IRS Audit Surprise
But yesterday I saw documents from the IRS that asked for casino win/loss statements and the personal logs would only be accepted if casino documents were not available.
This surprised me.
I think we've all heard that casino WIN/LOSS statements were not considered to be acceptable by the IRS-- but for this audit the IRS is giving preference to the casino's docs over what the player may have.
As some of you know I write blogs for several tax help companies and now I'm going to have to note this.
By the way, the audit notice came out of Vegas and not some area unfamiliar with gaming.
And of course, if you didn't have logs the casino win/loss statements suddenly wouldn't be acceptable.Quote: AlanMendelsonI know that we've discussed over and over how the IRS wants to see your LOGS of wins and losses when there's an audit for gambling.
But yesterday I saw documents from the IRS that asked for casino win/loss statements and the personal logs would only be accepted if casino documents were not available.
This surprised me.
I think we've all heard that casino WIN/LOSS statements were not considered to be acceptable by the IRS-- but for this audit the IRS is giving preference to the casino's docs over what the player may have.
As some of you know I write blogs for several tax help companies and now I'm going to have to note this.
By the way, the audit notice came out of Vegas and not some area unfamiliar with gaming.
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This really changes things if it is widespread. Anyone claiming to be a professional player would need to present ID to have a casino WL report.
And frankly I often wondered why personal logs could be trusted???
Quote: AlanMendelson
But yesterday I saw documents from the IRS that asked for casino win/loss statements and the personal logs would only be accepted if casino documents were not available.
This surprised me.
I think we've all heard that casino WIN/LOSS statements were not considered to be acceptable by the IRS-- but for this audit the IRS is giving preference to the casino's docs over what the player may have.
Like all things in life, it just depends on the person you are dealing with. Everybody has their own opinion on what is best, sometimes that might be outside the official guidelines.
For this audit, what was your total w2-g's?Quote: AlanMendelsonI know that we've discussed over and over how the IRS wants to see your LOGS of wins and losses when there's an audit for gambling.
But yesterday I saw documents from the IRS that asked for casino win/loss statements and the personal logs would only be accepted if casino documents were not available.
This surprised me.
I think we've all heard that casino WIN/LOSS statements were not considered to be acceptable by the IRS-- but for this audit the IRS is giving preference to the casino's docs over what the player may have.
As some of you know I write blogs for several tax help companies and now I'm going to have to note this.
By the way, the audit notice came out of Vegas and not some area unfamiliar with gaming.
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And which tax year?
(You mentioned over a decade ago you had $1M+ worth of w2-g's, didn't put down a profit from it and didn't get audited)
I think I need to see some real W/L statements to see what people would normally complain about them for.
However, physical casinos they seem unreliable, you really only get tracked if you have a player card and ID and even if they are tracking there is often mistakes (you are at the mercy of the floor/pit paying attention). And if you play slots and don't bother to insert your card (or forget) its totally off.
Personal logs seem the safest way to keep track, if you go to the casino with a set bankroll for the night, you know exactly how much you leave with (and thus wins or losses), but even this is not perfect because if you use your cash for other things through the night it may make it look like your losses are higher than they really are.
I don't think outside of legit (state regulated) online casinos there is a 100% way to know your wins/losses short of sitting at the table with a notepad and logging every bet and the result (which would be frowned upon/prohibited at BJ and would take all of the fun out of it).
Does this mark a sea change for what's considered proving wins and losses?
Some casinos are moving to RFID chips which can provide detailed exact reports and negates ratholing.
This is the first time I've ever heard of an actual audit of casino gaming.
DRICH my big audit was about 15 years ago when my partners and I sold our website business. That year I had $2.9-mill in W2Gs and while two auditors spent two days camped at our accountant's office they never even looked at anyone's casino betting.
Gene
Quote: AlanMendelson
DRICH my big audit was about 15 years ago when my partners and I sold our website business. That year I had $2.9-mill in W2Gs and while two auditors spent two days camped at our accountant's office they never even looked at anyone's casino betting.
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That wasn't me asking, must have been someone else.
Quote: GenoDRPhHaving never been audited, I come back to the same questions I generally always ask in cases like this: What do knowledgeable tax accountants say on the matter? What do knowledgeable attorneys say on the matter?
Gene
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I don't know that there are many tax accountants that specialize in gambling. The only two I know of are Marissa Chen and Russell Fox.
Quote: GenoDRPhHaving never been audited, I come back to the same questions I generally always ask in cases like this: What do knowledgeable tax accountants say on the matter? What do knowledgeable attorneys say on the matter?
Gene
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I've never heard of anyone ever being audited for casino gambling until now.
I do work for a tax help company -- two of them now, plus two others in the past. And the advice had always been YOUR LOGS FIRST.
This is the first time I've heard of any actual casino gambling audit and its CASINO RECORDS that they want.
I'll ask again: has ANYONE on this forum been audited for casino gambling?
Quote: AlanMendelsonThe question is this...
Does this mark a sea change for what's considered proving wins and losses?
Some casinos are moving to RFID chips which can provide detailed exact reports and negates ratholing.
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Woah this is huge, impactful moreso on blackjack heat than it is on tax implications.
So the important question is, how do we tell if a casino uses RFID chips?
Quote: AlanMendelson
I'll ask again: has ANYONE on this forum been audited for casino gambling?
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I have had what they call a letter audit. Just a notice that my gambling wins claimed did not correlate with what they were showing. They were correct. I underreported about $36,000 of W2G's which was corrected with an amendment. No other issues. I had 100's of W2G's that year and definitely misplaced some of them.
I ask because the only info I've ever seen the tribal casinos track and report is slot W/L, with nothing said about craps.
If they do track table game W/L, how is it done, i.e. is it session by session, or only if you have a big score?
Finally, the W/L statements I got typically made it clear that they were not to be used as definitive evidence; this was stated via disclaimer.
A prudent gambler would always have W/L statements available as well as a personal log, and do what is necessary to make sure they don't conflict.
Quote: MrVDo casino W/L logs track table game play as well as slots?
I ask because the only info I've ever seen the tribal casinos track and report is slot W/L, with nothing said about craps.
If they do track table game W/L, how is it done, i.e. is it session by session, or only if you have a big score?
Finally, the W/L statements I got typically made it clear that they were not to be used as definitive evidence; this was stated via disclaimer.
A prudent gambler would always have W/L statements available as well as a personal log, and do what is necessary to make sure they don't conflict.
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Yes. Casino WL statements track machines, tables and sports.
The table game tracking is your buy in vs when you leave. Whether you color up or not a figure is entered when you leave.
Machine play is coin in and coin out.
Since I don't do sports betting I can't comment but I'm sure it's a version of coin in and coin out.
Quote: DRichQuote: AlanMendelson
I'll ask again: has ANYONE on this forum been audited for casino gambling?
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I have had what they call a letter audit. Just a notice that my gambling wins claimed did not correlate with what they were showing. They were correct. I underreported about $36,000 of W2G's which was corrected with an amendment. No other issues. I had 100's of W2G's that year and definitely misplaced some of them.
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I had one of these as well when I was married. My wife overlooked a W2G for an $8000 royal.
I was sent a bill.
I responded with a handwritten note saying we had losses in excess of this and the bill was canceled.
Quote: IWannaBeAPQuote: AlanMendelsonThe question is this...
Does this mark a sea change for what's considered proving wins and losses?
Some casinos are moving to RFID chips which can provide detailed exact reports and negates ratholing.
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Woah this is huge, impactful moreso on blackjack heat than it is on tax implications.
So the important question is, how do we tell if a casino uses RFID chips?
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You can ask them, of course.
One clue is that there are circles printed on layouts for betting and payouts. The RFID readers are under those circles.
Quote: ChumpChangeSo do W/L statements say you had a coin-in of $100,000 and a coin-out of $101,000 for a $1,000 win on the slots, or do they just skip that and say you won $1,000 on the slots?
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It's been a long time since I looked at a WL statement but I recall columns showing bets made and payoffs.
So yes... if you bet $5 and cashed out $6 you'd see that plus a mention of $1 win.
But I'm guessing the actual format might vary from casino to casino.
I used to be able to get my statements online from Caesars but since I haven't played there in years their website now blocks me from the WL reports page.
Quote: ChumpChangeSo do W/L statements say you had a coin-in of $100,000 and a coin-out of $101,000 for a $1,000 win on the slots, or do they just skip that and say you won $1,000 on the slots?
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Yes, most show coin-in and coin-out.
One small place I played at only provided them if asked. They would also ask "What would you like it to show?" Not just the columns, the amounts you wanted listed on it. I don't know if that was illegal, but definitely immoral.
Quote: ChumpChangeThe people who slot machine hop would likely have thousands of entries if they are notating by individual slot machines on individual days. I think they would keep the W/L statements simple But throw in some W-2G's and things could get complicated, especially with high rollers getting a hand pay several times an hour.
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Generally the W2G's are just included in the coin-out. I have never seen one broken down by machine or session (the casinos have those but don't usually provide that).
Quote: ChumpChangeSo if you have $100,000 coin-in and $101,000 of coin-out, but have W-2G's totaling $86,000, you could say you only have $1,000 of wins, somehow.
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The ones I have worked on the W2G's were included in the coin-out total. We never provided a total for W2G's. On one of the Win/Loss statements we provided if it said $100k coin-in and $101k coin-out you only had a win of $1000 including the W2G's.
You can always say whatever you want and most likely you will not be audited anyway. Many people cheat on their taxes.
tuttigym
Quote: tuttigymSome forum members that might have some intimate knowledge and could provide answers would be MDawg; Evenbob; darkOz; Ace2; Seedvalue; SOOPOO; to name a few. Perhaps they could weigh in with some personal accurate information.
tuttigym
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Wow!!! I think I have been called out for not knowing Gaming. LOL
Quote: DRichQuote: tuttigymSome forum members that might have some intimate knowledge and could provide answers would be MDawg; Evenbob; darkOz; Ace2; Seedvalue; SOOPOO; to name a few. Perhaps they could weigh in with some personal accurate information.
tuttigym
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Wow!!! I think I have been called out for not knowing Gaming. LOL
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Did I leave you out? Sorry. BTW what does that even mean?
tuttigym
Quote: tuttigymSome forum members that might have some intimate knowledge and could provide answers would be MDawg; Evenbob; darkOz; Ace2; Seedvalue; SOOPOO; to name a few. Perhaps they could weigh in with some personal accurate information.
tuttigym
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Were they audited?
I got mine out of curiosity.
It does not show coin in or out.
Here's what it showed:
Gaming Activity
Pit games with total won or lost.
Slot games with total won or lost.
Tax Form Activity
Each W2G is listed with data found on the W2G needed to file a tax return
That's it.
For example, won 22K, lost 23K, net loss 1K.
Quote: AlanMendelson
The table game tracking is your buy in vs when you leave. Whether you color up or not a figure is entered when you leave.
]
Good luck with that. I've never had a player's card and I never buy in I always use chips from the last time I was there and nobody ever says a word to me. I also never color up, I just leave and sometimes I go to the cage and sometimes I don't. I usually try and wait till the dealer takes his break before I start playing so when the pit might ask him about me he doesn't know anything. But I'm never there for very long because I make my goal and I leave. But I don't go to brick-and-mortar anymore so what does it matter
Quote: EvenBobQuote: AlanMendelson
The table game tracking is your buy in vs when you leave. Whether you color up or not a figure is entered when you leave.
]
Good luck with that. I've never had a player's card and I never buy in I always use chips from the last time I was there and nobody ever says a word to me. I also never color up, I just leave and sometimes I go to the cage and sometimes I don't. I usually try and wait till the dealer takes his break before I start playing so when the pit might ask him about me he doesn't know anything. But I'm never there for very long because I make my goal and I leave. But I don't go to brick-and-mortar anymore so what does it matter
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The chips you start playing with are noted as your buy in.
Of course with no players card there's no WL statement.
Good luck to you if you're ever audited.
But if you're playing to be one unit ahead I guess you won't be audited.
Quote: AlanMendelson
The chips you start playing with are noted as your buy in.
Of course with no players card there's no WL statement.
Good luck to you if you're ever audited.
But if you're playing to be one unit ahead I guess you won't be audited.
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In a brick-and-mortar casino I never sit and play I'm always in the background writing things down and when I see a bet I approach the table and make it. They never see the chips I'm playing with except the one I bet they never pay attention to it. All I ever do now is play online of course and they record every damn thing. I never wanted a player's card because in order to comp you they have to pay super close attention to your play and I never wanted that. Who would. Apparently everybody because everybody has players cards
Quote: EvenBobQuote: AlanMendelson
The chips you start playing with are noted as your buy in.
Of course with no players card there's no WL statement.
Good luck to you if you're ever audited.
But if you're playing to be one unit ahead I guess you won't be audited.
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In a brick-and-mortar casino I never sit and play I'm always in the background writing things down and when I see a bet I approach the table and make it. They never see the chips I'm playing with except the one I bet they never pay attention to it. All I ever do now is play online of course and they record every damn thing. I never wanted a player's card because in order to comp you they have to pay super close attention to your play and I never wanted that. Who would. Apparently everybody because everybody has players cards
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The reality is you don't win enough to be audited.
Even non W2G players can be audited if they make large cash transactions at casinos but you don't do that either.
The IRS is not going to waste time on one unit wonders.
Quote: AlanMendelson
The IRS is not going to waste time on one unit wonders.
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From your mouth to God's ear..
Quote: AlanMendelsonQuote: tuttigymSome forum members that might have some intimate knowledge and could provide answers would be MDawg; Evenbob; darkOz; Ace2; Seedvalue; SOOPOO; to name a few. Perhaps they could weigh in with some personal accurate information.
tuttigym
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Were they audited?
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These forum members have posted often of their gambling "adventures" showing, IMO, heavy wins and losses, therefore, I conclude that they also have some kind of histories with the IRS which could shed some light of their reality and the relevance to this thread.
tuttigym
Quote: tuttigymQuote: AlanMendelsonQuote: tuttigymSome forum members that might have some intimate knowledge and could provide answers would be MDawg; Evenbob; darkOz; Ace2; Seedvalue; SOOPOO; to name a few. Perhaps they could weigh in with some personal accurate information.
tuttigym
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Were they audited?
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These forum members have posted often of their gambling "adventures" showing, IMO, heavy wins and losses, therefore, I conclude that they also have some kind of histories with the IRS which could shed some light of their reality and the relevance to this thread.
tuttigym
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I hire an accountant.
I file my taxes.
A few years I owed money and sent in my payments.
A few years they owed me (due to me diligently asking for my taxes taken out of every W2-G win up front.)
They sent me a letter stating I owed them from 2004, long before I was an AP a large amount (I was homeless for awhile and didn't care and didn't have the money anyway ). They had added twenty years of interest and penalty which quadrupled the original bill.
And I paid that as well although I probably should have looked into some type of debt relief.
The letter saying I owed the old taxes came right after I had won a very large jackpot (purely a lucky spin and not an AP move) but I am not sure if that's what triggered it
And that's about it. No audits, no questions raised.
I always submit to my accountant W2-G and W/L only. I don't take down logs and my accountant is always asking for them so I can save money. I probably pay too much on taxes to be honest.
Quote: ChumpChangeIt's very interesting that a W-2G win woke up Rumple IRS.
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I should point out that specific large win was in a state racino and all taxes were automatically removed up front. Then about six weeks later I received the letter about owing taxes from twenty years ago.
But it may have been unconnected.
Quote: AlanMendelsonQuote: EvenBobQuote: AlanMendelson
The table game tracking is your buy in vs when you leave. Whether you color up or not a figure is entered when you leave.
]
Good luck with that. I've never had a player's card and I never buy in I always use chips from the last time I was there and nobody ever says a word to me. I also never color up, I just leave and sometimes I go to the cage and sometimes I don't. I usually try and wait till the dealer takes his break before I start playing so when the pit might ask him about me he doesn't know anything. But I'm never there for very long because I make my goal and I leave. But I don't go to brick-and-mortar anymore so what does it matter
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The chips you start playing with are noted as your buy in.
Of course with no players card there's no WL statement.
Good luck to you if you're ever audited.
But if you're playing to be one unit ahead I guess you won't be audited.
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All good theoretically. I have come to a table to play for maybe a few minutes before dinner with a pile of chips in my hand. How is the pit boss even going to guess if it was $100 or $286 in my hand? And $50 of those chips were from a friend who didn’t want to go to cash them in at the cage when he was leaving so I bought them from him. And what about the $75 I gave to my wife so she could use them to make a Sportsbook bet? Not counting the two greenies I ratholed….
And there are ways to EASILY show a loss on slots that I’m sure the APs here are aware of.
In summary, a casino W/L statement for many players AINT WORTH JACK!
Quote: ChumpChangeOh, just gambling in a state racino without a W-2G woke up the IRS.
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You still receive a W2-G for large jackpots in racinos.
It's just that over $5000 they automatically deduct Federal and state taxes.
March 1, 2022
https://www.kiplinger.com/taxes/603033/tax-tips-for-gambling-winnings-and-losses
Generally, if you win more than $5,000 on a wager and the payout is at least 300 times the amount of your bet, the IRS requires the payer to withhold 24% of your winnings for income taxes. (Special withholding rules apply for winnings from bingo, keno, slot machines and poker tournaments.) The amount withheld will be listed in Box 4 of the W-2G form you'll receive. You'll also have to sign the W-2G stating, under penalty of perjury, that the information listed on the form is correct.
When you file your 1040 next year, include the amount withheld as federal income tax withheld. It will be subtracted from the tax you owe. You'll also have to attach the W-2G form to your return.
Again, this is what to expect when you plunk down a bet at a casino, racetrack, sports betting parlor, or with some other legally operated gaming business … don't expect your buddy or the guy in accounting who's running an office pool to withhold taxes (although, technically, they should).
I haven't ratholed really large amounts, nor have I taken large chips out of the casino, so I don't know how the casino will react if the chips appear (from surveillance) to never 'leave' the casino but do drop off tracking, only to reappear three weeks later. Do they mark them as 'dead' and thus not honor them when they are used after going dark for a couple of months? Someone else will have to answer this question.
