Thread Rating:

GWAE
GWAE
Joined: Sep 20, 2013
  • Threads: 93
  • Posts: 9854
Thanks for this post from:
odiousgambit
December 14th, 2018 at 12:03:40 PM permalink
Quote: GWAE

Quote: odiousgambit

I 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.



I do wonder if you could fight a w2g saying the session resulted in a zero gain, even though you have a w2g. In that case your agi would not be affected. My guess is the IRs employee would not understand the difference and it wouldn't matter.
Expect the worst and you will never be disappointed. I AM NOT PART OF GWAE RADIO SHOW
cf1984
cf1984
Joined: Jul 19, 2014
  • Threads: 3
  • Posts: 32
Thanks for this post from:
odiousgambitMichaelBluejay
December 14th, 2018 at 12:12:17 PM permalink
Quote: Wizard

Quote: MichaelBluejay

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.



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?



Yes and it sucks! Figure it will cost me over 2-3k this year by not being able to enjoy the larger standard deduction due to false gambling "winnings". Lost a little bit this year so stings to know government is getting paid when there was no true gambling income. Some people just can't see how it costs them money if you write off your winnings as losses. The only ones not hurt are those who already have enough deductions to itemize. If you don't, cha-ching for the IRS.

Excellent article, Michael Bluejay. There is a ton of confusion among gamblers and tax professionals in this area. The people I truly feel for are those non AP types who throw away their money and then don't realize they are getting nailed on the tax side as well.

I say make gambling winnings tax free. It's a losing game for most. It would actually raise revenue and lower expense for casinos. Fewer employees and players would be excited knowing no tax consequences if they win. At the very least, raise the stupid W2G threshold!
Last edited by: unnamed administrator on Sep 10, 2019
Wizard
Administrator
Wizard
Joined: Oct 14, 2009
  • Threads: 1317
  • Posts: 21598
Thanks for this post from:
odiousgambit
December 14th, 2018 at 12:43:43 PM permalink
I'm surprised the increase in the standard deduction hasn't made bigger news in the video poker community. I will take some blame for that, as I'm supposed to be on top of such things.

Here are the standard deductions for 2017 and 2018:

Filing Status 2017 2018
Single $6,350 $12,000
Married Filing Jointly or Qualifying Widow(er) $12,700 $24,000
Married Filing Separately $6,350 $12,000
Head of Household $9,350 $18,000


Personally, I have itemized for years, but due to this increase I don't think I will any longer in 2018. That means I'll be paying taxes on my W2G's, despite the fact that 2018 is looking like a losing year for me, thanks to an awful Super Bowl.
It's not whether you win or lose; it's whether or not you had a good bet.
DRich
DRich
Joined: Jul 6, 2012
  • Threads: 71
  • Posts: 5998
December 14th, 2018 at 12:59:29 PM permalink
Quote: Wizard



Personally, I have itemized for years, but due to this increase I don't think I will any longer in 2018. That means I'll be paying taxes on my W2G's, despite the fact that 2018 is looking like a losing year for me, thanks to an awful Super Bowl.



I am in the same boat. I have also itemized every year but don't think I will be this year. Forunately I haven't gambled as much this year so my W2G's will be a lot less.
Living longer does not always infer +EV
Wizard
Administrator
Wizard
Joined: Oct 14, 2009
  • Threads: 1317
  • Posts: 21598
Thanks for this post from:
odiousgambit
December 14th, 2018 at 1:01:20 PM permalink
I think I will just quit playing video poker if I have to pay taxes on the W2G's and can't offset losses.
It's not whether you win or lose; it's whether or not you had a good bet.
DRich
DRich
Joined: Jul 6, 2012
  • Threads: 71
  • Posts: 5998
Thanks for this post from:
odiousgambit
December 14th, 2018 at 1:06:17 PM permalink
Quote: GWAE

. My guess is the IRs employee would not understand the difference and it wouldn't matter.



My experience is that the front line IRS people know nothing about gambling.

I had an experience like you many years ago when I was gambling big. I received a letter from the iRS stating that I forgot to include over $38,000 in W2G's on my taxes. They were not wrong. At that time I was getting many W2G's per week and many just got lost or misplaced. I declared about $400k in W2G's but missed about $38k. They were requesting that I pay about $14k in additional taxes. It took me about 9 months to explain to them that I had additional losses that were not claimed to offset the missing W2G's. After lots of frustration and time spent we came to an agreement that I would pay an additional $1,100 and call it good.
Living longer does not always infer +EV
Ayecarumba
Ayecarumba
Joined: Nov 17, 2009
  • Threads: 236
  • Posts: 6763
Thanks for this post from:
odiousgambit
December 14th, 2018 at 1:34:14 PM permalink
Who will lead the charge to reform this system? Especially when there was enough sentiment out there to even consider lowering the W2-G threshold. Hawaii even passed a law that all wins, even the "you win .95 cents on your $2.00 slot pull" were supposed to be reported as income, with no deductions for losses. The law was overturned, but the sentiment remains; gambling (not just winners) needs to be throttled.

Maybe the budding business in recreational marijuana sales will provide pressure to reform the tax codes regarding "blue" income.
Simplicity is the ultimate sophistication - Leonardo da Vinci
OnceDear
Administrator
OnceDear
Joined: Jun 1, 2014
  • Threads: 44
  • Posts: 4352
Thanks for this post from:
odiousgambit
December 14th, 2018 at 1:45:10 PM permalink
Quote: Wizard

Personally, I have itemized for years, but due to this increase I don't think I will any longer in 2018. That means I'll be paying taxes on my W2G's, despite the fact that 2018 is looking like a losing year for me, thanks to an awful Super Bowl.



This is sick. You earn money at the day job: you pay some tax - that's sad but makes sense.
Casinos make a profit from you (plural) and presumably pay Corporation Tax on those profits.

But if you then entertain yourself with a big chunk of gambling and proceed to lose (generally that's the case) then your income tax payable increases. Is there really any point in trying to be a winner while honestly keeping records and reporting everything?
Take care out there. Spare a thought for the newly poor who were happy in their world just a few days ago, but whose whole way of life just collapsed..
GWAE
GWAE
Joined: Sep 20, 2013
  • Threads: 93
  • Posts: 9854
December 14th, 2018 at 1:50:36 PM permalink
Quote: OnceDear

This is sick. You earn money at the day job: you pay some tax - that's sad but makes sense.
Casinos make a profit from you (plural) and presumably pay Corporation Tax on those profits.

But if you then entertain yourself with a big chunk of gambling and proceed to lose (generally that's the case) then your income tax payable increases. Is there really any point in trying to be a winner while honestly keeping records and reporting everything?



That's how all taxation works. It is basically a MLM scheme. I employee someone and they pay taxes. They take that money and buy something. The business they buy from has an employee. They use your already taxed money to pay employee and they get taxed. It goes on and on
Expect the worst and you will never be disappointed. I AM NOT PART OF GWAE RADIO SHOW
Gialmere
Gialmere
Joined: Nov 26, 2018
  • Threads: 37
  • Posts: 1412
December 14th, 2018 at 2:09:19 PM permalink
Quote: Ayecarumba

Who will lead the charge to reform this system? Especially when there was enough sentiment out there to even consider lowering the W2-G threshold. Hawaii even passed a law that all wins, even the "you win .95 cents on your $2.00 slot pull" were supposed to be reported as income, with no deductions for losses. The law was overturned, but the sentiment remains; gambling (not just winners) needs to be throttled.

Maybe the budding business in recreational marijuana sales will provide pressure to reform the tax codes regarding "blue" income.

I don't want to get political (one of the reasons I'm here is that I grew tired of shrieking political discussions), but I was surprised that Harry Reid didn't address the issue when he ruled the Senate.
Have you tried 22 tonight? I said 22.

  • Jump to: