first $300 of gambling winnings from state income tax.)
I have been screaming about this in this forum for a year!!! These tax rules are going to have a negative effect on the gaming industry.
23.1% of the US population currently live in states where gambling losses cannot be itemized so as to off-set gambling winnings on state tax returns.
And with a $24,000 standard deduction on federal returns . . .
Time for the casinos to have some Pay Your Tax promotions.
I spoke with 3 different accountants. One of which who’s practice solely focuses on pro and amateur gamblers - he has offices in South NJ and Vegas. They all stated the same thing. Report all of the $318,000 on the W2G and write it all off as gambling losses. Also, the win/loss statement actually holds sway. With online gambling the old adage of keeping a diary is not necessarily needed because each hand is actually recorded and can be printed out - therefore they create the diary for you. I confirmed this with Borgata online both via phone call and email. They walked me through this process to gather this information.
In essence my AGI is going to increase for 2018. Thankfully I am not applying for any sort of loans or anything else.
Basically these wins triggered the W2G because the total win for the hand was over $1,200. For whatever reason online casinos consider online blackjack the same they would as a slot machine win. Kind of unfair, but it is what it is.
I thank everyone for all of the advice. Albeit some of the posts wanted me to look for the highest point in my building, open a window, and jump out.
My biggest lesson is this. If you are going to play online try not to trigger those W2G wins by keeping bet maximums to a lower amount.
I hope this post saves someone the sleepless night I had. I came to this site not knowing anyone and the whole community stepped up to try and help me. I’m extremely grateful!
Best of luck everyone!
-BV
BV3273, there's a lot of myth and misinformation floating around about gambling taxes. Here's how you should handle it, according to the IRS:Quote: BV3273Here is what it says on my win/loss statement:
Casino Game Activity
Monies taken to: $1,310,528.73
Monies taken from: $1,299,835.52
Total: ($10,693.21) - This is a loss for 2018
W-2G Total: $318,684.50
(1) Report your $1,299,835.52 wins on Schedule 1, Line 21.
(2) Report $1,299,835.52 as losses on Schedule A. Your losses were more than this, but you can't claim more in losses than you won.
(3) Even though these cancel, with no net win so you owe no tax, don't be tempted to not report it. Do report your win and your loss, otherwise you face the risk of penalties.
(4) Ignore your W-2G. It's irrelevant.
For more, see my detailed article on the subject.
All members, please don't ask any questions about this until you've actually read the article.
You're not. Wins are the total of session wins, losses are the total of session losses. That's made clear in the article.Quote: BV3273I don’t understand how if I win $1 it registers and I’m liable to pay taxes for that even though I had a loss for the entire session.
If you're using a report from the online casino, then it lists a figure for all wins, and a figure for all losses, and you can use that instead of session accounting. In your case, your losses on the casino report exceeded your wins, so you have no tax liability, as I mentioned in my earlier post.
Quote: BV3273I’ll run it by my accountant again before I file. I don’t understand how if I win $1 it registers and I’m liable to pay taxes for that even though I had a loss for the entire session. My transaction diary that I printed shows that the entire session in question took place over one day.
If you played only one session and you had a loss, then you don’t need to report anything under the session accounting rules. Expect to get a letter from the IRS, though.
This is correct.Quote: CrystalMathIf you played only one session and you had a loss, then you don’t need to report anything under the session accounting rules. Expect to get a letter from the IRS, though.
I am not saying that.Quote: BV3273So why are you stating that I have to report the 1.31 mil in wins listed on my win/loss versus the $318k on the W2G I received?
First, you said you had $1,299,835.52 in wins, not $1.31 mil.
Second, I said you report that figure as a win *and* a loss. Therefore you owe no tax, but somehow you're construing that as "if I win $1 it registers and I'm liable to pay taxes even though I had a loss for the entire session". I never said anything that supports that statement.
Again, you report the total of session wins as wins, and the total of session losses as losses.
So true.Quote: CrystalMathIf you played only one session and you had a loss, then you don’t need to report anything under the session accounting rules.
I wouldn't expect to get a letter from the IRS. I didn't. And if you do get a letter you can reply with a letter and that will almost certainly take care of it.Quote: CrystalMathExpect to get a letter from the IRS, though.
I updated the article to suggest that if your reporting doesn't match your W-2Gs, you include a note explaining that you used session accounting and referencing Shollenberger v Commissioner.
Yet again, no one is suggesting that you report NOTHING, certainly not me. What I actually said, and then repeated, is that you report $1,299,835.52 from the casino report.Quote: BV3273I’m still going to report the $318k from my W2G. I rather have reported that then report nothing.
