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HexxusToldEm
HexxusToldEm
Joined: Apr 22, 2020
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OnceDearChuckleberry
April 22nd, 2020 at 11:35:45 PM permalink
Hello, I found this discussion (as well as the information on Michael's site and others) while scouring the Internet for information about how to report my gambling wins and losses.

After pouring through all the info I could find, this is what I've gathered;

* The IRS has ruled that you should use sessions, but the IRS doesn't actually want you to use sessions, and will potentially come after you for using them.
* It's ok to use the notepad on your phone as a journal, but the IRS might not accept it, especially if they don't like the file creation date.
* The IRS proposed a safe harbor method for reporting gambling wins and losses, but they never approved it, but we should use it anyway, but the IRS might not accept it.
* Don't report W-2Gs if you're using the session method, even though the IRS wants them and will automatically flag you for not reporting them, and then might audit you.
* TurboTax software isn't designed to handle session reporting methods discussed, and TurboTax's "experts" can't agree on the correct way to actually do it electronically OR by paper.
* A tax preparer or CPA who is an expert on this can help, but will charge over $1,000, which is more than double what my previous tax preparer charged for my personal tax return (with Schedule C business income), and I might still get audited.
* Even if I use the session method, my taxes are going to go up even though I finished the year with a loss.
* The IRS phone advice reps don't know anything about session reporting; both of the agents I talked to referred me to the really basic "do I owe gambling money" tool they have online (which isn't very useful) AFTER I explained that I was trying to use the session method, and one of them was very rude and nasty to me the whole time and actually shouted "HEY!" and interrupted me while I was explaining my situation and why I was calling.
* A commentor on an accounting firm's advice page discussing how to use the session method without getting audited says he IS being audited for using the session method.

So, after all that, I ended up missing the tax deadline (because I filed for an extension and didn't realize this part would be such a problem until the night of the extension deadline) and now I'm wasting a lot of time making sure my journaled data is as accurate as possible (I kept a journal on my phone notepad and then moved the data into a spreadsheet), reviewing my receipts, and making sure I understand everything correctly so I can file late and move on to my 2019 taxes (where I won and lost even more),
and I'm getting the impression maybe I should just do it the way the IRS wants and report the W-2Gs, even though I'm going to end up paying more and it's actually less accurate.

Or maybe just stop gambling, I guess.

I guess I haven't really laid this out in a way where it's easy to reply to in any useful way, but, I suppose I just want to express that I've gotten the impression that this is not quite such a sure thing as it seems to be presented, I've been working on trying to get this particular portion of my taxes prepared correctly for months, I keep running into seeming contradictions and other hassles, and I wish I was done already.
Last edited by: HexxusToldEm on Apr 23, 2020
100xOdds
100xOdds
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April 23rd, 2020 at 1:11:15 AM permalink
i can see the IRS's point of view about electronic journal entry and how it can be faked.
yes, you can still fake it on a marble notebook but it's ALOT more work.

that being said, i use my phone's spreadsheet for journal entry.
since my w2-g's are less than $15k/yr, i'm not that worried about claiming the total loss amount from the journal.
Last edited by: 100xOdds on Apr 23, 2020
Craps is paradise (Pair of dice). Lets hear it for the SpeedCount Mathletes :)
MichaelBluejay
MichaelBluejay
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April 23rd, 2020 at 1:16:05 AM permalink
HexxusToldEm, much of what you posted is inaccurate, and not at all what I say in my article. Going over each bullet point would take forever, so I'll comment on just one:

Quote: HexxusToldEm

Don't report W-2Gs if you're using the session method, even though the IRS wants them and will automatically flag you for not reporting them, and then might audit you.

No. It's absolutely not a given that you'll get flagged or audited for reporting sessions instead of the W-2G total. As I mentioned in my article, I received several thousand dollars worth of W-2Gs, reported no gambling income (because I had no winning sessions), didn't get flagged, and didn't get audited. And if I did get flagged, I expect that a simple letter would have cleared it up, as it's done every single time the IRS misunderstood something on either my personal or business return.

For all the details, I refer back to my article.

Yes, many/most IRS phone agents are unfamiliar with session reporting. Yes, sometimes people get flagged for using sessions instead of reporting the W-2G total. Yes, the system is wack and messed up, and you haven't even mentioned the unfairness of taxing gambling winnings in the first place. However, your doom and gloom summary as though there's nothing you can do, or that you will certainly be punished, is far from reality.
Last edited by: MichaelBluejay on Apr 23, 2020
SOOPOO
SOOPOO
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April 23rd, 2020 at 6:08:04 AM permalink
Welcome to the forum, Hexxus. The way gambler's are taxed in the USA is inherently unfair. The fair way would be to to assess your yearly take (essentially the entire year is a 'session'), and consider that the taxable income. If you do it professionally, then deduct reasonable expenses. If you do it casually, then since you are not able to take a deduction for years you lose, you should not be liable for taxes in years you win.
Elect me.....

By the way, you didn't mention what state you live in, but there are some states that essentially make it impossible to gamble for a living, tax wise, if you do it legally. There's already a thread about that somewhere
DRich
DRich
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April 23rd, 2020 at 7:23:39 AM permalink
My suggestion if you are using your phone notepad for a log is to email the log to yourself at least once a week (probably better if you emailed it everyday). By emailing it you are recording a date/timestamp that the IRS will most likely accept. That way they know you didn't do the whole thing the day before you file or your audit.
Living longer does not always infer +EV
100xOdds
100xOdds
Joined: Feb 5, 2012
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April 23rd, 2020 at 6:50:42 PM permalink
Quote: MichaelBluejay

For all the details, I refer back to my article.




wait.. that simple of a log?
my log is: date, casino, name of slot, slot ID #, $ in, $ out

and i do that for every slot i play.
i might have over a dozen entries for that day.
(my log is a spreadsheet on my phone.)
Craps is paradise (Pair of dice). Lets hear it for the SpeedCount Mathletes :)
HexxusToldEm
HexxusToldEm
Joined: Apr 22, 2020
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April 23rd, 2020 at 9:03:36 PM permalink
Same here.

In fact, my Google Sheets spreadsheet on my phone tracks session $ in, session $ out, voucher in, voucher out, freeplay, noncash prizes, machine #, and some other stuff, as well as automatically calculating running totals and summaries of everything so I can keep track of how much I'm winning or losing and about how much I'll owe (although I'm still working on making sure the last thing is correct).

The year I'm stuck on though started out as a basic diary on my phone notepad (which I later put into a spreadsheet), which probably could have been done better.
I designed the spreadsheet later on.

I had some losses that I wasn't able to record because my phone died and I guess I have to just disregard them for tax purposes.
SOOPOO
SOOPOO
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Thanks for this post from:
MichaelBluejay
April 24th, 2020 at 6:24:27 AM permalink
Quote: HexxusToldEm


I had some losses that I wasn't able to record because my phone died and I guess I have to just disregard them for tax purposes.



Not true! If you had wins instead of losses that day the IRS would not want you to disregard them I can assure you! I'm sure you can add a note... "Phone died April24, 2020. Lost $100 on Super Jiggly Ambassadors of the Universe Slot machine".
MichaelBluejay
MichaelBluejay
Joined: Sep 17, 2010
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April 24th, 2020 at 11:30:46 AM permalink
Quote: 100xOdds

wait.. that simple of a log?

Like I keep saying, read the whole article for the details. You're quoting selectively.

I just edited the article to make it clearer that there are more details elsewhere about the diary format.
MichaelBluejay
MichaelBluejay
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April 24th, 2020 at 11:32:54 AM permalink
Quote: Hexxus

I had some losses that I wasn't able to record because my phone died...

Did your pencil and paper die, too?

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