Is a large tip to the dealer deductible?
Also, someone told me that I now have to file estimated quarterly taxes so that I'm not below my 10% difference that I will owe at tax time. This does't seem right or fair as how are we to know if/when we will hit something like this. I did not have any taxes withheld as I was hoping to make some investment money on that $71,000 before I have to cough it up to the IRS. The card room pit boss gave me the option to not withhold at this time. Thanks.
The 10% number is not relevant if you meet the safe harbor through withholding 100% of the taxes you owed last year (or 110% if your income is over some level)
If you don't meet the safe harbor requirements, you can just file now and pay the estimated taxes that you will owe. If your income is not earned evenly during the year, there is no requirement that you pay the same amount each quarter. However, you do need to pay the taxes that you owe now (not at tax time) if you do not meet the safe harbor requirements.
I have absolutely no clue if you can deduct the tip as a gambling loss. It seems reasonable, but I have no idea. Note that your gambling records of wins and losses are what's important here. I record session results post-tip, not pre-tip. I have no idea if that's legal.
Estimated payments on earned income are due when income is earned. It would be unfair if people with non-wage income did not have to withhold until tax day when wage earners are forced to by employers.
It may be worth investing the 71k despite the penalty if the investment is strong enough.
Congratulations on the win.
I should become a dealer...
edit: I should become your personal dealer
IMO, I'm not a tax lawyer
Quote: LuckyLucyScenario: Progressive Pai Gow jackpot win of $213,000 plus. Tipped the dealer $14,000. I don't itemize on taxes, but was wondering if the amount of the tip could be added in under misc. deductions as that amount will now qualify me to be able to itemize. (Please no comments on how some of you never tip the dealer. That is another whole discussion that I don't want to get into.) Any and all other suggestions are greatly appreciated.
Also, someone told me that I now have to file estimated quarterly taxes so that I'm not below my 10% difference that I will owe at tax time. This does't seem right or fair as how are we to know if/when we will hit something like this. I did not have any taxes withheld as I was hoping to make some investment money on that $71,000 before I have to cough it up to the IRS. The card room pit boss gave me the option to not withhold at this time. Thanks.
It is all explained in my forthcoming book, "Penciling the IRS 101."
Oh BTW, if you lose a bunch of money this year playing other than that 1 win then you might be able to itemize. In that case your daily win would be 213000-14k. At this amount I think you would be smart to find a good gambling accountant. It will probably be worth the money you have to pay for them.
Quote: LuckyLucyI don't itemize on taxes
here's your biggest problem
PS: but I guess that may just change. Boy do you want documentation if losses can be shown also to be large.
Quote: odiousgambitnot tax deductible and you could have to pay taxes for giving a gift, I forget what the limit is for gifts.
IMO, I'm not a tax lawyer
Imagine if it was tax deductible. Give most of it to the dealer(making sure that person is your friend) and they just give you back the cash later. Sweet scheme.
Quote: Lemieux66Imagine if it was tax deductible. Give most of it to the dealer(making sure that person is your friend) and they just give you back the cash later. Sweet scheme.
except that person would have to pay taxes and then there would be gift taxes.
Quote: GWAEexcept that person would have to pay taxes and then there would be gift taxes.
I didn't know about gift taxes. Good to know.
That's why it doesn't make sense to be able to deduct tips. How can anyone provide something acceptable to the I.R.S. that would be some sort proof of the contribution? Imagine dealers and floor personnel having to issue receipts for their tips.Quote: Lemieux66Give most of it to the dealer(making sure that person is your friend) and they just give you back the cash later. Sweet scheme.
Quote: GWAEexcept that person would have to pay taxes and then there would be gift taxes.
Not your question, but can I ask where you won this? I was playing for nearly that exact amount at the Venetian this past week. Was it theirs?
But, say not on this case of normal tips (not the big tip of this case), how do calculate a Win and a Loss.
From what I have read in the past you calculate session win being the Difference of Initial Buy in and Final Payout.
Say you stated with $500 end ended with $1.500, you calculate a $1.000 Win.
But say you paid $50 on tips (which in any case is difficult to remember exactly), Will you say your Win was $1.050.
Finding how much you won (after tips) can be done but how is anyone suppose to know how much tips he left.
The reasonable would be that Session Win is End Money - Start Money.
I understand in this particular case the tip is very big, and it can be remembered and if the tax law says you have to add it back, then you do.
But in the usual low tips in a session (which might add up to a big number for a regular player for a whole year) are gamblers expected to remember them and add the back on the winnings the declare. And do actually people do?
Quote: 1arrowheaddrTips to casino personnel are not tax deductible.
Estimated payments on earned income are due when income is earned. It would be unfair if people with non-wage income did not have to withhold until tax day when wage earners are forced to by employers.
It may be worth investing the 71k despite the penalty if the investment is strong enough.
Congratulations on the win.
This makes sense when you explain it this way. I'm glad I got the heads up because I won it 5/29 and the gov wants it on 6/15. Thanks for the congrats, it was quite a rush.
Quote: NeutrinoHoly crap $14k tip
I should become a dealer...
edit: I should become your personal dealer
Lol, I based the tip as 10% of my take after taxes. I subtracted roughly 1/3 from total and then tipped her. I am a dealer myself so it was my absolute pleasure to be able to to that for her.
Quote: GWAEcongrats on the huge win. That is a lot of taxes to pay. sigh....
Oh BTW, if you lose a bunch of money this year playing other than that 1 win then you might be able to itemize. In that case your daily win would be 213000-14k. At this amount I think you would be smart to find a good gambling accountant. It will probably be worth the money you have to pay for them.
I think I'd have to lose over $12,000 to itemize. Sigh is right.....
Quote: GWAEexcept that person would have to pay taxes and then there would be gift taxes.
This is the part that really eats me: I'll have to pay approx. $4600 on the tip that I gave her and she'll also have to pay taxes on her tip as income. They keep their own so she's solely responsible for it. This is one of the most unfair gambling tax laws. Not being able to claim my gambling losses on my taxes because I don't itemize is the other. I wouldn't think that they could call it a gift AND a tip, but nothing surprises me.
Quote: beachbumbabsLucy,
Not your question, but can I ask where you won this? I was playing for nearly that exact amount at the Venetian this past week. Was it theirs?
Minnesota, a land far, far away.......
What kind of hand you had?
Quote: pokerfacecongrats!
What kind of hand you had?
3-9 in diamands. Joker was my 5, so without it I wouldn't even have had a straight flush. I was the only one on the table so I kind of slow rolled it, saw the 3 & 6 and thought it was a bad hand so I just opened the rest real quick. My mouth was soon agape!!
Quote: LuckyLucyThis is the part that really eats me: I'll have to pay approx. $4600 on the tip that I gave her and she'll also have to pay taxes on her tip as income. They keep their own so she's solely responsible for it. This is one of the most unfair gambling tax laws. Not being able to claim my gambling losses on my taxes because I don't itemize is the other. I wouldn't think that they could call it a gift AND a tip, but nothing surprises me.
But how is that different from any other tip? I go to work and get paid and pay tax on that income. If I go to a restaurant and tip a waitress from my after-tax income, she has to pay income tax on it.
And she has to split that with the others? Personally If I wanted to give that much as a tip I would have gave some right then and the other half to her personally as a gift.Quote: LuckyLucyLol, I based the tip as 10% of my take after taxes. I subtracted roughly 1/3 from total and then tipped her. I am a dealer myself so it was my absolute pleasure to be able to to that for her.
Quote: LuckyLucyThis is the part that really eats me: I'll have to pay approx. $4600 on the tip that I gave her and she'll also have to pay taxes on her tip as income. They keep their own so she's solely responsible for it. This is one of the most unfair gambling tax laws. Not being able to claim my gambling losses on my taxes because I don't itemize is the other. I wouldn't think that they could call it a gift AND a tip, but nothing surprises me.
not to start a tax debate but that is how all taxes work.
You work and make money, you pay taxes on that money
You gamble and lose, the caisno pays taxes on your already taxed money
they pay their employees with that money and their employees pay taxes again
It is like a ponzi scam
Quote: AxelWolfAnd she has to split that with the others? Personally If I wanted to give that much as a tip I would have gave some right then and the other half to her personally as a gift.
LuckyLucy mentioned the dealer keeps her own.
Quote: AxiomOfChoiceBut how is that different from any other tip? I go to work and get paid and pay tax on that income. If I go to a restaurant and tip a waitress from my after-tax income, she has to pay income tax on it.
True that. I think this money will be taxed at least 4 times when all is said and done. I've gotten over it. I'll bend over, pay it and move on. Then get back to the happy vibe of winning it in the 1st place.
Quote: DeucekiesLuckyLucy mentioned the dealer keeps her own.
Being a dealer who keeps my own tips as well, (I deal at the other card room across town) I've heard this discussion many times by my players. Unfortunately if we are caught taking even a .50 cent wooden piece as a tip we loose our job immediately for tax evasion. Not worth the risk. It is what it is. As I mentioned above I'm over it and I want to get back to the happiness of the big win. Thanks to all for comments and suggestions. BTW a poker dealer at my card room told me that I'm not done winning or giving out jackpots yet, so I want to get back to that frame of mind!
Good luck to all and ALWAYS play that extra buck for the progressive!
