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billryan
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December 14th, 2023 at 12:05:53 PM permalink
Quote: DRich

Quote: 100xOdds

So i talked to a tax professional about filing with Sched C (self employed deductions) instead of Sched A (individual taxpayer deductions).

No, i can't deduct mileage going to/from the casino if doing Sched C.
It's commuting to work.
You can't deduct mileage to/from work.

Yes i can deduct airfare, hotel, food, etc costs to Vegas if I'm doing Sched C.
I can also deduct health care premiums and open a self employed IRA.

Downside of doing Sched C: 15.3% Self employment taxes (Social Security, Medicare)
You have to have lots of deductions to overcome that 15% tax to file as Sched C vs Sched A



This year I screwed myself on taxes. I took a job that is in another state 40% of the time thinking I could deduct my travel costs. It turns out unreimbursed travel expenses for a job are no longer deductible. Basically that means 52 flights and about 100 nights of hotel are not reimbursable for me.
link to original post




Job Search Expenses.
You are getting older and thinking about opening your own business when you retire. It's not a business trip that is non-deductable. It's a job interview or research for your developing consulting business.
IRS agents love creative accounting. Their job is boring and whenever a return makes them smile, they often pass it around the office and sometimes will even send it to another division.

Self-employed people and/or business owners can deduct all sorts of things that working people can't. The 15% self-employment tax sounds bad, but it's only paid on what's left after all expenses. Working people pay it on their gross income, self employed pay it on their net income. Think of it as working people pay retail taxes. Business's pay wholesale. It's not that clear cut but its the same idea.
Last edited by: billryan on Dec 14, 2023
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Mental
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December 14th, 2023 at 12:44:02 PM permalink
Quote: 100xOdds

Quote: 100xOdds

(From Michael Bluejay's article: https://easy.vegas/gambling/taxes)
'Starting in 2018, you can deduct related expenses, like travel to and from the casino.'

So I can deduct airfare to Vegas?
How about cruise ship casino? Can i deduct the cost of the cruise? How about airfare to the cruise?
link to original post

So i talked to a tax professional about filing with Sched C (self employed deductions) instead of Sched A (individual taxpayer deductions).

No, i can't deduct mileage going to/from the casino if doing Sched C.
It's commuting to work.
You can't deduct mileage to/from work.

Yes i can deduct airfare, hotel, food, etc costs to Vegas if I'm doing Sched C.
I can also deduct health care premiums and open a sep-IRA if self employed.

Downside of doing Sched C:
15.3% Self employment taxes (Social Security, Medicare)
You have to have lots of deductions to overcome that 15% tax to file as Sched C vs Sched A

Also, IRS scrutinizes business deductions alot more than individual returns.
link to original post

I do SchedC.
I am contributing to a SEP-IRA and deducting healthcare premiums. I decided not to try and take any other expenses as deductions. My meals and hotel are already covered by the casino. Airfare is usually covered. I don't think it is worth it to keep records for the remaining expenses.

I used to flip to Sched A some years when the numbers worked out better, but lately the number are always much better filing Sched C. Flipping might look bad if you are borderline Sched C eligible. It used to be hard to file Sched C if you had any full time day job. It has been over twenty years since I had ordinary W2 income and my Sched C has not been challenged since then.
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100xOdds
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December 14th, 2023 at 1:43:54 PM permalink
Quote: Mental

I do SchedC.
I am contributing to a SEP-IRA and deducting healthcare premiums. I decided not to try and take any other expenses as deductions. My meals and hotel are already covered by the casino. Airfare is usually covered. I don't think it is worth it to keep records for the remaining expenses.

I used to flip to Sched A some years when the numbers worked out better, but lately the number are always much better filing Sched C. Flipping might look bad if you are borderline Sched C eligible. It used to be hard to file Sched C if you had any full time day job. It has been over twenty years since I had ordinary W2 income and my Sched C has not been challenged since then.
link to original post

Sched C is better with so little deductions?

Insurance premiums is like $7k/yr for me. (male, nobody else on the plan)
Sep ira is 25% of compensation (maximum $61,000 for 2022).

Lets say you max the Sep ira. That means you make $244k/yr profit.
244k - 61k - 7k = $176k net income.
15.3% self employment taxes is $27k.

Then you have the normal income tax on $149k ($176-27k).
This tax calculator (https://www.taxact.com/tools/tax-bracket-calculator ) says Fed income tax on $149k is $26k.
27k + 26k = 53k taxes

If you filed Sched A on $244k, then Fed income tax is $52k.

Wow.. yeah Sched C is better even with so little deductions.
You pay $1k more but you have a maxxed out Sep ira and contributing $ into your social security.

When would Sched A be better?
Last edited by: 100xOdds on Dec 14, 2023
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DRich
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December 14th, 2023 at 1:50:35 PM permalink
Quote: 100xOdds

Quote: DRich

Quote: 100xOdds

So i talked to a tax professional about filing with Sched C (self employed deductions) instead of Sched A (individual taxpayer deductions).

No, i can't deduct mileage going to/from the casino if doing Sched C.
It's commuting to work.
You can't deduct mileage to/from work.

Yes i can deduct airfare, hotel, food, etc costs to Vegas if I'm doing Sched C.
I can also deduct health care premiums and open a self employed IRA.

Downside of doing Sched C: 15.3% Self employment taxes (Social Security, Medicare)
You have to have lots of deductions to overcome that 15% tax to file as Sched C vs Sched A


This year I screwed myself on taxes. I took a job that is in another state 40% of the time thinking I could deduct my travel costs. It turns out unreimbursed travel expenses for a job are no longer deductible. Basically that means 52 flights and about 100 nights of hotel are not reimbursable for me.
link to original post

You worked as an employee?

If you were a self employed consultant, i would think the travel expenses would be deductible?
link to original post



Yes, I am an employee. If I realized that I could no longer write off those expenses I would have structured it as a contractor. I chose employee because of the benefits but it was a mistake in retrospect.
At my age, a "Life In Prison" sentence is not much of a deterrent.
Mental
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December 14th, 2023 at 2:42:34 PM permalink
Quote: 100xOdds

Quote: Mental

I do SchedC.
I am contributing to a SEP-IRA and deducting healthcare premiums. I decided not to try and take any other expenses as deductions. My meals and hotel are already covered by the casino. Airfare is usually covered. I don't think it is worth it to keep records for the remaining expenses.

I used to flip to Sched A some years when the numbers worked out better, but lately the number are always much better filing Sched C. Flipping might look bad if you are borderline Sched C eligible. It used to be hard to file Sched C if you had any full time day job. It has been over twenty years since I had ordinary W2 income and my Sched C has not been challenged since then.
link to original post

Sched C is better with so little deductions?

Insurance premiums is like $7k/yr for me. (male, nobody else on the plan)
Sep ira is 25% of compensation (maximum $61,000 for 2022).

Lets say you max the Sep ira. That means you make $244k/yr profit.
244k - 61k - 7k = $176k net income.
15.3% self employment taxes is $27k.

Then you have the normal income tax on $149k ($176-27k).
This tax calculator (https://www.taxact.com/tools/tax-bracket-calculator) says Fed income tax on $149k is $26k.
27k + 26k = 53k taxes

If you filed Sched A on $244k, then Fed income tax is $52k.

Wow.. yeah Sched C is better even with so little deductions.
You pay $1k more but you have a maxxed out Sep ira and contributing $ into your social security.

When would Sched A be better?
link to original post

Maybe it is harder to get the numbers to work out after the 2017 tax law changes to the standard deduction and the SALT cap.

I assume married filing jointly. I assume $200K in W2-G income and a losses of $100K. I just plugged these numbers into TaxCut assuming a standard deduction and no other income.

Sched A $200,000 - $100,000 ==> $13,197 tax
Sched C $200,000 - $100,000 ==> $5,821 tax and $14,121 SE tax

You ought to discount the social security contribution if you are a high earner. You will get a much lower return on your SS investment compared to a lower income earner. I don't know how much you would need to invest on your own to get an annuity equivalent to SS benefits. The higher the ratio of W2-G income to net income, the more you benefit from filing Sched C.

If you think SS contributions are worth 100 cents on the dollar, than Sched C is always better. Sched A will often leave you with more cash in your pocket. If you heavily discount the value of SS contributions, it is easier to find situations where Sched A is better financially.
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billryan
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December 14th, 2023 at 3:16:53 PM permalink
Quote: DRich

Quote: 100xOdds

Quote: DRich

Quote: 100xOdds

So i talked to a tax professional about filing with Sched C (self employed deductions) instead of Sched A (individual taxpayer deductions).

No, i can't deduct mileage going to/from the casino if doing Sched C.
It's commuting to work.
You can't deduct mileage to/from work.

Yes i can deduct airfare, hotel, food, etc costs to Vegas if I'm doing Sched C.
I can also deduct health care premiums and open a self employed IRA.

Downside of doing Sched C: 15.3% Self employment taxes (Social Security, Medicare)
You have to have lots of deductions to overcome that 15% tax to file as Sched C vs Sched A


This year I screwed myself on taxes. I took a job that is in another state 40% of the time thinking I could deduct my travel costs. It turns out unreimbursed travel expenses for a job are no longer deductible. Basically that means 52 flights and about 100 nights of hotel are not reimbursable for me.
link to original post

You worked as an employee?

If you were a self employed consultant, i would think the travel expenses would be deductible?
link to original post



Yes, I am an employee. If I realized that I could no longer write off those expenses I would have structured it as a contractor. I chose employee because of the benefits but it was a mistake in retrospect.
link to original post



What prevents you from opening a side business?
The difference between fiction and reality is that fiction is supposed to make sense.
DRich
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December 14th, 2023 at 5:40:54 PM permalink
Quote: billryan

Quote: DRich



Yes, I am an employee. If I realized that I could no longer write off those expenses I would have structured it as a contractor. I chose employee because of the benefits but it was a mistake in retrospect.



What prevents you from opening a side business?



I am hoping that this year I will be able to change to a 1099 contractor. The problem is that it is a government position and there is probably a lot of red tape to change it now.
At my age, a "Life In Prison" sentence is not much of a deterrent.
billryan
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December 14th, 2023 at 7:07:24 PM permalink
Quote: DRich

Quote: billryan

Quote: DRich



Yes, I am an employee. If I realized that I could no longer write off those expenses I would have structured it as a contractor. I chose employee because of the benefits but it was a mistake in retrospect.



What prevents you from opening a side business?



I am hoping that this year I will be able to change to a 1099 contractor. The problem is that it is a government position and there is probably a lot of red tape to change it now.
link to original post



You are avoiding the question.
The difference between fiction and reality is that fiction is supposed to make sense.
DRich
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December 14th, 2023 at 7:30:19 PM permalink
Quote: billryan



You are avoiding the question.
link to original post



I guess I don't understand how opening a side business would help me write off expenses for my current position expenditures..
Last edited by: DRich on Dec 15, 2023
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ChumpChange
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December 14th, 2023 at 11:24:44 PM permalink
Participate in a SEP Plan
An eligible employee is an individual (including a self-employed individual) who meets all the following requirements:

Has reached age 21
Has worked for the employer in at least 3 of the last 5 years
Received at least $750 in compensation for 2023 ($650 in compensation for 2021 and for 2022 from the employer during the year and $600 for 2019 and for 2020)
https://www.irs.gov/retirement-plans/plan-sponsor/simplified-employee-pension-plan-sep

So I've got to use Schedule C for 3 years in a row before I can open a SEP IRA Plan? I'm getting too old for this and SS taxes on income over $25K is broken and the Trump Tax system may revert in 2026 or 2027 to the old abominable ways. I may just stick to Schedule A and hope my estimated $1K of annual winnings pans out to $250K+ per year soon.
lilredrooster
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December 15th, 2023 at 6:36:43 AM permalink
Quote: Wizard


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.
link to original post


Which brings up some interesting questions.
If I write down in my notebook - to offset a W2G - that I lost $3,500 at blackjack on December 5, 2023 - is that acceptable to the IRS__?
I'm not a tax expert but I think in a great many instances the answer would be yes.
If they decide to audit they can look at bank accounts but so what.
A person could have $12K cash in their closet.

To be clear, I'm not advocating that anybody try to scam the IRS.
Just saying.
From what I know about tax laws and rules of reporting they are subject to very broad interpretation.

I would speculate that the IRS has often been shortchanged because of this.

.
Last edited by: lilredrooster on Dec 15, 2023
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DRich
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December 15th, 2023 at 7:11:04 AM permalink
Quote: lilredrooster


Which brings up some interesting questions.
If I write down in my notebook - to offset a W2G - that I lost $3,500 at blackjack on December 5, 2023 - is that acceptable to the IRS__?
I'm not a tax expert but I think in a great many instances the answer would be yes.
If they decide to audit they can look at bank accounts but so what.
A person could have $12K cash in their closet.

To be clear, I'm not advocating that anybody try to scam the IRS.
Just saying.
From what I know about tax laws and rules of reporting they are subject to very broad interpretation.

I would speculate that the IRS has often been shortchanged because of this.



If it is a paper notebook you will get extra scrutinization because obviously that could have been written at any time. I always wanted to keep a date/time stamped record so I would just jot my notes down on the notepad on my phone and then at the end of the day I would email it to myself to get a recorded date/timestamp.
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lilredrooster
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December 15th, 2023 at 7:19:32 AM permalink
Quote: DRich

Quote: lilredrooster


Which brings up some interesting questions.
If I write down in my notebook - to offset a W2G - that I lost $3,500 at blackjack on December 5, 2023 - is that acceptable to the IRS__?
I'm not a tax expert but I think in a great many instances the answer would be yes.
If they decide to audit they can look at bank accounts but so what.
A person could have $12K cash in their closet.

To be clear, I'm not advocating that anybody try to scam the IRS.
Just saying.
From what I know about tax laws and rules of reporting they are subject to very broad interpretation.

I would speculate that the IRS has often been shortchanged because of this.



If it is a paper notebook you will get extra scrutinization because obviously that could have been written at any time. I always wanted to keep a date/time stamped record so I would just jot my notes down on the notepad on my phone and then at the end of the day I would email it to myself to get a recorded date/timestamp.
link to original post


yes, that definitely looks like more official documentation
but it doesn't in any way prove that it's an accurate or correct accounting
it's just about as easy to do as writing it down in a notebook
again, it seems like the IRS is an easy target for scammers
and again, I'm not recommending this
just saying

.
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Mental
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December 15th, 2023 at 8:05:41 AM permalink
Statutory Language
I.R.C. § 7201 - ATTEMPT TO EVADE OR DEFEAT TAX
Any person who willfully attempts in any manner to evade or defeat any tax
imposed by this title or the payment thereof shall, in addition to other penalties
provided by law, be guilty of a felony and, upon conviction thereof, shall be fined*
not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not
more than 5 years, or both, together with the costs of prosecution.
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billryan
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December 15th, 2023 at 8:34:25 AM permalink
Quote: Mental

Statutory Language
I.R.C. § 7201 - ATTEMPT TO EVADE OR DEFEAT TAX
Any person who willfully attempts in any manner to evade or defeat any tax
imposed by this title or the payment thereof shall, in addition to other penalties
provided by law, be guilty of a felony and, upon conviction thereof, shall be fined*
not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not
more than 5 years, or both, together with the costs of prosecution.
link to original post



Tax Evasion is a Felony
Tax Avoidance is an honored American tradition.
What's the difference between Evasion and Avoidance?
26-42 months.
The difference between fiction and reality is that fiction is supposed to make sense.
lilredrooster
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December 15th, 2023 at 8:41:02 AM permalink
Quote: billryan

Quote: Mental

Statutory Language
I.R.C. § 7201 - ATTEMPT TO EVADE OR DEFEAT TAX
Any person who willfully attempts in any manner to evade or defeat any tax
imposed by this title or the payment thereof shall, in addition to other penalties
provided by law, be guilty of a felony and, upon conviction thereof, shall be fined*
not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not
more than 5 years, or both, together with the costs of prosecution.
link to original post



Tax Evasion is a Felony
Tax Avoidance is an honored American tradition.
What's the difference between Evasion and Avoidance?
26-42 months.
link to original post


before he gets the 26-42 months they have to catch the scammer
how many do they catch_________?
I would guess not many - at least of the small fries
I don't believe the IRS is not going to spend a lot of time on those evading a couple of K in taxes
if a dude hits a big jackpot of $250 K and tries to write all or most of it off - yeah, they could get interested in that
such a person is a fool - and there are plenty of fools out there
I would never do it for any amount - I couldn't feel good about myself - I want to be an honest person

.
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billryan
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December 15th, 2023 at 10:00:03 AM permalink
Maybe ten years ago, I rode to AC from NYC with a guy who worked for the IRS. He had been an auditor for a couple of years. He said that the computer randomly spits out returns for audits and that agents went over small and large returns with the same microscope.
Like all good Americans, I believe I pay my share of taxes and that everyone else plays fast and loose. Just as I believe there is tremendous waste in government, especially in programs that don't benefit me or mine.
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100xOdds
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December 27th, 2023 at 6:43:47 AM permalink
Here's something to consider if you're collecting social security:
up to 85% of your SS is taxable if your adjusted gross income is $25k+ if filing Single.

Gambling loses are calculated AFTER agi so you will get hit with taxes on SS.
ie: $30k in w2-g's. $30k in gambling loses. Even though it's a wash, your AGI is $30k and your SS is subject to taxes
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calwatch
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December 29th, 2023 at 5:53:51 AM permalink
I think that SS takers who gamble regularly are more likely to qualify for professional gambler status, since they aren't doing other gainful employment. This would tilt them into Schedule C, provided they can show a regular profit. As for me, being a homeowner in a high tax state I have plenty of Schedule A deductions anyway so I get to deduct my losses up to the extent of gains either way.
Mental
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December 29th, 2023 at 6:17:59 AM permalink
Quote: calwatch

I think that SS takers who gamble regularly are more likely to qualify for professional gambler status, since they aren't doing other gainful employment. This would tilt them into Schedule C, provided they can show a regular profit. As for me, being a homeowner in a high tax state I have plenty of Schedule A deductions anyway so I get to deduct my losses up to the extent of gains either way.
link to original post

The Tax Cuts and Jobs Act (TCJA) capped it at $10,000 per year, consisting of property taxes plus state income or sales taxes, but not both. My property taxes are higher than the SALT cap. My state income tax was eight times higher than the SALT cap. I can only get up to the standard deduction by giving a lot to charity. If I did not file Schedule C or give to charities, I would be using my gambling losses to fill up the standard deduction.

Most SS recipients are not going to have a mortgage interest deduction. You may be in a different situation, but I believe the TCJA has cost many gamblers a lot of money, especially seniors.
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billryan
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December 29th, 2023 at 8:17:12 AM permalink
Quote: Mental

Quote: calwatch

I think that SS takers who gamble regularly are more likely to qualify for professional gambler status, since they aren't doing other gainful employment. This would tilt them into Schedule C, provided they can show a regular profit. As for me, being a homeowner in a high tax state I have plenty of Schedule A deductions anyway so I get to deduct my losses up to the extent of gains either way.
link to original post

The Tax Cuts and Jobs Act (TCJA) capped it at $10,000 per year, consisting of property taxes plus state income or sales taxes, but not both. My property taxes are higher than the SALT cap. My state income tax was eight times higher than the SALT cap. I can only get up to the standard deduction by giving a lot to charity. If I did not file Schedule C or give to charities, I would be using my gambling losses to fill up the standard deduction.

Most SS recipients are not going to have a mortgage interest deduction. You may be in a different situation, but I believe the TCJA has cost many gamblers a lot of money, especially seniors.
link to original post



I think those tax cuts caused a lot of Senior Citizens to quit, or cut back on their gamblin-especially the SALT cap.
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Talldude90
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January 1st, 2024 at 12:31:38 PM permalink
Last year I didn't keep records so I am just going to have to pay full taxes on my W2Gs. This year I want to keep good records and be able to deduct losses. I get the keeping a diary of winnings and losses. The proof of winnings and losses is what I am concerned about. For slot machines it says a record of the machine number and all winnings by date and time the machine was played. I play about 100 machines each gaming session (some multiple times)??? Do I really need the number and date/time for each machine each time I sit down???
Mental
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January 1st, 2024 at 1:15:24 PM permalink
Quote: Talldude90

Last year I didn't keep records so I am just going to have to pay full taxes on my W2Gs. This year I want to keep good records and be able to deduct losses. I get the keeping a diary of winnings and losses. The proof of winnings and losses is what I am concerned about. For slot machines it says a record of the machine number and all winnings by date and time the machine was played. I play about 100 machines each gaming session (some multiple times)??? Do I really need the number and date/time for each machine each time I sit down???
link to original post

I had a AUR issue with the IRS twenty years ago. I scheduled an office visit at a local office. The agent never even asked to see my records. He just wanted to know how I treated the W-2G income and why it wasn't recorded as other income.

I happen to have a record of reporting substantial income from gambling almost every year since the 90's. If you are filing Schedule C, I think prior history of reporting net income will be very useful in avoiding them questioning your records. The first few years might be dicier. If an agent decides to question my records, I don't think recording machine numbers will make any difference. If I can show that my dates of play and W/L line up rather well with the casinos W/L reports, I doubt they will look any further.

The agent told me way back when "We don't have people tailing you and checking whether you won or lost. We will generally accept your records as long as don't look like they were manufactured after the fact.

I include a cover letter every year briefly explaining that I keep accurate records and that my W-2Gs are all reported on Schedule C. I think it shows that I understand my responsibility to report my gambling income accurately. I am not just thinking about it after I get audited.
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DRich
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January 1st, 2024 at 4:35:32 PM permalink
Quote: Talldude90

Last year I didn't keep records so I am just going to have to pay full taxes on my W2Gs. This year I want to keep good records and be able to deduct losses. I get the keeping a diary of winnings and losses. The proof of winnings and losses is what I am concerned about. For slot machines it says a record of the machine number and all winnings by date and time the machine was played. I play about 100 machines each gaming session (some multiple times)??? Do I really need the number and date/time for each machine each time I sit down???
link to original post



I never kept more than daily logs for each casino I played at. I never bothered with machine numbers or table numbers. Most of play play was on machines and I would just include amount bet and amount won/loss for that casino on that day. I never had a full audit but I did have a letter audit and they were fine with what I provided.
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100xOdds
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January 13th, 2024 at 2:53:03 AM permalink
Question about a 1099.
Lets say the casino has a monthly drawing and you win $1500 cash.
They give you a 1099.

Can you offset that with gambling loses?
How do you offset that? Just treat the 1099 as a w2-g and lump it in under gambling loses?
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DRich
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January 13th, 2024 at 5:52:37 AM permalink
Quote: 100xOdds

Question about a 1099.
Lets say the casino has a monthly drawing and you win $1500 cash.
They give you a 1099.

Can you offset that with gambling loses?
How do you offset that? Just treat the 1099 as a w2-g and lump it in under gambling loses?
link to original post



According to the IRS you can not deduct prizes and giveaways against gambling losses. Many people do and get away with it but technically you can not. Only winnings from a specific wager can be offset by losses. A 1099 is just accounted for as income.
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billryan
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January 13th, 2024 at 7:17:11 AM permalink
Quote: DRich

Quote: 100xOdds

Question about a 1099.
Lets say the casino has a monthly drawing and you win $1500 cash.
They give you a 1099.

Can you offset that with gambling loses?
How do you offset that? Just treat the 1099 as a w2-g and lump it in under gambling loses?
link to original post



According to the IRS you can not deduct prizes and giveaways against gambling losses. Many people do and get away with it but technically you can not. Only winnings from a specific wager can be offset by losses. A 1099 is just accounted for as income.
link to original post



Could you expound on that. If you win a tournament, is that considered a prize and you can't deduct your losses?
The difference between fiction and reality is that fiction is supposed to make sense.
billryan
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January 13th, 2024 at 7:17:56 AM permalink
Quote: DRich

Quote: 100xOdds

Question about a 1099.
Lets say the casino has a monthly drawing and you win $1500 cash.
They give you a 1099.

Can you offset that with gambling loses?
How do you offset that? Just treat the 1099 as a w2-g and lump it in under gambling loses?
link to original post



According to the IRS you can not deduct prizes and giveaways against gambling losses. Many people do and get away with it but technically you can not. Only winnings from a specific wager can be offset by losses. A 1099 is just accounted for as income.
link to original post



Could you expound on that. If you win a tournament, is that considered a prize and you can't deduct your losses?
The difference between fiction and reality is that fiction is supposed to make sense.
DRich
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January 13th, 2024 at 7:57:08 AM permalink
Quote: billryan

Quote: DRich

Quote: 100xOdds

Question about a 1099.
Lets say the casino has a monthly drawing and you win $1500 cash.
They give you a 1099.

Can you offset that with gambling loses?
How do you offset that? Just treat the 1099 as a w2-g and lump it in under gambling loses?
link to original post



According to the IRS you can not deduct prizes and giveaways against gambling losses. Many people do and get away with it but technically you can not. Only winnings from a specific wager can be offset by losses. A 1099 is just accounted for as income.
link to original post



Could you expound on that. If you win a tournament, is that considered a prize and you can't deduct your losses?
link to original post



If there was an explicit fee to be in the tournament then it is considered gambling. If it is a free tournament for you because you were invited by the casino because you are a known gambler, it is not a write off. There must be a cost directly associated with the win.
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calwatch
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January 14th, 2024 at 10:59:35 PM permalink
Remember that relatively few people deduct gambling losses anyway, but I would not have an issue just netting it with gambling wins in "other income" and deducting losses to the extent of gains on Schedule A. It is part of the same hobby.
Mission146
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January 15th, 2024 at 6:14:20 AM permalink
Quote: DRich

Quote: 100xOdds

Question about a 1099.
Lets say the casino has a monthly drawing and you win $1500 cash.
They give you a 1099.

Can you offset that with gambling loses?
How do you offset that? Just treat the 1099 as a w2-g and lump it in under gambling loses?
link to original post



According to the IRS you can not deduct prizes and giveaways against gambling losses. Many people do and get away with it but technically you can not. Only winnings from a specific wager can be offset by losses. A 1099 is just accounted for as income.
link to original post



DRich,

Any insight on why a casino would prefer to do a cash giveaway (with the requisite forms) rather than making it Free Play? If they do it as Free Play, then not only should there not be a need for a 1099, but also, they can offset that as promotional funds when determining their revenue reporting, which seems to be the bulk of the taxes they pay. If they give someone $1,500, cash, then that person goes on to lose that $1,500...now it becomes taxable gaming revenue. I suppose you could still deduct the $1,500 cash as promotional (at least, I'd assume), but free play seems like it would be less of a PITA for everyone involved.
https://wizardofvegas.com/forum/off-topic/gripes/11182-pet-peeves/120/#post815219
DRich
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January 15th, 2024 at 7:43:00 AM permalink
Quote: Mission146



Any insight on why a casino would prefer to do a cash giveaway (with the requisite forms) rather than making it Free Play? If they do it as Free Play, then not only should there not be a need for a 1099, but also, they can offset that as promotional funds when determining their revenue reporting, which seems to be the bulk of the taxes they pay. If they give someone $1,500, cash, then that person goes on to lose that $1,500...now it becomes taxable gaming revenue. I suppose you could still deduct the $1,500 cash as promotional (at least, I'd assume), but free play seems like it would be less of a PITA for everyone involved.



Very simple answer. Everyone wants to win cash and fewer people want to win freeplay. It is all marketing.
At my age, a "Life In Prison" sentence is not much of a deterrent.
100xOdds
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January 15th, 2024 at 5:12:40 PM permalink
Quote: calwatch

Remember that relatively few people deduct gambling losses anyway, but I would not have an issue just netting it with gambling wins in "other income" and deducting losses to the extent of gains on Schedule A. It is part of the same hobby.
link to original post


$6k w2-g, $4k 1099.
i dont think tax programs will let you put down $10k as gambling losses in Sch A. I think it'll limit you to $6k.
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DRich
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January 15th, 2024 at 5:25:22 PM permalink
Quote: 100xOdds

Quote: calwatch

Remember that relatively few people deduct gambling losses anyway, but I would not have an issue just netting it with gambling wins in "other income" and deducting losses to the extent of gains on Schedule A. It is part of the same hobby.
link to original post


$6k w2-g, $4k 1099.
i dont think tax programs will let you put down $10k as gambling losses in Sch A. I think it'll limit you to $6k.
link to original post



I don't think either of those would be a loss.
At my age, a "Life In Prison" sentence is not much of a deterrent.
Gialmere
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February 28th, 2024 at 12:16:42 PM permalink
In a surprising development, the IRS Advisory Council has agreed with a recent bill that would both increase the jackpot handpay threshold from $1200 to $5800 and annually adjust the number to inflation. It seems the Counsel feels that the current threshold is a burden on business but, no doubt, is also thinking of the mountains of paperwork being generated as inflation turns the amounts being squabbled over into nickels and dimes. It will now recommend this adjustment to IRS heads.

You might think this is no big deal, just anther stop on the endless bureaucratic trail to nowhere. Except, this is where it gets surprising. The Council points out that the $1200 dollar amount was arrived at by regulation and not legislation. This creates an amazing shortcut that can bypass all of Congress with its committees and subcommittees. The heads of the IRS can simply make it so.

Will they do it? Who knows. But, with inflation pushing the value of the dollar ever downward while simultaneously pushing the mountains of paperwork ever upward, it could happen sooner than we all think.

Full story at the Nevada Independent
Last edited by: Gialmere on Feb 28, 2024
Have you tried 22 tonight? I said 22.
DRich
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February 28th, 2024 at 12:31:37 PM permalink
Quote: Gialmere

In a surprising development, the IRS Advisory Council has agreed with a recent bill that would both increase the jackpot handpay threshold from $1200 to $5800 and annually adjust the number to inflation. It seems the Counsel feels that the current threshold is a burden on business but, no doubt, is also thinking of the mountains of paperwork being generated as inflation turns the amounts being squabbled over into nickels and dimes. It will now recommend this adjustment to IRS heads.

You might think this is no big deal, just anther stop on the endless bureaucratic trail to nowhere. Except, this is where it gets surprising. The Council points out that the $1200 dollar amount was arrived at by regulation and not legislation. This creates an amazing shortcut that can bypass all of Congress with its committees and subcommittees. The heads of the IRS can simply make it so.

Will they do it? Who knows. But, with inflation pushing the value of the dollar every downward while simultaneously pushing the mountains of paperwork ever upward, it could happen sooner than we all think.

Full story at the Nevada Independent
link to original post



I hope it doesn't happen. I would rather see that all gambling income gets reported. I think 99% of people are not currently reporting wins.
At my age, a "Life In Prison" sentence is not much of a deterrent.
SOOPOO
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February 28th, 2024 at 12:38:00 PM permalink
Quote: Gialmere

In a surprising development, the IRS Advisory Council has agreed with a recent bill that would both increase the jackpot handpay threshold from $1200 to $5800 and annually adjust the number to inflation. It seems the Counsel feels that the current threshold is a burden on business but, no doubt, is also thinking of the mountains of paperwork being generated as inflation turns the amounts being squabbled over into nickels and dimes. It will now recommend this adjustment to IRS heads.

You might think this is no big deal, just anther stop on the endless bureaucratic trail to nowhere. Except, this is where it gets surprising. The Council points out that the $1200 dollar amount was arrived at by regulation and not legislation. This creates an amazing shortcut that can bypass all of Congress with its committees and subcommittees. The heads of the IRS can simply make it so.

Will they do it? Who knows. But, with inflation pushing the value of the dollar every downward while simultaneously pushing the mountains of paperwork ever upward, it could happen sooner than we all think.

Full story at the Nevada Independent
link to original post



Thank you for the post. My in laws, both 80+, hit a jackpot slot playing, over $1200 but less than $5k. They will get the W2G. But Iíll bet they donít keep accurate records and will just pay tax on the Ďwiní. Iím sure they lose overall every year. This change will help people like them.
ChumpChange
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February 28th, 2024 at 12:40:17 PM permalink
I'd like to see it raised to $12,000. There's some standard deductions people have now they didn't have before. Also, most grand jackpots are well over $10,000.
Mental
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February 28th, 2024 at 1:08:27 PM permalink
Quote: Gialmere

In a surprising development, the IRS Advisory Council has agreed with a recent bill that would both increase the jackpot handpay threshold from $1200 to $5800 and annually adjust the number to inflation. It seems the Counsel feels that the current threshold is a burden on business but, no doubt, is also thinking of the mountains of paperwork being generated as inflation turns the amounts being squabbled over into nickels and dimes. It will now recommend this adjustment to IRS heads.

You might think this is no big deal, just anther stop on the endless bureaucratic trail to nowhere. Except, this is where it gets surprising. The Council points out that the $1200 dollar amount was arrived at by regulation and not legislation. This creates an amazing shortcut that can bypass all of Congress with its committees and subcommittees. The heads of the IRS can simply make it so.

Will they do it? Who knows. But, with inflation pushing the value of the dollar every downward while simultaneously pushing the mountains of paperwork ever upward, it could happen sooner than we all think.

Full story at the Nevada Independent
link to original post

Thanks for the link. This would not change my reported income by a single penny. It would save me huge headaches matching all my W-2Gs to individual sessions in my session accounting. I still have one online casino mailing me IRS forms even though I opted for electronic versions. I am looking at 78 identical envelopes that arrived in one batch.

The Congressional Budget Office scores all bills to see how they affect revenue. Since this is an administrative action, maybe the CBO is not involved. I doubt that the change will reduce tax revenue by much. There will be a some increase in tax revenue just because people gamble more, especially people in certain tax brackets. The tax code doesn't just tax gamblers. It taxes casino profits as well. It is much harder for casinos to evade taxes versus gamblers.
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calwatch
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February 28th, 2024 at 9:35:58 PM permalink
Considering that the trend is to drop reporting values (like with 1099-NECs), I doubt this will happen. I would like to see either the cost of gambling being netted out above the line, before AGI (but not below zero), or for a more lenient treatment of "professional gambler" that doesn't require it to be one's primary profession, which is unique to all other professions - I can be in the horse business and show profit just two out of seven years and still deduct all my losses, below zero.
some1
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April 11th, 2024 at 6:19:19 PM permalink
Have anyone here had an experience with IRS refusing to accept the session accounting method?
Background: Back in January I got CP2000 notice from IRS saying I underreported my income by the amount on W-2G form. That W-2G was for the jackpot I won at online slots and which I subsequently gambled away the same day (I have a spreadsheet with the full transactions log proving the same). I responded to this notice with the following explanation:
Quote:

My reported gambling winnings don't match the W-2G total because I used session accounting to arrive at the total for winnings, as per Chief Counsel Memorandum 2008-011 and Shollenberger v Commissioner, which established that wins and losses should be tracked by session, and that 'The Form W-2G that reported their gross winnings from the $2,000 jackpot should not be reported on line 21 as $2,000


However, it looks like IRS agent who handles my case is either unfamiliar with the session accounting method or just wouldn't let me use it. Here is the response I got from them:
Quote:

Gambling losses, up to the amount of winnings, can only be claimed as an itemized deduction on Schedule A. If your total itemized deductions, including your allowable losses, do not exceed your standard deduction YOU cannot claim your losses.


I tried calling them to explain my situation and what I meant by referring to the session accounting method, but got pretty much the same response: that I can offset winning with losses unless I itemize.

Was anyone in a similar situation? How did you handle it? I'm afraid that disputing it in court could cost more than I'm going to save on taxes.
Maybe someone could recommend a tax attorney familiar with the session accounting who could represent me without costing me thousands?

@MichaelBluejay I found this forum thanks to your website, would appreciate any tips you could give for this situation.
DRich
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April 11th, 2024 at 6:38:39 PM permalink
I believe you have to itemize to take the gambling offset for a deduction.
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some1
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April 11th, 2024 at 7:37:42 PM permalink
My point is that by using session accounting I don't have any winnings at all. The amount on W-2G does not reflect my income from gambling.
DRich
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April 12th, 2024 at 5:35:19 AM permalink
Quote: some1

My point is that by using session accounting I don't have any winnings at all. The amount on W-2G does not reflect my income from gambling.
link to original post



the W2G does reflect some income from gambling. Why don't you just itemize? I always itemized my gambling and never had any problems with it.

It is definitely true that the majority of IRS examiners do not understand gambling.
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unJon
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April 12th, 2024 at 5:39:17 AM permalink
Quote: DRich

Quote: some1

My point is that by using session accounting I don't have any winnings at all. The amount on W-2G does not reflect my income from gambling.
link to original post



the W2G does reflect some income from gambling. Why don't you just itemize? I always itemized my gambling and never had any problems with it.

It is definitely true that the majority of IRS examiners do not understand gambling.
link to original post



With the increase in the standard deduction and cap on SALT deductions, lots of folks do worse itemizing.
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DRich
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April 12th, 2024 at 5:53:40 AM permalink
Quote: unJon



With the increase in the standard deduction and cap on SALT deductions, lots of folks do worse itemizing.
link to original post



There is a simple solution for that. Gamble more.
At my age, a "Life In Prison" sentence is not much of a deterrent.
UP84
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April 12th, 2024 at 6:03:31 PM permalink
Quote: some1

...However, it looks like IRS agent who handles my case is either unfamiliar with the session accounting method or just wouldn't let me use it. Here is the response I got from them:

Quote:

Gambling losses, up to the amount of winnings, can only be claimed as an itemized deduction on Schedule A. If your total itemized deductions, including your allowable losses, do not exceed your standard deduction YOU cannot claim your losses.


I tried calling them to explain my situation and what I meant by referring to the session accounting method, but got pretty much the same response: that I can offset winning with losses unless I itemize.

Was anyone in a similar situation? How did you handle it? I'm afraid that disputing it in court could cost more than I'm going to save on taxes.
Maybe someone could recommend a tax attorney familiar with the session accounting who could represent me without costing me thousands?

Did you submit your session reporting log with your return?
MaxFlavor
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April 13th, 2024 at 6:09:00 AM permalink
In the "Tax Help for Gamblers" book by Jean Scott, Marissa Chien and Russel Fox, they advise not to submit your session reporting log with your return. It might be a good book for you to check out.
MaxFlavor
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April 13th, 2024 at 6:09:39 AM permalink
In the "Tax Help for Gamblers" book by Jean Scott, Marissa Chien and Russel Fox, they advise not to submit your session reporting log with your return. It might be a good book for you to check out.
some1
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April 13th, 2024 at 1:50:55 PM permalink
Thanks. I didn't submit my log because it is several hundred pages long and there was no way to upload it electronically. But they didn't even ask about it.
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