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ChumpChange
ChumpChange
Joined: Jun 15, 2018
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MichaelBluejay
December 13th, 2018 at 6:43:13 AM permalink
There 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.
AcesAndEights
AcesAndEights
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MichaelBluejayRS
December 13th, 2018 at 6:43:31 AM permalink
Quote: MichaelBluejay

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:

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: Wizard

That 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.
"So drink gamble eat f***, because one day you will be dust." -ontariodealer
MichaelBluejay
MichaelBluejay
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December 13th, 2018 at 7:15:56 AM permalink
Quote: AcesAndEights

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.

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.

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.
AcesAndEights
AcesAndEights
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December 13th, 2018 at 8:08:45 AM permalink
Quote: MichaelBluejay

Quote: AcesAndEights

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.

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.

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.
"So drink gamble eat f***, because one day you will be dust." -ontariodealer
AcesAndEights
AcesAndEights
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MichaelBluejay
December 13th, 2018 at 8:10:37 AM permalink
Quote: ChumpChange

There 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.
"So drink gamble eat f***, because one day you will be dust." -ontariodealer
Fleaswatter
Fleaswatter
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ChumpChangeMichaelBluejay
December 13th, 2018 at 8:45:36 AM permalink
Quote: MichaelBluejay

Probably 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.
new motto for the left: I don't know if I received bad information, but I think I suspected there was more than there actually was, (John Brennan Mar 25, 2019)
DogHand
DogHand
Joined: Sep 24, 2011
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December 13th, 2018 at 9:00:38 AM permalink
MichaelBluejay,

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
MichaelBluejay
MichaelBluejay
Joined: Sep 17, 2010
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December 13th, 2018 at 9:20:01 AM permalink
Quote: DogHand

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?

The first three sources at the end of the article in the "Record wins/losses per session" section substantiate this.
Gialmere
Gialmere
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MichaelBluejay
December 13th, 2018 at 9:54:56 AM permalink
How 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 Easy Vegas which is a great site for guys like me just getting back into casino gaming--lots of nice examples of play.]
Last edited by: unnamed administrator on Aug 19, 2019
Have you tried 22 tonight? I said 22.
AcesAndEights
AcesAndEights
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December 13th, 2018 at 10:04:01 AM permalink
Quote: Gialmere

How 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.
"So drink gamble eat f***, because one day you will be dust." -ontariodealer

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