If Only You Could Deduct Gambling Losses!
Wouldn't that be great! Not having to pay federal and state taxes on all of your gambling losses! If I could do that I would effectively have a 35% bigger bankroll due to a huge, fat refund check thanks to my donations to Las Vegas casinos each year.
Perhaps they can create a "non-profit" casino where your donations/gambling losses are tax deductable. All proceeds could go to support the military or something. I would gamble exclusively at that casino each year!
Anyway, enough dreaming. But as I take a quick break from my taxes, I think, "Wouldn't it be nice..."
Quote: gamblerIt's tax time again, and as I sit down to work on my 2010 taxes, I once again think, "Wouldn't it be nice if you could deduct all of your gambling losses!"
Wouldn't that be great! Not having to pay federal and state taxes on all of your gambling losses! If I could do that I would effectively have a 35% bigger bankroll due to a huge, fat refund check thanks to my donations to Las Vegas casinos each year.
Perhaps they can create a "non-profit" casino where your donations/gambling losses are tax deductable. All proceeds could go to support the military or something. I would gamble exclusively at that casino each year!
Anyway, enough dreaming. But as I take a quick break from my taxes, I think, "Wouldn't it be nice..."
Well, you can--if you file a Schedule C as "professional gambler".
Quote: mkl654321Well, you can--if you file a Schedule C as "professional gambler".
You couldn't get away with that if you had a net loss. Might slip it by one year and a year and a half later they would reclassify it as a hobby and you would pay penalties and interest on the deducted taxable income for that year.
Quote: clarkacalYou couldn't get away with that if you had a net loss. Might slip it by one year and a year and a half later they would reclassify it as a hobby and you would pay penalties and interest on the deducted taxable income for that year.
Sure you could.
The problem would not be the NET LOSS. The problem would be establishing that you are a "Professional Gambler"
That is the tough part. If you ain't in play for at least a million in losses, then your never going to qualify.
And don't be doing any other work.
SFB
Quote: SFBSure you could.
The problem would not be the NET LOSS. The problem would be establishing that you are a "Professional Gambler"
That is the tough part. If you ain't in play for at least a million in losses, then your never going to qualify.
And don't be doing any other work.
SFB
Yes, there are net losses on schedule C's all the time, but when it is filed under a common losing activity such as gambling you're asking for trouble. If you claimed a net profit every year or at least the majority of years you could file as a professional gambler.
Quote: clarkacalYou couldn't get away with that if you had a net loss. Might slip it by one year and a year and a half later they would reclassify it as a hobby and you would pay penalties and interest on the deducted taxable income for that year.
The rule is that you have to either a) show a net win in at least two of the five years or b) a net win for the five-year period. This applies to all business classifications, not just "professional gambler". It also helps to keep them off your back if you keep track of all related expenses, such as travel, meals, rooms, etc. Ironically, failure to report these items (which has the effect of overstating your business income) increases the chance that the IRS will look at your gambling activities as a "hobby", and not eligible for Schedule C filing.
I filed as "professional gambler" for nine years, and I never had a bit of trouble with the IRS. But I dotted all the Is and crossed all the Ts. The vast majority of gamblers, professional and otherwise, don't even come close to doing that.
Quote: mkl654321I filed as "professional gambler" for nine years, and I never had a bit of trouble with the IRS. But I dotted all the Is and crossed all the Ts. The vast
majority of gamblers, professional and otherwise, don't even come close to doing that.
So, I hear, the IRS is not specifically interested in going after all unreported income, but significant unreported income whether it's gambling or anything else. They don't get a good return hunting down all the small fry.
That may or may not apply to you.
Edited for clarity
Quote: rxwineSo, I hear, the IRS is not specifically interested in going after all unreported income, but significant unreported income whether it's gambling or anything else. They don't get a good return hunting down all the small fry.
That may or may not apply to you.
Edited for clarity
I probably was "small fry" as far as gamblers go, because my usual tax liability was in the $3000-5000 range after I deducted operating expenses. That said, I did have one year where I had 3/4 of a million in W2-Gs, and that drew their attention (oddly enough, that was my worst year overall).
