Tax question
Due to tax obligation, does video poker have worse payout than expected, especially if you play larger denomination?
Let's say you play $100 denomination Bonus Poker at Bellagio, any three of a kind($1500 payout) would trigger the W-2G...
That sounds ridiculous to me.
So when you see a 99.54% JoB, the TRUE return is actually always less than 99.54%. Am I right?
Is there a "Tax aversion" playing strategy that produces a higher TRUE return?
For example, you play 96 JoB, you're dealt 2, 5, 10, Q, A.
2,10, Q, A are suited.
Holding 10, Q, A, ER = 1.286772%
Holding 2, 10, Q, A, ER = 1.276596%
It might be possible that holding 2, 10, Q, A is a better move, since royal flush doesn't worth 800 units after tax, and the second best holding avoids the possibility of getting a royal flush.
IRS can't track all my three of a kinds. What can they do to me if I don't report my small wins.
But, seriously, trolling the IR freaking S on a public forum may not be the wisest career move.
If you itemize deduction you can deduct gambling losses. If you have significant gambling wins, and losses, these facts alone may be enough to itemize (I have been in this situation in the past).
Declaring or not declaring tax on gambling winnings: You guys crack me up.Quote: RogerKintCongrats, you've just been reported by Babs to the nearest IRS field office ;)
But, seriously, trolling the IR freaking S on a public forum may not be the wisest career move.
As others have said, just because the casino isn't handing you paperwork, you still have to declare every last dollar... Unless you surrender your US citizenship and emigrate. Don't you guys even have to declare winnings from anywhere in the world, E.g.. while on vacation to Europe?
Must be a real PITA to do anything like properly.
As for the OP's question about EV when taxes are figured in, then yes, there will be instances giving up a small +EV will be to your advantage.
If I remember correctly there were certain machines that would pay $1199 instead of $1200 and if you don't think that was done expressly for the purpose of not alerting the IRS via a form then I will have to send you to Nathan's Corner....
Quote: OnceDearDeclaring or not declaring tax on gambling winnings: You guys crack me up.
As others have said, just because the casino isn't handing you paperwork, you still have to declare every last dollar... Unless you surrender your US citizenship and emigrate. Don't you guys even have to declare winnings from anywhere in the world, E.g.. while on vacation to Europe?
Must be a real PITA to do anything like properly.
Yeah, US is one of the few places that taxes world-wide earnings of its citizens. Good ol' Uncle Sam. Always need to get his beak wet.
https://en.wikipedia.org/wiki/International_taxation#Taxation_systems
Quote: billryanMy guy was telling me that the new tax laws allow non-pros to deduct expenses from winnings. I hadn't read that anywhere else.
Hmmm, I haven't heard that anywhere either. GWAE just had one of their tax guys on (Russel Fox), and I think this came up, but I must have glossed right past it.
Here is a supporting link:
https://www.accountingweb.com/tax/individuals/gambling-loss-deductions-broadened-under-new-tax-law
The upshot is you are correct, but losses + expenses still can't be deducted above wins if you are a non-pro.
That happened to me in 2008, when I was chasing comps on a video poker machine that supposedly was accruing 5x more slot points than it was supposed to. I got probably $6000+ in W-2Gs but reported zero gambling income, because I never had a session win.
Here's my detailed article on gambling taxes, which includes six separate references for the fact that you don't blindly total and report the W-2G amounts.
Here are your new income tax brackets for 2019. https://cnb.cx/2EqeW76
Quote: MichaelBluejayProbably the biggest misconception about taxes is the idea that you're supposed to tally your W-2G winnings and enter that as your gambling income. This is flat-out wrong. Actually, you tally up your session wins, and report that total as your gambling income. That total will likely bear no resemblance to your W-2G total. You can have a fistful of W-2G's but still report zero gambling winnings, if your session losses total zero.
That happened to me in 2008, when I was chasing comps on a video poker machine that supposedly was accruing 5x more slot points than it was supposed to. I got probably $6000+ in W-2Gs but reported zero gambling income, because I never had a session win.
Here's my detailed article on gambling taxes, which includes six separate references for the fact that you don't blindly total and report the W-2G amounts.
Great page, MB. I especially like your breakdown of the unfair aspects of gambling taxes. Really gets the blood boiling early in the day.
Quote: billryanMy guy was telling me that the new tax laws allow non-pros to deduct expenses from winnings. I hadn't read that anywhere else.
That has always been the case as long as I can remember, pros and non-pros. As MichaelBluejay wrote, you're supposed to declare your net profit at the end of the year. In other words, you can offset losses against your W2G wins. You are also supposed to declare all wins.
The IRS can always audit you for any reason they wish and ask to see evidence of offsetting losses, which is why you should keep records.
Nathan brought up the situation of playing a $100 denom ($500 total bet) video poker machine. I've seen slot players betting around this much and an attendant would stand right next to the machine the whole time. With every win of $1200 or more, she wrote down the win in a record, had the player initial it, turn a key, and the player was good to go. In other words, only about a 15 second delay for each jackpot.
Quote: WizardThat has always been the case as long as I can remember, pros and non-pros. As MichaelBluejay wrote, you're supposed to declare your net profit at the end of the year. In other words, you can offset losses against your W2G wins.
Uh, not exactly. You don't declare your net profit, and my article makes that clear. You report your total wins as income in one place ("wins" being the sum of all winning sessions), and, if you itemize, all your losses in another place ("losses" being the sum of all losing sessions). Whether or not you received W-2Gs is irrelevant, since those amounts aren't used for tax purposes. For that reason, the IRS ought to stop requiring casinos to hand out those completely worthless forms.
Quote: WizardThat has always been the case as long as I can remember, pros and non-pros. As MichaelBluejay wrote, you're supposed to declare your net profit at the end of the year. In other words, you can offset losses against your W2G wins. You are also supposed to declare all wins.
The IRS can always audit you for any reason they wish and ask to see evidence of offsetting losses, which is why you should keep records.
Nathan brought up the situation of playing a $100 denom ($500 total bet) video poker machine. I've seen slot players betting around this much and an attendant would stand right next to the machine the whole time. With every win of $1200 or more, she wrote down the win in a record, had the player initial it, turn a key, and the player was good to go. In other words, only about a 15 second delay for each jackpot.
Some places (notably Cosmo) have it so their high rollers can acknowledge the win, put in a pin, and spin. Takes 10 seconds, no attendant needed. But I think the account needs to be pre-set, signature collected, to do it, and I would guess you've agreed to receive paperwork at the cage or something, after you're done. Your jackpot just goes to your balance, and you cash out to a TITO.
Well, if you like that, then you'll like this one. I didn't add it to the page because I didn't want to clutter it:Quote: AcesAndEightsGreat page, MB. I especially like your breakdown of the unfair aspects of gambling taxes. Really gets the blood boiling early in the day.
Gambling wins shouldn't be taxable at all, not because I think taxation is inherently evil (I don't), but because gambling is an overall expected loss, so there's no overall profit. Consider all the gambling done by all Americans over the course of a year: casino, sports, lottery, etc. The grand total is a loss for the players, and a profit for the operators. So where's the income to tax?!
This is true even for the multi-state lotteries with jackpots of hundreds of millions of dollars. If the government wants to tax those winnings, then to be fair they'd need to allow players to FULLY deduct their lottery losses, (1) even in excess of winnings, and (2) in excess of the standard deduction, because if you don't get to deduct in excess of the standard deduction, then you don't really get a tax benefit. Meaning, someone who never plays the lottery gets the same standard deduction as someone who does, so lottery players effectively don't get a tax benefit on their losses, but winners get a tax bill on their wins. Not fair.
Quote: MichaelBluejayWell, if you like that, then you'll like this one. I didn't add it to the page because I didn't want to clutter it:
Gambling wins shouldn't be taxable at all, not because I think taxation is inherently evil (I don't), but because gambling is an overall expected loss, so there's no overall profit. Consider all the gambling done by all Americans over the course of a year: casino, sports, lottery, etc. The grand total is a loss for the players, and a profit for the operators. So where's the income to tax?!
This is true even for the multi-state lotteries with jackpots of hundreds of millions of dollars. If the government wants to tax those winnings, then to be fair they'd need to allow players to FULLY deduct their lottery losses, (1) even in excess of winnings, and (2) in excess of the standard deduction, because if you don't get to deduct in excess of the standard deduction, then you don't really get a tax benefit. Meaning, someone who never plays the lottery gets the same standard deduction as someone who does, so lottery players effectively don't get a tax benefit on their losses, but winners get a tax bill on their wins. Not fair.
Yes, I agree that would be reasonable. While we're at it, I would like a pony for Christmas!
Quote: WizardThat has always been the case as long as I can remember, pros and non-pros.
The new part this year is that non-pros can deduct expenses other than losses, e.g. airfare, hotels, etc. Still can't exceed wins though, and you still have to itemize. Won't be a huge impact on non-pros, but if this were in place a couple of years ago, it would have benefited me. I declared everything properly for an amateur, gross session wins on 1040 and gross session losses on Schedule A. I don't remember what the net ended up being, but it was in the range of a few thousand for a couple of years. If I could have added my airfair to Vegas and hotel costs, in addition to my bus fare or car mileage to the local casinos in Seattle, it would have knocked down that net a bit more.
Yes, that's the new part. But like I say in my article, almost nobody will actually get to use this benefit. Even before Trump's tax changes, most Americans didn't itemize deductions, and now that he's doubled the Standard Deduction, nearly no one will get any benefit from itemizing.Quote: AcesAndEightsThe new part this year is that non-pros can deduct expenses other than losses, e.g. airfare, hotels, etc. Still can't exceed wins though, and you still have to itemize.
That's not a complaint about the increased Standard Deduction (I have mixed feelings about it), just saying that the ability to deduct related gambling expenses isn't something that very many people will be able to actually claim.
Quote: MichaelBluejayYes, that's the new part. But like I say in my article, almost nobody will actually get to use this benefit. Even before Trump's tax changes, most Americans didn't itemize deductions, and now that he's doubled the Standard Deduction, nearly no one will get any benefit from itemizing.Quote: AcesAndEightsThe new part this year is that non-pros can deduct expenses other than losses, e.g. airfare, hotels, etc. Still can't exceed wins though, and you still have to itemize.
That's not a complaint about the increased Standard Deduction (I have mixed feelings about it), just saying that the ability to deduct related gambling expenses isn't something that very many people will be able to actually claim.
Due to the insane price paid for my house (insane in my head, it's pretty average for the area), in addition to high local taxes, my wife and I will continue to itemize for many years barring further changes to the tax code. Interest paid this year on our mortgage will be about $18k, and we will easily hit the $10k cap on state and local taxes paid, so $28k > $24k. That $18k number will only go down slightly for a long time as anyone who has had a mortgage knows.
Sadly I can't take advantage of this benefit for gamblers, as I haven't gambled in some time. Once the Encore Boston Harbor opens, I may make a triumphant return.
Quote: ChumpChangeThere was a Blazing 7's slot machine built in 1978 and they were worried about the $1200 tax form line back then. With a CPI calculator that tax line would be near $5000 now.
This is why all bare numbers in the tax code should be adjusted for inflation.
Quote: MichaelBluejayProbably the biggest misconception about taxes is the idea that you're supposed to tally your W-2G winnings and enter that as your gambling income. This is flat-out wrong. Actually, you tally up your session wins, and report that total as your gambling income. That total will likely bear no resemblance to your W-2G total. You can have a fistful of W-2G's but still report zero gambling winnings, if your session losses total zero.
When I first read this I thought to myself that this is a bunch of baloney and you can't do it this way, but when I read your references, is sure looks like you are completely correct.
If someone decides to follow this plan, they better have kept substantial and detailed records. In the past I unknowingly not reported a W-2G and lo and behold, I received a tax bill from the IRS for the unreported W-2G income. The IRS knows exactly how much income you received from W-2G's and is looking for that amount to be reported on your tax forms. If the IRS's information does not match what you reported, you better have the documentation to prove otherwise.
From IRS publication 529 (miscellaneous deductions) here are just some of the record keeping requirements:
Quote:Diary of winnings and losses. You must keep an accurate diary or similar record of your losses and winnings.
Your diary should contain at least the following information.
The date and type of your specific wager or wagering activity.
The name and address or location of the gambling establishment.
The names of other persons present with you at the gambling establishment.
The amount(s) you won or lost.
Proof of winnings and losses.
In addition to your diary, you should also have other documentation. You can generally prove your winnings and losses through Form W-2G, Certain Gambling Winnings; Form 5754, Statement by Person(s) Receiving Gambling Winnings; wagering tickets; canceled checks; substitute checks; credit records; bank withdrawals; and statements of actual winnings or payment slips provided to you by the gambling establishment.
These recordkeeping suggestions are intended as general guidelines to help you establish your winnings and losses. They aren't all-inclusive. Your tax liability depends on your particular facts and circumstances.
Keno.
Copies of the keno tickets you purchased that were validated by the gambling establishment, copies of your casino credit records, and copies of your casino check cashing records.
Slot machines.
A record of the machine number and all winnings by date and time the machine was played.
Table games (twenty-one (blackjack), craps, poker, baccarat, roulette, wheel of fortune, etc.).
The number of the table at which you were playing. Casino credit card data indicating whether the credit was issued in the pit or at the cashier's cage.
Bingo.
A record of the number of games played, cost of tickets purchased, and amounts collected on winning tickets. Supplemental records include any receipts from the casino, parlor, etc.
Racing (horse, harness, dog, etc.).
A record of the races, amounts of wagers, amounts collected on winning tickets, and amounts lost on losing tickets. Supplemental records include unredeemed tickets and payment records from the racetrack.
Lotteries.
A record of ticket purchases, dates, winnings, and losses. Supplemental records include unredeemed tickets, payment slips, and winnings statements.
Looking at the record keeping requirements, how many gamblers would keep track of the slot machine number, the blackjack table number, the names of other people present with you, etc?
While it does seem you can handle W-2G's as you outlined, just be extremely careful in keeping records.
Your linked article contains the statement:
"but a session can't span more than a day"
Do you have any documentation to support this claim?
Dog Hand
The first three sources at the end of the article in the "Record wins/losses per session" section substantiate this.Quote: DogHandYour linked article contains the statement:
"but a session can't span more than a day"
Do you have any documentation to support this claim?
[On a side note, it's really cool seeing Michael Bluejay post here. I came here via Easy Vegas which is a great site for guys like me just getting back into casino gaming--lots of nice examples of play.]
Quote: GialmereHow often is the $1200 changed? Is it pegged to inflation? I'd like to see it raised to $2500 which seems fairer and easier although it's hardly surprising that Uncle Sam doesn't share that view.
[On a side note, it's really cool seeing Michael Bluejay post here. I came here via Vegas Click which is a great site for guys like me just getting back into casino gaming--lots of nice examples of play.]
It's not pegged to inflation, but it absolutely should be. I don't know when the $1200 was written into law, but ChumpChange's post above implies it was at least as early as 1978.
Quote: AcesAndEightsQuote: GialmereHow often is the $1200 changed? Is it pegged to inflation? I'd like to see it raised to $2500 which seems fairer and easier although it's hardly surprising that Uncle Sam doesn't share that view.
[On a side note, it's really cool seeing Michael Bluejay post here. I came here via Vegas Click which is a great site for guys like me just getting back into casino gaming--lots of nice examples of play.]
It's not pegged to inflation, but it absolutely should be. I don't know when the $1200 was written into law, but ChumpChange's post above implies it was at least as early as 1978.
It has been $1200 for the entire time I have been in the casino business. It is long overdue for a change. Trouble is, they were talking about LOWERING the number last year...
https://www.cpapracticeadvisor.com/news/12299406/irs-finalizes-reporting-rules-for-certain-casino-games
That is completely ridiculous. $2500 or even $5000 is probably the right amount.
Quote: AcesAndEightsYes, I agree that would be reasonable. While we're at it, I would like a pony for Christmas!
The new part this year is that non-pros can deduct expenses other than losses, e.g. airfare, hotels, etc. Still can't exceed wins though, and you still have to itemize. Won't be a huge impact on non-pros, but if this were in place a couple of years ago, it would have benefited me. I declared everything properly for an amateur, gross session wins on 1040 and gross session losses on Schedule A. I don't remember what the net ended up being, but it was in the range of a few thousand for a couple of years. If I could have added my airfair to Vegas and hotel costs, in addition to my bus fare or car mileage to the local casinos in Seattle, it would have knocked down that net a bit more.
Would have been a huge help to me, as well. But not this year, unfortunately.
They shouldn't raise it, they should *abolish it completely*, for two reasons:Quote: FCBLComishThat is completely ridiculous. $2500 or even $5000 is probably the right amount.
(1) The W-2G bears no resemblance to what you actually report on your tax return.
(2) All the gambling done by all taxpayers each year results in a net LOSS. There is no real net income to be taxed. Gambling wins shouldn't be taxed, at least not unless they let you *really* deduct *all* your losses, in excess of the standard deduction. But even if they did that, W-2G still has no relation to what you report, so W-2G shouldn't be issued. Complete waste of time.
Oh, and good to see you here, Gialmere! I don't post on WoO very much, but sometimes I pop up when I see I can answer a question or correct a misconception.
Quote: MichaelBluejayUh, not exactly. You don't declare your net profit, and my article makes that clear. You report your total wins as income in one place ("wins" being the sum of all winning sessions), and, if you itemize, all your losses in another place ("losses" being the sum of all losing sessions). Whether or not you received W-2Gs is irrelevant, since those amounts aren't used for tax purposes. For that reason, the IRS ought to stop requiring casinos to hand out those completely worthless forms.
That's true and practical for machine players who get a lot of W2Gs. I was thinking more like a table game player who doesn't get any. I don't think it would break any rules to just state you net annual win as the win and offset nothing against it. Otherwise, exactly how is a win defined, each winning hand, session, day?
I think you need to read my article. IRS rules are clear that you can't just report the net, wins and sessions are actually defined (at least enough to give you an idea of how to record your journal), and my article addresses all of this.Quote: WizardThat's true and practical for machine players who get a lot of W2Gs. I was thinking more like a table game player who doesn't get any. I don't think it would break any rules to just state you net annual win as the win and offset nothing against it. Otherwise, exactly how is a win defined, each winning hand, session, day?
Quote: MichaelBluejayI think you need to read my article. IRS rules are clear that you can't just report the net, wins and sessions are actually defined, and my article addresses all of this.Quote: WizardThat's true and practical for machine players who get a lot of W2Gs. I was thinking more like a table game player who doesn't get any. I don't think it would break any rules to just state you net annual win as the win and offset nothing against it. Otherwise, exactly how is a win defined, each winning hand, session, day?
If a blackjack player did just report their entire year of blackjack winnings as one single integer and not itemized, what could the IRS possibly do to correct the error?
Quote: MichaelBluejayWell, if you like that, then you'll like this one. I didn't add it to the page because I didn't want to clutter it:
Gambling wins shouldn't be taxable at all, not because I think taxation is inherently evil (I don't), but because gambling is an overall expected loss, so there's no overall profit. Consider all the gambling done by all Americans over the course of a year: casino, sports, lottery, etc. The grand total is a loss for the players, and a profit for the operators. So where's the income to tax?!
This is true even for the multi-state lotteries with jackpots of hundreds of millions of dollars. If the government wants to tax those winnings, then to be fair they'd need to allow players to FULLY deduct their lottery losses, (1) even in excess of winnings, and (2) in excess of the standard deduction, because if you don't get to deduct in excess of the standard deduction, then you don't really get a tax benefit. Meaning, someone who never plays the lottery gets the same standard deduction as someone who does, so lottery players effectively don't get a tax benefit on their losses, but winners get a tax bill on their wins. Not fair.
Absolutely agree that taxing gambling wins is double taxation. The problem is that gambling itself is a tax against people who don't understand math. So the vast majority of victims of this tax will never understand why it is wrong
Quote: WizardThat's true and practical for machine players who get a lot of W2Gs. I was thinking more like a table game player who doesn't get any. I don't think it would break any rules to just state you net annual win as the win and offset nothing against it. Otherwise, exactly how is a win defined, each winning hand, session, day?
Quote: MichaelBluejayI think you need to read my article. IRS rules are clear that you can't just report the net, wins and sessions are actually defined, and my article addresses all of this.
I am only going to try to address "session" here.
From Mr. Bluejay's link:, I quote:
Quote:The IRS doesn't explicitly define what a "session" is, so just use a reasonable definition. When you take a break for a meal or some other kind of entertainment, or when you cash in your chips, consider your session over. It's not clear whether you have to consider your session over if you simply switch games (e.g., slots to blackjack), or if you walk 30 seconds from one casino to the next (like in downtown Vegas where they're close together), but it couldn't hurt. You can have multiple sessions in one day, but a session can't span more than a day.
In 2015, the IRS was proposing changes to the reporting requirements for Winnings From Bingo, Keno, and Slot Machines. In this proposed change, the IRS defined session as the following;
Quote:Session.
For purposes of this section, a session of play begins when a patron places the first wager on a particular type of game at a gaming establishment and ends when the patron places his or her last wager on the same type of game before the end of the same calendar day at the same gaming establishment. For purposes of this section, the time is determined by the time zone of the location where the patron places the wager. A session of play is always determined with reference to a calendar day (24-hour period from 12 a.m. through 11:59 p.m.) and ends no later than the end of that calendar day. Nothing in this section prohibits a payor from terminating a session for any reason before the end of that calendar day.
These proposed IRS rules were never adopted but will give you an indication about the IRS's thinking with respect to "sessions".
Quote: MichaelBluejayUh, not exactly.
Well, how should I put this? In my 17 years living Vegas and 32 in and out of casinos, the number of times I've seen somebody step away from a gambling table and write in a journal something, presumably his win/loss, casino, table number, companions, and time of day, is zero. However, I don't dispute what you site as the law.
The two of us exempted from this statement -- let the record say.
Well, did you read the article? You *do* report your wins as a single integer (and your loss as a single integer, if you're itemizing.) What you *don't* do is subtract your losses from your wins and report the net profit as your income. You also don't submit your daily journal, that's just backup in case you get audited.Quote: TomGIf a blackjack player did just report their entire year of blackjack winnings as one single integer and not itemized, what could the IRS possibly do to correct the error?
If you reported the net profit as income instead of a single figure for wins and a single figure for losses, then you file a 1040X to amend your return.
I believe you. For starters, most people have no clue that they're supposed to, as this thread has proved. But even if they knew, most people probably wouldn't comply, because most wins are untraceable and the recordkeeping requirement is onerous. Personally, I use the Notes app on my phone, takes just a few seconds. By the way, the table # or slot machine # isn't a hard-and-fast requirement. The IRS lists what info should be included "at a minimum" and the table #/slot# isn't part of that. There's a subsequent section where they list other information that can be recorded, including table # and slot #, though that info is identified neither as "optional" nor "required".Quote: Wiz BabyIn my 17 years living Vegas and 32 in and out of casinos, the number of times I've seen somebody step away from a gambling table and write in a journal something, presumably his win/loss, casino, table number, companions, and time of day, is zero.
Anyway, based on this discussion, I added a numbered summary of main points at the beginning of the article. The article is way more useful now. However good my content might be, it's that way because of reader feedback, which is invaluable.
”US persons”, which includes more than just US citizens, must report all worldwide income, period. If you are in Egypt on vacation and find an artifact in the sand worth a million bucks, you report it.Quote: OnceDearDeclaring or not declaring tax on gambling winnings: You guys crack me up.
As others have said, just because the casino isn't handing you paperwork, you still have to declare every last dollar... Unless you surrender your US citizenship and emigrate. Don't you guys even have to declare winnings from anywhere in the world, E.g.. while on vacation to Europe?.
You can attempt to renounce US citizenship but that does not mean you will be allowed to, And even if you are allowed you will probably have to pay a hefty exit tax, and still no guarantee of being fully released from US tax obligations.
With that said, when I compare myself to European colleagues making similar salaries, I have a sh*tload more disposable income then they do. I’m amazed at some of the guys in the UK that basically live paycheck to paycheck despite earning decent salaries. Everything is double the price there, partially because the tax load on everything you buy is much higher.
I’ll bet you’ll pay more in tax on gasoline/“petrol” in one year than I’ll pay in my life on gambling winnings.
Quote: WizardWell, how should I put this? In my 17 years living Vegas and 32 in and out of casinos, the number of times I've seen somebody step away from a gambling table and write in a journal something, presumably his win/loss, casino, table number, companions, and time of day, is zero. However, I don't dispute what you site as the law.
The two of us exempted from this statement -- let the record say.
Respectfully, I do this every time I gamble. But I don't use a paper journal like a luddite, I enter it into a notes app on my phone.
The table numbers get a little iffy sometimes, since I usually wait until I'm at least a little bit away from the table to not raise any suspicions. Of course, there shouldn't be anything suspicious about someone keeping detailed win/loss records, but you know how pit bosses are.
Quote: AcesAndEightsRespectfully, I do this every time I gamble. But I don't use a paper journal like a luddite, I enter it into a notes app on my phone.
The table numbers get a little iffy sometimes, since I usually wait until I'm at least a little bit away from the table to not raise any suspicions. Of course, there shouldn't be anything suspicious about someone keeping detailed win/loss records, but you know how pit bosses are.
I do not write down the table or machine number. I also use my phone notes and just write the date time, casino, game played (ie. BJ or Video Poker) and my net result.
10 days I win $5000 a day.
10 days I lose $5000 a day.
My AGI is jumped $50K, and my bookkeeping drags me back to no winning at all.
Quote: AcesAndEightsRespectfully, I do this every time I gamble.
Duly noted. I apologize for inferring nobody doing their due diligence to keep proper records.
Quote: MichaelBluejayWell, did you read the article? You *do* report your wins as a single integer (and your loss as a single integer, if you're itemizing.) What you *don't* do is subtract your losses from your wins and report the net profit as your income. You also don't submit your daily journal, that's just backup in case you get audited.
I do not dispute this is what you're supposed to do.
Let's look at an example.
Johnny is single with a work income of $100,000. He has absolutely nothing to deduct on schedule A except, perhaps, gambling losses.
The standard deduction for 2018 for individuals is $12,000 (source: forbes.com).
The marginal tax rate for income between $82,501 and $157,500 in 2018 is 24% for individual filers. (same source)
Summing up every individual session, here are Johnny's gambling results for 2018:
Wins: $12,000
Losses: $32,000
If my understanding is correct, he would have to pay taxes on $100,000 in income. Whether he itemizes or not, he deducts the same $12,000 from $112,000 in AGI.
The situation for Mary is exactly the same, except she didn't gamble at all. She uses the standard deduction and pays income on $88,000.
So, John actually lost $20,000 gambling and ends up paying 24%*$12,000 = $2,880 more in taxes than Mary.
Do I have that right? Does that sound fair?
Quote: WizardQuote: MichaelBluejayWell, did you read the article? You *do* report your wins as a single integer (and your loss as a single integer, if you're itemizing.) What you *don't* do is subtract your losses from your wins and report the net profit as your income. You also don't submit your daily journal, that's just backup in case you get audited.
I do not dispute this is what you're supposed to do.
Let's look at an example.
Johnny is single with a work income of $100,000. He has absolutely nothing to deduct on schedule A except, perhaps, gambling losses.
The standard deduction for 2018 for individuals is $12,000 (source: forbes.com).
The marginal tax rate for income between $82,501 and $157,500 in 2018 is 24% for individual filers. (same source)
Summing up every individual session, here are Johnny's gambling results for 2018:
Wins: $12,000
Losses: $32,000
If my understanding is correct, he would have to pay taxes on $100,000 in income. Whether he itemizes or not, he deducts the same $12,000 from $112,000 in AGI.
The situation for Mary is exactly the same, except she didn't gamble at all. She uses the standard deduction and pays income on $88,000.
So, John actually lost $20,000 gambling and ends up paying 24%*$12,000 = $2,880 more in taxes than Mary.
Do I have that right? Does that sound fair?
That is exactly right. That happened to me 8 years ago at much smaller amounts. I had a w2g for 4k. Had a gross of $0. My agi went from something like 38k to 42k for a family of 4. Nunbers are off, canr remember the exact. I not only had to pay taxes on that 4 k, but it put me over the threshold for the poor person credit and I lost the credit.
I did my taxes without the w2g and refund was something like $4600 and when I added the w2g on my refund went down to $3100. Again numbers are not exact but close.
I remember you mentioning this before, and it was a matter of the IRS contacting you after you filed and saying "where's the W2g pal?" They didn't say "oh I guess during that session he must have lost as much as he won, after all the W2g is meaningless and should be abolished" It may be that you could have responded that you won as much as you lost in the session where you won the W2g, and the truth is at the very least that you lost quite a bit vis a vis that damnable thing [I'd bet], but the hassle of making that response would be beyond belief. And you probably didn't keep a diary.Quote: GWAEI did my taxes without the w2g and refund was something like $4600 and when I added the w2g on my refund went down to $3100.
Can you confirm the IRS contacted you, am I remembering right?
Quote: odiousgambitI remember you mentioning this before, and it was a matter of the IRS contacting you and saying "where's the W2g pal?" They didn't say "oh I guess during that session he must have lost as much as he won, after all the W2g is meaningless and should be abolished" It may be that you could have responded that you won as much as you lost in the session where you won the W2g, and the truth is at the very least that you at least lost quite a bit vis a vis that damnable thing [I'd bet], but the hassle of making that response would be beyond belief. And you probably didn't keep a diary.
Can you confirm the IRS contacted you, am I remembering right?
Wow your memory is better than mine. I forgot all about that. Yes I ended up filing and not including the w2g and got a nice little letter about a year later saying hey numb nuts, you didn't include your w2g, you owe us 1500 plus interest. I cant remember if I refilled or just sent them the money. I think I just sent them the money since I knew it was correct.
