Offsetting losses with backers?
Basically I went to Vegas this year for a few wsop events. I "won" ~120k from tourneys.
However, I was backed.
How does this work for tax season? I am aware there is a form I need.. but is that it?
Do I just say for example ... I only "won" 40k and then I can write off loses to my 40k? And the people who staked me can write off their losses from their share?
1) You need to ask a professional. Get someone decent to do your taxes and ask him as he'll have the actual answers.
After that, just from my view point it sounds like a crappy situation for you and your backers... The IRS is going to take your $120k in winnings and tax it, so down to about $85k. Then, if you owe $20k to one guy, $20k to another, when they get that money technically they're supposed to claim that as income, and it gets TAXED AGAIN on their end. I don't know if there's some forms or something in which they can claim the money was already taxed, but at least I would think the IRS see's the $20k you give them and see's that as their personal income that needs taxed, regardless if you got taxed when you won it separately.
So at the end of the day if you win $120k, and you're going to split that 4 ways ($30k each) it sounds to me like:
1) You're taxed to $85k
2) You split that 4 ways for ~$21k each
3) The other 3 then get taxed on their $21k down to about $15k
Overall you end up losing ~$53k in taxes, on $120k, because the IRS see's everyone's separate winnings as separate income.
Some casinos allow you to "share" a jackpot and thus issue each of the parties a separate W2 so the money is only taxed once, but I would think they would need to be there when you're issued the money so they could also be issued a W2 for their amounts. Once you've taken the whole amount (taxed) after that if you give the money to them that's separate income they're supposed to report.
At the end of the day, ask a tax professional. They'll know the loopholes/etc to avoid the double/triple taxing of the money.
It's called a 5754 form you can probably print one out.Quote: PokerSuxHi guys, I am not sure where to post this as I am a new member...
Basically I went to Vegas this year for a few wsop events. I "won" ~120k from tourneys.
However, I was backed.
How does this work for tax season? I am aware there is a form I need.. but is that it?
Do I just say for example ... I only "won" 40k and then I can write off loses to my 40k? And the people who staked me can write off their losses from their share?
Quote: AxelWolfIt's called a 5754 form you can probably print one out.
Bingo bango
/thread
Quote: RomesI'm not going to be able to answer your question, but perhaps get the conversational ball rolling...
1) You need to ask a professional. Get someone decent to do your taxes and ask him as he'll have the actual answers.
After that, just from my view point it sounds like a crappy situation for you and your backers... The IRS is going to take your $120k in winnings and tax it, so down to about $85k. Then, if you owe $20k to one guy, $20k to another, when they get that money technically they're supposed to claim that as income, and it gets TAXED AGAIN on their end. I don't know if there's some forms or something in which they can claim the money was already taxed, but at least I would think the IRS see's the $20k you give them and see's that as their personal income that needs taxed, regardless if you got taxed when you won it separately.
So at the end of the day if you win $120k, and you're going to split that 4 ways ($30k each) it sounds to me like:
1) You're taxed to $85k
2) You split that 4 ways for ~$21k each
3) The other 3 then get taxed on their $21k down to about $15k
Overall you end up losing ~$53k in taxes, on $120k, because the IRS see's everyone's separate winnings as separate income.
Some casinos allow you to "share" a jackpot and thus issue each of the parties a separate W2 so the money is only taxed once, but I would think they would need to be there when you're issued the money so they could also be issued a W2 for their amounts. Once you've taken the whole amount (taxed) after that if you give the money to them that's separate income they're supposed to report.
At the end of the day, ask a tax professional. They'll know the loopholes/etc to avoid the double/triple taxing of the money.
Congrats on the WSOP wins!
If you use the 5754 form, you only get taxed once, at each person's withholding, and each person can offset those winnings with losses if they itemize. You do it either by percentage or dollar amount, and all of you have to file the form. If the Rio withheld taxes already, be sure to apportion those as well.
However, I strongly recommend you consult a tax specialist to do this correctly. The independent ones aren't nearly as expensive as you might think. Can't recommend H&R as they will severely overcharge you while underpaying the preparer.
