Jackpot Taxes
I am looking for some advice on what steps I should take to solve a gambling tax issue. I just got an IRS bill in the mail saying that I owe $27,000 in taxes for multiple jackpots I won back in 2019. I know for a fact I lost way more than I won for the year, but I do not have any official records of the losses. Is that something I can obtain from my local casino? I filed my 2019 taxes myself on TurboTax and never reported any gambling wins or losses. I assume the casino sent them a record of my jackpot wins. I know I will probably need to hire an accountant to figure it out, but I was hoping someone might have already gone through this same sort of situation and could explain the process to me. Any advice would be much appreciated.
Thank you!
The IRS will put you on a monthly payment plan if you ask. I once did one for $500 a month for six years.
Did you happen to do the taxaudit.com membership with your TurboTax filing? They're great at navigating things like this.
Thanks for your reply. I have quick question for future reference. Besides calendar dates, amounts won/lost, and casino location, what other things should I include in a gambling diary to meet the IRS’s expectations.
Thank you.
Thanks for your reply. Unfortunately, I did not do the taxaudit membership. I realized that this is not an actual IRS bill, rather it is a CP2000. So I’m going to send in the disagreement by the due date and proceed from there. Hopefully I can scrounge up enough evidence of losses to match the w2g wins.
The one thing I don't cover in the article is what to do if you don't have contemporaneous records of your losses. In that case, I imagine you'll be on the hook for paying taxes on the W-2G's as though those were wins. You could double-check with a tax attorney, but I think that's the answer you get. If you do check with a tax attorney, please report back here what you were advised, so we all can learn.
My lesson was, if you had a W2G in any amount for a tax year make sure that you claim your wins (and losses) when you do your taxes because in following years they will be far more skeptical of your claims if you amend your claim after being told that you owe money (plus you should in all years, even if most years will be losses). It can be hard to keep track of, but its better to claim your losses the year that you receive them (plus its probably a generally good habit to track losses).
https://www.irs.gov/taxtopics/tc419
We got a bill from the IRS.
I responded to the bill with a hand written note saying we omitted the W2Gs in error but our losses still exceeded our wins.
The IRS accepted the hand written note and the charge was withdrawn.
Write them a letter.
Quote: GandlerI had a similar problem some years ago (not to that extent), due to a random W2G that I genuinely forgot about. I just paid the amount that they said that I owed because it would cost more to to fight it it or to amend my tax return and hope (it was less than 3k). I had losses that equaled or were greater than my wins, but it was not worth trying to convinced the IRS and I made the mistake (of not reporting).
I always tell people to go to the IRS before filing and get a list of all reported income. They will give you a printout showing exactly what was reported to them. Then just make sure that you include all of those items on your return. I have found that many W2G's that I had in my possession were never turned in by the casinos.
No doubt, members will reply to this post attempting to dispute it, without having read the article. Don't do that, read the article first.
Quote: MichaelBluejayEveryone saying you should definitely report your W-2G's as income, is wrong. Again, I refer readers to how to report gambling income.
No doubt, members will reply to this post attempting to dispute it, without having read the article. Don't do that, read the article first.
Don't suppose you could link to relevant part.
(groan)Quote: rxwineDon't suppose you could link to relevant part.
The explanation starts in the very first section of the article, and in that section there's a prominent link to the details.
Let me guess, you didn't even look at the article before complaining that you couldn't find the relevant part?
Quote: MichaelBluejay(groan)
The explanation starts in the very first section of the article, and in that section there's a prominent link to the details.
Let me guess, you didn't even look at the article before complaining that you couldn't find the relevant part?
No i looked at how long the page was. I always read longer pages from the bottom up, because it saves a lot of time, as that is where conclusions or rephrasing the content occurs.
No, it didn't. Rather than even glance at the intro, you took the time to create a post to complain that you couldn't find what's actually front and center, then I had to reply, and then you replied to that. Some time-saver.Quote: rxwineNo i looked at how long the page was. I always read longer pages from the bottom up, because it saves a lot of time....
Anyway, as I suspected, you didn't read any of the article. I've done everything but read it to you.
Quote: MichaelBluejayNo, it didn't. Rather than even glance at the intro, you took the time to create a post to complain that you couldn't find what's actually front and center, then I had to reply, and then you replied to that. Some time-saver.
Anyway, as I suspected, you didn't read any of the article. I've done everything but read it to you.
If you call that a complaint, you're deluded. This is a complaint. LISTEN YOU STUPID MOTHERFUCKER, JUST QUOTE WHAT IT IS YOU WANT TO POINT OUT AND PUT THE GODDAMN LINK TO THE ARTICLE AT THE END OF IT, SO IF WE WANT TO READ THE WHOLE THING WE CAN!
As I said in my earlier post here, there's more detail than can be covered in a forum post. Hence the article. If you won't deign to read it, I can't help you, sorry.Quote: rxwineIf you call that a complaint, you're deluded. This is a complaint. LISTEN YOU STUPID MOTHERFUCKER, JUST QUOTE WHAT IT IS YOU WANT TO POINT OUT AND PUT THE GODDAMN LINK TO THE ARTICLE AT THE END OF IT, SO IF WE WANT TO READ THE WHOLE THING WE CAN!
Quote: MichaelBluejayAs I said in my earlier post here, there's more detail than can be covered in a forum post. Hence the article. If you won't deign to read it, I can't help you, sorry.
Other than whole books being summarized in a couple paragraphs, I’m sure the detail is far too extensive.
It's not, all the information is essential. But since you refuse to read it, you'll never know.Quote: rxwineOther than whole books being summarized in a couple paragraphs, I’m sure the detail is far too extensive.
There's a summary RIGHT AT THE TOP OF THE ARTICLE, but again, since you refuse to read it, how would you ever know?Quote: rxwineEven NASA can summarize.
Quote: DRichI always tell people to go to the IRS before filing and get a list of all reported income. They will give you a printout showing exactly what was reported to them. Then just make sure that you include all of those items on your return. I have found that many W2G's that I had in my possession were never turned in by the casinos.
I think what happened is I had in one year a W2G and a 1099 that were both relatively small (a company I helped out for a couple weeks) and both were near the beginning of the year, so by the end of the year I had totally forgot about them (I honestly do not even remember what the W2G was for, that is how unremarkable it was or if they actually gave me a hard copy when I was there, I assume that they probably did, its probably at the bottom of an old coat pocket somewhere).
And, neither the casino in question nor the company mailed me either form, so by March of the following year they were both completely out of my brain.
So it was two forms of income reported to the IRS by others, but not by me (again genuine mistake, I was not trying to skim money from the IRS). But, I understand that I ultimately was at fault, so I just paid it (I am not sure how much of my owed bill was gambling vs the 1099, probably most of it was from the 1099, I am assuming the W2G would be barley over the minimum required to print one, so probably even going back and amending to cancel gambling losses would only make a minimal change even if they accepted it). But, that is a great idea (asking the IRS for all forms sent for you before filing taxes).
Quote: MichaelBluejayThere's a summary RIGHT AT THE TOP OF THE ARTICLE, but again, since you refuse to read it, how would you ever know?
Guess it’s a pet peeve.
Example of some type of ads.
For instance
EASY WEIGHT LOSS they post. Yeah I say. But No details, no executive summary. Can’t be bothered to even post the general idea? Is it no carbs diet? Is it the Neanderthal diet? Is there no general idea. I think even quantum theory has some general ideas.
Yeah, other sites are annoying like that. Not mine.Quote: rxwineEASY WEIGHT LOSS they post. Yeah I say. But No details, no executive summary. Can’t be bothered to even post the general idea? Is it no carbs diet? Is it the Neanderthal diet? Is there no general idea.
Quote: MichaelBluejaydanepeterson, much of the advice in this thread is flat-out wrong. Here's my article on gambling taxes (endorsed by the Wizard) which explains how to report, in great detail, citing official and expert sources. There's more to the topic than can easily be explained in a forum post.
I really like the quote at the top "how taxes are supposed to be done". I would say it is great information about how the law is written, as ambiguous as the law is. The way it is implemented and enforced is far different. And probably different in every case a person gambles and wins money.
I would think the vast majority of gamblers who win some days and lose other days don't report anything. The majority of them are net losers for the year. "The IRS doesn't explicitly define what a 'session' is, so just use a reasonable definition." Having a session start on 1 January and end on 31 December is reasonable, according to some gambling and casino experts.
"The IRS says your diary should include, at a minimum:" - The IRS is charged with enforcing the laws, but this comes across as interpreting the laws. (I have not seen the law as written, so I am only going based on the information in the article). So long as I follow the tax law by paying the correct amount on my winnings, is there a specific tax law I am breaking by using an accounting method that is substantially different? Or am I only going against the IRS advisement?
The way I do everything is a lot different, but has a lot of inherent advantages for me, which leads to better accounting and therefore a larger contribution to the treasury department. At the end of the year, I put one number down under "other income" on my 1040. The IRS has accepted that for gambling every single year. If they ever disagree, what could they do? How could they possibly have any information that put all my bets together? Some of it is recorded on accounts, players card, won-loss statements and w2s, and they could piece that together. But quite a lot is not recorded there. My records would almost certainly have to suffice, unless they are going to insist I pay less.
Quote: rxwineIf you call that a complaint, you're deluded. This is a complaint. LISTEN YOU STUPID MOTHERFUCKER, JUST QUOTE WHAT IT IS YOU WANT TO POINT OUT AND PUT THE GODDAMN LINK TO THE ARTICLE AT THE END OF IT, SO IF WE WANT TO READ THE WHOLE THING WE CAN!
You make a lot of good points. I know see things your way.
Quote: MichaelBluejayYeah, other sites are annoying like that. Not mine.
Of course, I mean the forum post having more details, not your site.
1. A brief synopsis here. 2. More details at site.
But I'm not telling you what to do. Just telling you what I think about it.
As I keep saying, the topic is simply too complicated to include the details in a forum post, hence the article. Also, in the past when I've tried to include some details in a post, since it wasn't *completely* detailed, members then hammered me with follow-up questions in the thread, rather than following the link to the article. You yourself just demonstrated the lengths that members will go to avoid reading a well-organized article that answers all their questions. So, the article's available, but if you can't be bothered to read it, then I'm sorry.Quote: rxwineOf course, I mean the forum post having more details, not your site.
Quote: MichaelBluejayAs I keep saying, the topic is simply too complicated to include the details in a forum post, hence the article. Also, in the past when I've tried to include some details in a post, since it wasn't *completely* detailed, members then hammered me with follow-up questions in the thread, rather than following the link to the article. You yourself just demonstrated the lengths that members will go to avoid reading a well-organized article that answers all their questions. So, the article's available, but if you can't be bothered to read it on my site, then I'm sorry, I'm not going to reproduce it here.
Well, I'm fine with you pimping your site so people have to go there to read something you yourself have copyright ownership of.
I'm not aware of any expert who believes something so outrageous. I added a paragraph to the article to explain why this isn't a reasonable interpretation.Quote: TomGHaving a session start on 1 January and end on 31 December is reasonable, according to some gambling and casino experts.
Quote: rxwineIf you call that a complaint, you're deluded. This is a complaint. LISTEN YOU STUPID MOTHERFUCKER, JUST QUOTE WHAT IT IS YOU WANT TO POINT OUT AND PUT THE GODDAMN LINK TO THE ARTICLE AT THE END OF IT, SO IF WE WANT TO READ THE WHOLE THING WE CAN!
Wait... since when can we use obscenities against fellow members as long as we’re doing it stealthly by writing in the third person?
Quote: MichaelBluejayIf I'm the target. I've been insulted by numerous members, usually nothing happens. I gave up on complaining about it.
Given the profanity, I imagine that something would be done if someone were to complain. If I had to guess, my guess would be that OD is not following the thread.
Anyway, I'm not going to complain as this has nothing to do with me. If someone else wants to complain, then it's up to them.
Sorry dude, but i think you will have to pay $27k.Quote: danepetersonHi everyone,
I am looking for some advice on what steps I should take to solve a gambling tax issue. I just got an IRS bill in the mail saying that I owe $27,000 in taxes for multiple jackpots I won back in 2019. I know for a fact I lost way more than I won for the year, but I do not have any official records of the losses. Is that something I can obtain from my local casino? I filed my 2019 taxes myself on TurboTax and never reported any gambling wins or losses.
I assume the casino sent them a record of my jackpot wins. I know I will probably need to hire an accountant to figure it out, but I was hoping someone might have already gone through this same sort of situation and could explain the process to me. Any advice would be much appreciated.
Thank you!
the bolded part is your problem.
At minimum:
you should have entered all the w2-G you got from the casino as income.
THEN to offset that, put in the same amount on the line for gambling loses.
if you're in the 30% tax bracket, then $27k/.3 = $90k worth of w2-g?
Am i close?
If i am close, then you probably will still get audited by the IRS even if you did the minimum because a $90k write off is worth their time to investigate.
you would then need to provide proof such in daily records of win/loss for EACH slot+table game you played.
This is how i do it:
5/5/2019, casino name, 9/6 Jacks or Better video poker, slot machine #, start $100, end $15
i keep it on an excel spreadsheet on my phone.
Probably not, I think. IRS funding has been slashed and so audits are way down. Audits are down 50% compared to ten years ago. It's ironic, cutting the IRS budget doesn't actually save any money, because of fewer audits. The cuts actually wind up costing money. https://www.foxbusiness.com/money/irs-audits-personal-income-tax-returns-falls-lowest-level-in-decadesQuote: 100xOddsIf i am close, then you probably will still get audited by the IRS even if you did the minimum because a $90k write off is worth their time to investigate.
OP might get a letter and a demand for explanation from the IRS, but I think full-blown audit is unlikely. In fact, I'd bet on it.
