Income taxes and Form W2-G
Quote: Luckylady1234I have 5 W2-Gs for 2013. They total $13,500. I know I have to claim them on my income tax and get to deduct on Schedule A. I have the win/loss from the casinos I have frequented which total quite a bit more than what I won. I also have an informal log I kept of all my gambling. I have this by day and casino I played in. It has how much I started with and how much I cashed out for. Only two 2 days had more than what I started with even though I got w2-Gs on 4 days. I do know I have to claim everything I won not just a net for those days even though I lost on 3 of the W2-G days. My question is - is there a dollar amount of winnings that would trigger the IRS to audit you. I am just curious, I do have a log of each day my husband and I gambled - just wanted some insight from the folks on here.
I don't know if there is a dollar amount that will trigger an audit. If I worked at the IRS and were interested in catching gamblers in fibs about their gambling winnings, I would flag any return that had the exact amount of W2-G winnings as "gambling income." Seems like an indicator of someone who is cutting corners and not actually reporting their real gross winnings. But that's a hypothetical. Obviously a "gambling winnings" amount LESS than the total of the W2-Gs would be a problem too :).
It sounds like you have a pretty good handle on it. Use your log to compute your total gross win by session. On the days that you got the W2-Gs, you would have a gross win from the sessions that triggered the W2-Gs and gross losses from other sessions. Total up your gross losses and deduct them on schedule A. If you were a net loser for the year, then deduct the full amount of your gross wins as you can't go over.
I got so mad any time I talk about gambling and taxes. Argh.
Personally, I think it would be better if you DID include that $600. Ditto for other days where there is both a win and loss. As long as you have the log, use it.
Right now, your total winnings is only slightly more than the W2Gs. To me, that seems fishy.
If I ever get a small W2G, and it actually was a year I lost money, I would still claim my losses ate most of it, but not all of it. I would think claiming all of it was wiped out would be the one thing that might even get them to check twice.
Of course you should really check with a tax attorney; in my case, I have no experience with it [hope to keep it that way]
Quote: DJTeddyBearRight now, your total winnings is only slightly more than the W2Gs. To me, that seems fishy.
You would think the IRS would realize most recreational gambling means overall losing, not winning, unless a very large amount was won [allowing a yearly gain].
Quote: odiousgambitYou would think the IRS would realize most recreational gambling means overall losing, not winning, unless a very large amount was won [allowing a yearly gain].
Wrong! (probably <g>)
As a CPA with a large tax practice?
I only report the W2G and related losses.
Doesn't really matter to me that the taxpayer may go to the track or gambling hall every weekend.
Its *not* a business to any of my clients, and if it was, that is completely different tax treatment.
Be glad that you won. And don't be surprised that most of that went right back into the slot machine or other gambling devices/games.
It happens to all of us. They didn't build those big buildings on winners....
I ask to see their "players Card" report, and any other evidence of their losses. However, make sure your "losing tickets" are for the year in question...
W2G's get eaten alive by your losses. If you win the lottery, that get reported differently, and you would be hard pressed to have losses to eat that up.
If you get audited? Then its "not" because of the W2G's. If you "don't" report them, you will get hammered, but if you do, then you are probably gonna be in the clear.
I do not see it as a problem to report the $600 in excess winnings from your other trips. Actually that is pretty close to the way the IRS would require you to record it. They want to know of "each winning day" for a total of over all winnings, and then you deduct your losses.
Just can blow your AGI thru the roof.
SFB
Quote: SFBJust can blow your AGI thru the roof.
Quote: AcesAndEights
Of course I agree with you, but there is a bright side. If the unfair tax code makes you physically ill, you can now obtain treatment because the government has given us Affordable Care :)
Quote: Luckylady1234I gamble because I enjoy it but with this hassle the government puts us through it takes all the enjoyment out of it.
Oh boy, don't get me started. Even though I agree with you 100%, this is the government that Americans have eagerly voted for over and over and over again.
And guess what? Americans will once again vote for the same thing in 2016. Just watch!
Quote: Luckylady1234Was I supposed to be declaring my little wins and associated losses all those years.
Technically?
Yes, but you're in the same boat with millions of other gamblers, and there's an element of safety in numbers.
I'd love to hear more from the tax professional in this thread. I didn't quite understand what SFB was suggesting, sorry.
All for what it's worth...good luck!
Edit: She also says, if you still have concerns about this or anything else in your return, that you have your taxes done by either an IRS enrolled agent or CPA; the IRS places a lot of credibility on an accredited third party signing a tax return with unusual or questionable deductions. If your major concern is avoiding questions/audits, this will help a lot, rather than doing it yourselves. But don't go to just anybody if you decide to do it for that reason.
Quote: beachbumbabsand she further suggests that you file a paper return rather than electronic in order to provide copies of your player statements and especially your handwritten ledger/notes.
Thanks babs, but I'm quite surprised to hear that.
This is a very ordinary situation, yes? The only uncertainty is the amount of winnings to report in excess of the total W2G amount. I can't see the benefit of giving the IRS rope with which to hang you (in the form of documentation attached to the return).
Quote: Luckylady1234Is writing off gambling losses questionable or unusual.
No, it's completely standard for losses to exceed winnings (although of course you can't deduct losses beyond winnings).
Quote: Luckylady1234I have gambled for quite a few years and have never had a w2g win.
I hope to never have one. It's the main reason I never really started with video poker. I'm sticking with table games.
Quote: odiousgambitI hope to never have one. It's the main reason I never really started with video poker. I'm sticking with table games.
I had 3 last year and it was the first time in my life that I had them. It is really messing me up with my AGI. My wife is pregnant and we have 1 kid. Since I am the only one working we qualify for WIC. Having my AGI go way up could potentially effect that even though we were losers for the year.
Quote: Beethoven9th
And guess what? Americans will once again vote for the same thing in 2016. Just watch!
Even money, up to $1000, says Congress under the next Republican President does NOT increase the W2-G minimum requirement for slots/VP (currently $1200) when he/she gets elected in the first 4 years.
Quote: Luckylady1234Thank you very much. I will do that. I really don't think I have "questionable" or "unusual" deductions. Is writing off gambling losses questionable or unusual.
I would say no, that it's not questionable or unusual. She answered the question the way I put it to her, which included that you were concerned your return might cause red flags. The ordinary way to do it would be to include all winnings towards your AGI and your losses up to the amount of your winnings on Sched A, and put your supporting gambling documentation with your tax documents in your home files. If you feel that your return is unusual enough in whole or in that part that the IRS will flag it or question it, a pre-emptive enclosure of the records will likely stop the inquiry before it gets started. The thing is, you want it to be easily understood by that first reviewer; then it just gets filed and you're done. If they get tickled on something, the supporting records can answer the tickle right there, and again it gets filed and you're done. If they have to inquire further, that starts a formal process that often triggers an audit. It's a judgement call for both you and the IRS agent.
If you take your return to a tax professional, and have them sign it rather than just doing it yourself, that will be enough validation that you probably won't need to send the supporting documentation either. You and your husband are the only ones who know whether this has been such an unusual year for you that this return will stick out like a sore thumb compared to past years and invite further scrutiny. If the only thing different is that you have W2G's, I would think you're fine treating it as an ordinary return and not sending the info along.
I doubt there's a fixed amount, but even if there was, they'd never let that info slip out.Quote: Luckylady1234I was really wondering if the IRS audits all W2gs over a certain amount! I.e., $10,000.
There will never be another Republican president. lolQuote: tringlomaneEven money, up to $1000, says Congress under the next Republican President
Quote: beachbumbabsI would say no, that it's not questionable or unusual. She answered the question the way I put it to her, which included that you were concerned your return might cause red flags. The ordinary way to do it would be to include all winnings towards your AGI and your losses up to the amount of your winnings on Sched A, and put your supporting gambling documentation with your tax documents in your home files. If you feel that your return is unusual enough in whole or in that part that the IRS will flag it or question it, a pre-emptive enclosure of the records will likely stop the inquiry before it gets started. The thing is, you want it to be easily understood by that first reviewer; then it just gets filed and you're done. If they get tickled on something, the supporting records can answer the tickle right there, and again it gets filed and you're done. If they have to inquire further, that starts a formal process that often triggers an audit. It's a judgement call for both you and the IRS agent.
If you take your return to a tax professional, and have them sign it rather than just doing it yourself, that will be enough validation that you probably won't need to send the supporting documentation either. You and your husband are the only ones who know whether this has been such an unusual year for you that this return will stick out like a sore thumb compared to past years and invite further scrutiny. If the only thing different is that you have W2G's, I would think you're fine treating it as an ordinary return and not sending the info along.
Babs:
I never send anything else to the IRS except that which is required. (And tax pro's can disagree about this...) And paper filing with extra info doesn't make an audit less likely. The person who has to input the paper return is just putting in the info anyway. No thinking involved. Extra documentation at that time is ignored as well.
All returns are scored after they are input into the Master File. *All* returns. If your score is bad, then you might get audited. And if your include your W2G's, then you are confirming what the IRS already has and lowering your score. And the vast majority of info on your return, the IRS already has....
Gambling income and losses are not that "questionable" or "unusual". $13k isn't that unusual if you like to play and have a solid regular income. If your income is really high, then more would actually be expected. (More $ to spend=more likely to gamble more)
As a tax professional, I agree that all citizens need to use us to file their returns... ;)
SFB
I appreciate your having weighed in, since you're a professional in the area. I was serving as messenger, not trying to give the advice myself. I do, however, believe the tickle is legit, because I've seen it happen. Satisfying the examiner at the earliest opportunity seems to lead to the best result, and that was her suggestion if LadyLuck felt her situation warranted it. In LadyLuck's follow-up, it sounds like she'll be fine doing an ordinary report, especially since she's seeing a professional for guidance.
Quote: SFBBabs:
I never send anything else to the IRS except that which is required. (And tax pro's can disagree about this...) And paper filing with extra info doesn't make an audit less likely. The person who has to input the paper return is just putting in the info anyway. No thinking involved. Extra documentation at that time is ignored as well.
All returns are scored after they are input into the Master File. *All* returns. If your score is bad, then you might get audited. And if your include your W2G's, then you are confirming what the IRS already has and lowering your score. And the vast majority of info on your return, the IRS already has....
Gambling income and losses are not that "questionable" or "unusual". $13k isn't that unusual if you like to play and have a solid regular income. If your income is really high, then more would actually be expected. (More $ to spend=more likely to gamble more)
As a tax professional, I agree that all citizens need to use us to file their returns... ;)
SFB
Thanks SFB. I have always used a professional to do my taxes. I have an appointment on Tuesday. I would only use a professional as they are up to speed on all the tax updates. I don't trust the online tax programs.
Quote: beachbumbabsSFB,
I appreciate your having weighed in, since you're a professional in the area. I was serving as messenger, not trying to give the advice myself. I do, however, believe the tickle is legit, because I've seen it happen. Satisfying the examiner at the earliest opportunity seems to lead to the best result, and that was her suggestion if LadyLuck felt her situation warranted it. In LadyLuck's follow-up, it sounds like she'll be fine doing an ordinary report, especially since she's seeing a professional for guidance.
About satisfying the examiner? Of course, the sooner the better...
As I said, tax pros can disagree about how we do certain things, and sending "extra" to the IRS with the original return is one of those areas. And I know you were the messenger, and I am not beating you up.
The one thing I do know about the IRS? They really do NOT have a clue what is going on...
SFB
I have more pressing things to deal with like the new requirements for reporting capital gains. What a PITA.
Quote: teddysI always declare just the full amount of my W-2G's and than deduct them immediately on schedule A. Never had any problem, although this year I have $14,000 in W-2G's which is my most ever.
I have more pressing things to deal with like the new requirements for reporting capital gains. What a PITA.
teddys,
You must've won more than that on your 2x Jeopardy wins. What IRS form did they send you? I've always been curious how that worked.
Quote: teddysI always declare just the full amount of my W-2G's and than deduct them immediately on schedule A. Never had any problem, although this year I have $14,000 in W-2G's which is my most ever.
I have more pressing things to deal with like the new requirements for reporting capital gains. What a PITA.
So will you claim and deduct just the $14,000 and not add in small wins. Is that for 2014 or 2013. If 2014 you have a long way to go and hopefully will be a lot higher for you.
I am sure to be audited, no question there. My question is do you think indicating your point/tier credits as proof of coin in is useful? If it takes $3 to earn a point at MLife and I had 4M Tier Credits, that's a lot of coin in. Any thoughts about that?
Quote: beachbumbabsteddys,
You must've won more than that on your 2x Jeopardy wins. What IRS form did they send you? I've always been curious how that worked.
I believe almost all winnings besides those on a slot machine are given a 1099-misc.
Think of the couple that goes to AC or Vegas for a 3-day trip and blows $600 on slots and roulette. Those folks are probably not even going to bother mentioning it on their taxes.
If that same couple hits a small jackpot and ends up with a W-2G for $2000 or something, most of them are just going to report the W-2G amount and nothing else as they have no documentation of their losses.
If I was at the IRS, anyone that reported winnings greater than their W-2G(s) would raise an eyebrow and so would anyone that claimed a large loss without a single W-2G.
One more reason to play table games vs. slots?
Other problems have been mentioned. No sir, I do not want any W-2Gs, thank you.
Quote: odiousgambitI havent read this whole thread but in case no one said it, the problem with W-2G for many, many gamblers [as I understand it] is that they don't qualify for schedule A itemized deductions. So, even though presumably the IRS easily accepts the idea that most gamblers lose more than they win, if they can't itemize deductions they get the standard deduction. What that means is even losers who can document the facts will pay taxes for garnering those W-2s.
Other problems have been mentioned. No sir, I do not want any W-2Gs, thank you.
that is exactly what happened to us last year. I had 3 w2gs which was the first time I ever had one. I "knew" that I could write off loses so I wasn't worried about taxes. It wasn't until this year that I realized that since I don't itemize I would have to pay taxes on it. We basically blew the winnings because it was complete extra money. Not on hookers and blow, but on a new computer, vacation, and some small items we had needed. If I knew I was going to get crushed with taxes then I would have saved the money instead of going on a weekend trip. Owell it was a lesson learned.
