W2G's and Taxes
Tax season is going to suck. :{
$67,000 in documented "income" from gambling. You are allowed to deduct documented losses up to the amount of the win. Assuming you have documented the $27,000 in losses, you have $40,000 in gross income. (As an aside, this requires filing schedule "C" for itemized deductions).
$40,000 gross income-$5,800 standard deductionEdit: Cannot take the standard deduction in addition to the deduction for losses -$3,700 personal exemption = $36,300 taxable income.
$8,700X 0.10 (first income bracket) = $870
$27,600x0.15 (second income bracket) = $4,140
Total tax due and owning= $5,010.
But I have kept track of wins and losses with a notebook if that is what you mean. Up 40k after all the ups and downs.
Quote: teddysTotal estimate here, assuming you don't file as a professional gambler, you are single, under 65, and not blind:
$67,000 in documented "income" from gambling. You are allowed to deduct documented losses up to the amount of the win. Assuming you have documented the $27,000 in losses, you have $40,000 in gross income. (As an aside, this requires filing schedule "C" for itemized deductions).
$40,000 gross income-$5,800 standard deduction-$3,700 personal exemption = $30,500 taxable income.
$8,700X 0.10 (first income bracket) = $870
$21,800x0.15 (second income bracket) = $3,270
Total tax due and owning= $4,140.
Wow that's alot better than my guesstimate of $10,000. Sure sounds like you know what you're talking about. Thanks! :)
Quote: Mooseton
But I have kept track of wins and losses with a notebook .
I take it all your wins are from slots, if the casino sent
the IRS forms. Did you use a players card? If you did,
get your playing history from the casinos. You should have
kept track of the machine number on every machine you
played, money in and money out. Date and time and
casino. Its the only thing the IRS will accept as proof
of losses. The players card readout only tells part
of story. Its sketchy evidence at best, there's so
many ways to fudge the results.
Quote: EvenBobI take it all your wins are from slots, if the casino sent
the IRS forms. Did you use a players card? If you did,
get your playing history from the casinos. You should have
kept track of the machine number on every machine you
played, money in and money out. Date and time and
casino. Its the only thing the IRS will accept as proof
of losses. The players card readout only tells part
of story. Its sketchy evidence at best, there's so
many ways to fudge the results.
S*** that sucks. That'll be some work for me to look up all the info at all the casinos i've played at. And there is almost no chance of accurately figuring out the machines I've won/lost on.
Yes all the wins were from machine wins and I always use a player's card. Easy way out sounds to be to just request a statement from every casino I've played at the end of the year (which is a lot of casinos considering I live in Las Vegas). I can find out the specific slot machine numbers mostly, but not all, and that will require quite a bit of work, which sucks but oh well. Would it work to just request a win/loss statement from each casino I've played at this year? Dates I've got recorded, but I left out the time when I played and specific machine numbers. I might have screwed myself here.
But seriously, does everyone record their machine numbers that they play on or the separate times? Kinda sounds like it would suck the fun out of it all.
Quote: Mooseton
But seriously, does everyone record their machine numbers that they play on or the separate times?
Of course they don't, thats what the IRS counts on.
They want you to screw up so you have to claim
all your winnings as income. I'd get a tax consultant
if I were you.
Now, if you haven't been keeping contemporaneous records, this could be a problem, but it's never too late to start. See this article for information. The casino record provides a guide and is NOT considered legal documentation, as it nets out the entire year, rather than per session. Since you had no other income, and the amount you earn puts you more or less in the "professional" category, you should file as a professional gambler and deduct business expenses on Schedule C, rather than on Schedule A for a hobby gambler. The first link has Tax Court cases and books you can read to determine if this is worth it.
Quote: calwatchThe IRS doesn't require that you record machine entries,
From everything I've read on this, they do indeed require
machine numbers, time and date, money in and money
out. I know this because my wife had a similar problem
a few years back and had no losses to claim because
there were no records.
Quote: calwatchThe IRS doesn't require that you record machine entries, since remember a "session" is essentially one continuous playing period, regardless of whether you switch machines or not. I generally define it as stepping in and out of any one given casino. The rules are that you need to record date and type of wager, name and location of gambling establishment, persons present with you (if you went with a group), and amount won or lost. Also keep W-2G's, ATM records, and so forth. As part of money management, I generally withdraw what I plan to gamble with prior to when I bet, and deposit the remainder when I am done with that gambling visit, which also meets IRS rules and provides documentation, in the book entry of ATM withdrawals and deposits at a location out of my area. If you don't have those, you could recreate those records from bank statements.
Now, if you haven't been keeping contemporaneous records, this could be a problem, but it's never too late to start. See this article for information. The casino record provides a guide and is NOT considered legal documentation, as it nets out the entire year, rather than per session. Since you had no other income, and the amount you earn puts you more or less in the "professional" category, you should file as a professional gambler and deduct business expenses on Schedule C, rather than on Schedule A for a hobby gambler. The first link has Tax Court cases and books you can read to determine if this is worth it.
Nice links.
So what is the point of requesting a casino win/loss statement if it doesn't hold up come tax time? I notice every casino has a link to request this but for what purpose?
Also, my record keeping has just been: Date, Result(win/loss for the day), Net for the year (win/loss), Games (which ones I played and how I did on each one), and Casino(es) that I played at. Is that sufficient or not?
I just don't want to mess up. Thanks all for the helpful replies.
Quote: Mooseton
Also, my record keeping has just been: Date, Result(win/loss for the day), Net for the year (win/loss), Games (which ones I played and how I did on each one), and Casino(es) that I played at. Is that sufficient or not?
Its not because you could make it up sitting in your
home office. The IRS isn't stupid. If it were that
easy you could write off all your wins with fake losses.
Quote: BeardgoatPlaying poker might be an advantage for you.
Although I will seriously consider that, I'll probably even give a little play, it definitely sounds like it enters the gray area of dishonesty, which was not my purpose of starting this thread. That is very interesting though.
When I started this thread, I was just looking for a ballpark figure, and you all have been very helpful. It just sucks now that I'm told my documentation is not up to par, and if given an audit, I'd be up s*** creek.
I've played in probably 50% of the casinos in Las Vegas, including the entire strip, on a ton of different machines. There is just no way I would be able to figure out which specific machines I played on at this point. I guess I'll just have to "stay the course" cuz I didn't know any better. Win/loss statements combined with my gambling journal will have to do.
In addition, the Tax Court notes:
We also note that the revenue procedure provides that
“Verifiable documentation for gambling transactions includes but
is not limited to” Forms W-2G, wagering tickets, canceled checks,
credit records, and bank withdrawals--all of which are present
here. Id. sec. 3, 1977-2 C.B. at 538. Additionally, the revenue
procedure provides a method, keeping a gambling log, that the IRS
will consider as acceptable evidence for substantiation of
wagering winnings and losses. Id. It does not contain the
exclusive method for substantiating gambling losses. Id. sec. 1,
1977-2 C.B. at 538 (“The purpose of this revenue procedure is to
provide guidelines to taxpayers concerning the treatment of
wagering gains and losses for Federal income tax purposes and the
related responsibility for maintaining adequate records in
support of winnings and losses.”).
Therefore, you can post-facto construct a reasonable determination of gains and losses, by using the above items, to answer the poster's question. The gambling log with the machine numbers, which I find excessive, is acceptable but not required. This goes back to "the Cohan rule", which allows for estimation of records - although that estimation will be the burden of proof to the taxpayer to convince the IRS at audit. Still, although I am not your (or anyone else's) tax advisor, I would claim the expenses based on estimation, and prepared to come up with a foundation therein. If I was audited, I would indicate that while I did keep better logs when I was informed of the need to, I used Cohan to substantiate expenses, and would use the receipts, deposits, bank account statements, etc. to prove these expenses. If the IRS gives me a reasonable compromise, I would take it instead of running up more legal expenses to go to Tax Court. Also, I would keep better logs in the future.
Quote: ahiromuHow does it work with table games then?
It works the same way. Every table has a number. Time and date,
money in and money out, and dealers name. The IRS can and
will reject your proof if they don't like it and there's nothing you
can do about it. It depends on how much you like forking over an
extra 10 or 15 grand in taxes, as opposed to keeping adequate
records. They know 99% of gamblers lie about their losses, so
they make it as hard as possible for you.
I ran into the same thing when I had the cab co. Part of the business
was delivering lost luggage for the airlines. The drivers had to keep
logs of miles driven because they used their own vehicles. They
got so many cents a mile and could deduct oil changes and tires
and vehicle maintenance. The logs you kept had to be pristine and
accurate, or they would deny you the deductions. The IRS isn't
stupid.
Quote: calwatchIt depends on each district, and how much you want to fight. See the Cohan rule above. Again, if offered a reasonable settlement, I would take it rather than going to Tax Court, but taking zero losses is not the option, since the IRS recognizes, from the Tax Court decisions, that long term gamblers lose money. At the very least, appeal the decision - see Publication 5 - and see if the IRS will settle. I'd rather pay an attorney that money than the IRS.
I'm not actually being audited. Sorry if I gave that view.
Quote: MoosetonQuote: calwatchIt depends on each district, and how much you want to fight. See the Cohan rule above. Again, if offered a reasonable settlement, I would take it rather than going to Tax Court, but taking zero losses is not the option, since the IRS recognizes, from the Tax Court decisions, that long term gamblers lose money. At the very least, appeal the decision - see Publication 5 - and see if the IRS will settle. I'd rather pay an attorney that money than the IRS.
I'm not actually being audited. Sorry if I gave that view.
I was responding to EvenBob's waving the white flag at legitimate expenses. It's a business decision whether to continue to fight the IRS or not, and so if the wife decided not to fight the disallowed expenses that's their choice - but a qualified attorney could have used Cohan to reconstruct expenses. Is it worth fighting for $1,000? Probably not, but for five figures or more deficiency it is definitely relevant.
Quote: MoosetonExcellent! I feel better. Way to go! I will document machine #'s, time of day, and add whoever I'm with in addition to my documentation.
You can never have too much documentation, it shows them you're serious.
But you sure as hell can have too little, which is what most gamblers have.
Hit them with a lot of stuff and there's a good chance you'll get away with it.
players do. Just speak the machine number and the rest of
the info into the recorder and transcribe it later.
The good news is, the IRS is only doing 1/3 of the audits
they did in the 90's because of budget cuts. Congress keeps
making them smaller, no bigger. And you only need to worry
about all of this if you get audited.
Good Idea
Quote: buzzpaffWhat are your documented expenses ? And i do mean documented !!!
In case anyone missed it, you can only deduct expenses if you file as a professional gambler. I'm not familiar with the exact requirements for that (OP might qualify since he doesn't have another job), but if you have a "normal" job it's likely you don't qualify.
Quote: MoosetonResurrecting my old thread. Does your tax accountant actually need to see your W2-G's? I consider that information too private for my tax guy.
That is exactly the kind of information your tax preparer needs. What else could it possibly be for?
Quote: MoosetonResurrecting my old thread. Does your tax accountant actually need to see your W2-G's? I consider that information too private for my tax guy.
What? You think that forms which document your income are too private to show to the guy who is preparing your taxes?
Do you expect him to just guess at all the numbers when he fills out your tax forms?
Quote: MoosetonBear with me here. The bits and pieces I've picked off the internet seem to indicate that the tax preparer would only need the sum of the W2G amounts. Knowing the games, machine and table numbers, dates, times, and casinos I've played at is the kind of info I would pay to not release to anyone. If he doesn't absolutely need it I wouldn't voluntarily give that info up. Do you think a home made summary would be enough?
I guess it depends whether you want him to fill out your taxes properly or not.
Technically, he is supposed to add up all your winning sessions (not just your W2G's) and deduct all your losing sessions.
Realistically, most people don't go through all this hassle, or even have good enough records to support it. If you have the records, I'd suggest just giving it all to him.
Why do you consider this so private?
Quote: MoosetonBear with me here. The bits and pieces I've picked off the internet seem to indicate that the tax preparer would only need the sum of the W2G amounts. Knowing the games, machine and table numbers, dates, times, and casinos I've played at is the kind of info I would pay to not release to anyone. If he doesn't absolutely need it I wouldn't voluntarily give that info up. Do you think a home made summary would be enough?
The tax preparer has to feel comfortable enough about the numbers he puts on the form to sign it. I don't know any (and my mom's in the business) who would sign the form without seeing the documentation on the W2G's. I'm just sayin'...
Quote: AxiomOfChoiceWhy do you consider this so private?
I have little to no heat whatsoever at this time and I really don't want some suspicious tax accountant looking closely at how the heck I'm printing money off in the casinos. Plus, not sure if you could tell haha, but I guess I'm just a little paranoid.
Quote: MoosetonI already have those numbers prepared for him. And the records are much improved since this thread was started. Think that would be good enough? I ended up in an uncomfortable situation last year where the preparer demanded the w2gs or else he said he wouldn't be able to file. Being that I waited to mid April I reluctantly gave him the stack. I so badly wanted to tell him only the numbers that are truly necessary. There's a little more to the story that I'm just not willing to share.
You could also just do your own taxes.
Quote:I have little to no heat whatsoever at this time and I really don't want some suspicious tax accountant looking closely at how the heck I'm printing money off in the casinos. Plus, not sure if you could tell haha, but I guess I'm just a little paranoid.
Why not? Does he work for a casino or something?
He will think that you just got lucky. The casino already has all the information that you are going to provide him, anyway.
Quote: MoosetonI filed as an amateur last year but would like to file as a pro for my first time. Right now its looking like I'm going to do it myself. I've read 3 books and examined some examples.
One thing that you could consider doing is doing it yourself, and then paying a guy some amount of money to look it over and tell you if you missed any possible deductions. That way he is not signing anything so he doesn't need to see any documentation. It should also be cheaper than the full thing.
If you file for the automatic extension (so your return will be due in October) you should be able to find someone with some free time after April who is willing to do this for you. Just be sure to pay anything that you think you owe by April 15 to avoid interest (ie, when you file for the extension, send any money that you think you owe. If you are wrong, you can always get it back when you file the return)
Quote: AxiomOfChoiceOne thing that you could consider doing is doing it yourself, and then paying a guy some amount of money to look it over and tell you if you missed any possible deductions. That way he is not signing anything so he doesn't need to see any documentation. It should also be cheaper than the full thing.
I appreciate your advice. I might just do that.
I got a Letter In 2009 for tax period Of 2007 Telling me i have a 10k w2g And I didn't file it i sent them A letter from the Player tracker At the bar And they Said Case Closed//.. My Question I've Asked 3 major firms they Said If they don't hAve your reall ss Number not to Worry ... However They have u drivers Licence DOB ext... and Signature on W2 G
Obvouis I didn't Win this 469k I didn't Lose 469k Either any Sug.,.. My Accountant said i;ve never filed them Before not to file it now as it will draw a flag.... Wait to get a letter then Get The Win loss letters from where u need to do ... the Sticky part is The wrong SS Number they wrote it Down wrong at begin of the Year I never caught it so theose w2G are gone
if you have an accountant I would listen to them and not what an internet forum tells you.
Quote: gary0101I have 469k In W2G On My name wrong SS number .. I've never claimed a W2G In 30 Yesrs as I'm 50
I got a Letter In 2009 for tax period Of 2007 Telling me i have a 10k w2g And I didn't file it i sent them A letter from the Player tracker At the bar And they Said Case Closed//.. My Question I've Asked 3 major firms they Said If they don't hAve your reall ss Number not to Worry ... However They have u drivers Licence DOB ext... and Signature on W2 G
Obvouis I didn't Win this 469k I didn't Lose 469k Either any Sug.,.. My Accountant said i;ve never filed them Before not to file it now as it will draw a flag.... Wait to get a letter then Get The Win loss letters from where u need to do ... the Sticky part is The wrong SS Number they wrote it Down wrong at begin of the Year I never caught it so theose w2G are gone
Is this why I've been getting letters every year from the IRS saying my SSN shows I Have $469k in W2G's? Taxes and penalties are up around $400k already too =P. I really do wonder if that "wrong SSN" is has someone else getting letters from the IRS on your behalf...
Is your name "Bobb Dancer"?Quote: gary0101I have 469k In W2G On My name wrong SS number .. I've never claimed a W2G In 30 Yesrs as I'm 50
I got a Letter In 2009 for tax period Of 2007 Telling me i have a 10k w2g And I didn't file it i sent them A letter from the Player tracker At the bar And they Said Case Closed//.. My Question I've Asked 3 major firms they Said If they don't hAve your reall ss Number not to Worry ... However They have u drivers Licence DOB ext... and Signature on W2 G
Obvouis I didn't Win this 469k I didn't Lose 469k Either any Sug.,.. My Accountant said i;ve never filed them Before not to file it now as it will draw a flag.... Wait to get a letter then Get The Win loss letters from where u need to do ... the Sticky part is The wrong SS Number they wrote it Down wrong at begin of the Year I never caught it so theose w2G are gone
Quote: GWAE
if you have an accountant I would listen to them
According to him, the accountant told him not to file the W2-Gs as it would raise a red flag.
I would fire that accountant.
In December I get a letter from the IRS saying "Proposed Amount Due $3,800.00" and the letter is called a CP2000 letter. Which according to my accountant is a 'inquiry' not a demand, lien or similar fact of findings, etc. They are merely asking for an explanation and a chance to explain before they start collection or other hard core findings. Of course the thing to do, which we are, is an amendment 1040 and a deduction for the $7k of slots winnings. According to the accountant I over paid the Federal by a couple hundred as well as the state. So probably will get $200 to $400 or so refunded.
They will catch it if someone sends in a W2G and you will have a problem. It will eventually get to the point where it jams you up.
Last year I only have one W2G for $2k and she just added it to my income and took a $2k deduction as one of the places I played I have in excess of $2k loss on my win-loss at table games.
I'm not going to play slots while I am waiting anymore, I will stick to baccarat. No paperwork.
Quote: CrystalMathAccording to him, the accountant told him not to file the W2-Gs as it would raise a red flag.
I would fire that accountant.
The only 'red flag' is not filing it. My accountant and I read into the publications regarding the loss deduction, etc. It is pretty clear as to what is accepted as 'proof' and for cursory W2G's a win-loss of the same amount is nothing out of the ordinary and 'norm'. I have been in IRS audits before (nothing to do with personal or W2G's) and I will say some type of documentation of the taxpayer's filing (even incomplete back up data) is usually giving to the tax payer for amounts not being large (like over $100k level). I can't see any problem for a non professional player to walk in an audit and have a win-loss for say $5k or $10 or $20k offset the same amount of winnings. Of course, from jump street you have to put those W2G's into your income which might alter any type of refund you get back.
Quote: Baccaratfrom79I will tell you what I know. (I never play slots unless I am waiting on my wife and one of the places we play, there is a high limit slots section in the same area as the high limit private cashiers cage). So 2013 I won 7,000.00 from 5 $100 bills on a $25.00 machine. I got 4 W2G's totaling the $7k. I didn't file them. I always do chips and am a front money player and CTR'd and LTR's, doesn't matter to me. One can cash out $50k or $200k in chips and you will never get a W2G as we all know. My money is legal so I never worried. I also had a $10k lottery win on a scratch off ticket and the state took out like $3,190.00 ($2,500 for fed and $690 for state). So the bottom line is that I ignored the $17k of winning W2G's.
In December I get a letter from the IRS saying "Proposed Amount Due $3,800.00" and the letter is called a CP2000 letter. Which according to my accountant is a 'inquiry' not a demand, lien or similar fact of findings, etc. They are merely asking for an explanation and a chance to explain before they start collection or other hard core findings. Of course the thing to do, which we are, is an amendment 1040 and a deduction for the $7k of slots winnings. According to the accountant I over paid the Federal by a couple hundred as well as the state. So probably will get $200 to $400 or so refunded.
They will catch it if someone sends in a W2G and you will have a problem. It will eventually get to the point where it jams you up.
Last year I only have one W2G for $2k and she just added it to my income and took a $2k deduction as one of the places I played I have in excess of $2k loss on my win-loss at table games.
I'm not going to play slots while I am waiting anymore, I will stick to baccarat. No paperwork.
So you don't mention your table games action in any way on your taxes?
My main question is because I make low six figures, I'm single, and each year have 1-4 W2Gs on average. Very simple taxes.
I owed an extra $1200 or so after putting my W2.
After putting in a $4000 W2G and $1200 W2G I owe an extra $1300 or so (25-30% of winnings). Even when I put in $5200 loss (I was a net loser on the year) it doesn't affect the $1300 owed. So why let me report losses? My understanding is because my 5200 loss is still below the standard deduction, so if I won 100k in W2Gs and put in 100k as loss, it would help lower my tax burden.
I just don't want to be overpaying if for some reason I am with TurboTax, and this is the 3rd year in a row I'm paying a full 30% or so my winnings in extra taxes owed (but my total of W2gs has never been higher than 5k in a year).
If it isn't, then you take the standard deduction and all that work you did in itemizing things was just an excercise of data entry.
If your tax situation really is as simple as you describe, then I don't think things would work out for you any better with a tax consultant, but I believe their rates have dropped a lot over the past handful of years, probably because of turbotax and other tax prep software.
Quote: wezvidz
After putting in a $4000 W2G and $1200 W2G I owe an extra $1300 or so (25-30% of winnings). Even when I put in $5200 loss (I was a net loser on the year) it doesn't affect the $1300 owed. So why let me report losses? My understanding is because my 5200 loss is still below the standard deduction, so if I won 100k in W2Gs and put in 100k as loss, it would help lower my tax burden.
If your write offs are not over the standard deduction there is no point in claiming them. The point you are missing with your second example is that if you claim $100k in W2G's your adjusted gross income goes up by that and you will now be taxed at the rate of a person that makes low $200,000's (AGI) instead of a person that makes low $100,000's. Your tax rate percentage will be higher even though net income amount is the same,
Quote: wezvidzIs there any reason for me to check with an H&R Block type accountant and pay more than $39 for TurboTax?
My main question is because I make low six figures, I'm single, and each year have 1-4 W2Gs on average. Very simple taxes.
I owed an extra $1200 or so after putting my W2.
After putting in a $4000 W2G and $1200 W2G I owe an extra $1300 or so (25-30% of winnings). Even when I put in $5200 loss (I was a net loser on the year) it doesn't affect the $1300 owed. So why let me report losses? My understanding is because my 5200 loss is still below the standard deduction, so if I won 100k in W2Gs and put in 100k as loss, it would help lower my tax burden.
I just don't want to be overpaying if for some reason I am with TurboTax, and this is the 3rd year in a row I'm paying a full 30% or so my winnings in extra taxes owed (but my total of W2gs has never been higher than 5k in a year).
Since the standard single deduction is only $6,200 and you have gambling losses of $5,200, you can't find another $1,000 in deductions? At 100K+ income, most states/local income taxes would get you $1,000 in deductions. If no state taxes, don't forget the sales tax exemption.
