W2G's and Taxes
Quote: Sabretom2Gambling winnings go on line 21 (income). Losses are an itemized deduction. As long as your losses equal W2Gs, taxes are unaffected. There is no reason to avoid W2Gs.
Not really true as most people don't itemize, only 33% itemize. So in reality your winnings up to the amount of your standard deduction is taxable, because if you didn't gamble you would still be able to claim the standard deduction.
Quote: zoobrewNot really true as most people don't itemize, only 33% itemize. So in reality your winnings up to the amount of your standard deduction is taxable, because if you didn't gamble you would still be able to claim the standard deduction.
This is one thing that is broken in the tax code. It is not fair that I win 4k in one spin I have to pay 1200 in taxes even though I lost for the year. So essentially they are double dipping in taxes. I win 4k and I get taxed 1200, overall I lose 2k for the year and the casino gets taxed 50%. The government ends up making more money than anyone.
Quote: DRichIf 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,
DRich, I don't believe that's true. Your total deductions from Schedule A (which include gambling losses) come off at line 40 (this year's 1040 at least) and your taxable income is on line 43. So your tax rate won't go up. There are a lot of other things that will be negatively impacted though as your AGI (line 37) will be artificially inflated. Things like Roth IRA contributions, various deductions for tuition, the amount of medical expenses you can deduct etc. will all be negatively impacted by a large AGI.
At least a few things will be positively impacted though. The amount you can deduct on Schedule A for state sales tax is based on your income (unless you have exact records for all the state tax you paid). So that number will go up...there was one other benefit I discovered last year, but I don't remember now.
Quote: wezvidzFL, no state tax..
Income or sales?
Quote: Sabretom2Gambling winnings go on line 21 (income). Losses are an itemized deduction. As long as your losses equal W2Gs, taxes are unaffected. There is no reason to avoid W2Gs.
As another has said, not true. I just went through it today with a tax person that was very experienced and well up on the subject matter. Most times there is no way to net out the winnings with a lose.
Quote: AcesAndEightsIncome or sales?
FL has no state income tax.
State sales tax 6% on everything except basic groceries, and 1 week/year there's a no sales tax thing on school supplies, clothing, a wide range of things. Most counties/local gov'ts add at least .5% to that. The highest I've seen is a total of 8%, mine is 6.5%
Tourist tax on hotels and concessions 2-6% on top of state sales tax%.
Cigarettes $1.34/pack.
Gas $.344/gallon unleaded, $.296/diesel.
Corporate taxes 5.5%.
Property tax is local, but restricted to 10 mill, plus local entities can add up to 2 mill. There's a homeowner's exemption for the first 25-50K of value.
Cars cost about $50/year to license.
Alcohol is levied depending on the percentage of alcohol in the beverage and the size of the container; ranges from about $.50/gallon to almost $10/gallon.
Quote: beachbumbabsFL has no state income tax.
Property tax is local, but restricted to 10 mill, plus local entities can add up to 2 mill. There's a homeowner's exemption for the first 25-50K of value.
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A lot of good that does, especially if you are east of Federal Highway in Broward and Southern Palm Beach Counties. LOL!!!
Quote: MoosetonI know you don't mail W2Gs to the IRS for the federal return but does anyone know if you are supposed to send those with state returns? Specifically NJ.
Instructions for filing NJ Income Taxes says you should include ALL W2's and 1099-MISC (the other form for reporting gambling winnings under some circumstances). So, yes, I would.
1.) Received a W2-G for a video poker jackpot and they filed using standard deduction (no reported losses). Paid taxes on full amount.
2.) Received a W2-G for a video poker jackpot and they filed using itemized deductions but did not report any gambling losses. Again paid taxes on the full amount.
I really can't say I have ever seen a recreational player document anything in a casino even though I have seen many, many Royal Flush jackpots hit.
Quote: oldbudmanJust wondering if anyone has ever heard of someone getting audited for gambling activity based upon the 2 following scenarios:
1.) Received a W2-G for a video poker jackpot and they filed using standard deduction (no reported losses). Paid taxes on full amount.
2.) Received a W2-G for a video poker jackpot and they filed using itemized deductions but did not report any gambling losses. Again paid taxes on the full amount.
I really can't say I have ever seen a recreational player document anything in a casino even though I have seen many, many Royal Flush jackpots hit.
I don't see how either 1) or 2) would be anything but gold stars from the IRS. You're reporting the win, paying your top tax rate on it in both cases. They'd be thrilled.
Quote: odiousgambitnew unpassed tax plan would about double the standard deduction. For gamblers getting the W2g's this would raise the bar for how many itemized deductions you need not to get screwed [assuming you have gambling losses you could have deducted]
I haven't spent a lot of time looking but I read there would be no itemizing gambling loses under the new plan.
https://wizardofvegas.com/forum/gambling/gambling-with-an-edge/29131-tax-questions-solicited/#post597896
Someone I met in the Diamond lounge said he had about $15k worth of w2-g's last year.
he wrote them all off because the annual win/loss statement from the casinos showed he has more than $15k worth of losses.
i told him that the IRS probably wont accept that win/loss statement as proof and that you need to keep a daily diary of wins/losses.
he starts to get all worried when another patron in the lounge chimed in that the odds of the IRS auditing him for $15k worth of w2-g write offs is near 0.
he said he regularly writes off $20k worth of w2-g's w/o proof and hasn't been audited yet.
i said 'yet' is the keyword.
He seemed confident it's not going to happen.
Are the odds of getting audited by the IRS = low if the write off of w2-g's is $20k or below?
What is the real world general threshold for w2-g write offs before your odds of being audited goes above low/near 0?
Well.Quote: GWAEQuote: odiousgambitnew unpassed tax plan would about double the standard deduction. For gamblers getting the W2g's this would raise the bar for how many itemized deductions you need not to get screwed [assuming you have gambling losses you could have deducted]
I haven't spent a lot of time looking but I read there would be no itemizing gambling loses under the new plan.
That seems to come from Oklahoma senator Tom Coburn's recent remarks, and does suggest some such limitation is in the new bill.
He seems to have been told that multimillionaires are writing off true gambling losses to the tune of $21 billion - or he is making it up out of whole cloth. The remarks strongly suggest the thing the millionaires are supposedly getting away with is not just a matter of offsetting losses against wins, but flat out losing the money gambling and then getting a tax break. So, how do they get to do that and we don't?
https://www.huffingtonpost.com/2011/11/14/tom-coburn-30-billion-millionaires-tax-breaks_n_1092692.html
Quote: 100xOddsIhe said he regularly writes off $20k worth of w2-g's w/o proof and hasn't been audited yet.
i said 'yet' is the keyword.
He seemed confident it's not going to happen.
I owed $400 in back taxes, and it only took them a year to catch up with me.
Quote: rxwineI owed $400 in back taxes, and it only took them a year to catch up with me.
how is that similar to writing off $20k in gambling loses to offset $20k in w2-g's?
Quote: odiousgambitWell.Quote: GWAEQuote: odiousgambitnew unpassed tax plan would about double the standard deduction. For gamblers getting the W2g's this would raise the bar for how many itemized deductions you need not to get screwed [assuming you have gambling losses you could have deducted]
I haven't spent a lot of time looking but I read there would be no itemizing gambling loses under the new plan.
That seems to come from Oklahoma senator Tom Coburn's recent remarks, and does suggest some such limitation is in the new bill.
He seems to have been told that multimillionaires are writing off true gambling losses to the tune of $21 billion - or he is making it up out of whole cloth. The remarks strongly suggest the thing the millionaires are supposedly getting away with is not just a matter of offsetting losses against wins, but flat out losing the money gambling and then getting a tax break. So, how do they get to do that and we don't?
https://www.huffingtonpost.com/2011/11/14/tom-coburn-30-billion-millionaires-tax-breaks_n_1092692.html
That article is 6 years old,but it was true then as it is now: losses can only be deducted to the extent of reported wins.
It looks to me like whoever compiled the list simply grabbed people's Schedule A's and put listings in catagories. (What on earth are their sources? This is private info.) There's no balancing report on earnings, but for the losses to be allowed, the earnings would also have to be reported on the front form.
There's also several obvious omissions. No listing of charitable contributions or mortgage interest, which this class of taxpayer would have in abundance.
So you have to figure this is a cherry-picked list with an agenda. They MEANT you to think there was an angle, but the effect of those deductions was, at worst, to zero out earnings. Much more likely that there was a significant amount paid on earnings they couldn't offset. There's a ceiling on off-setting losses (they can't be more than winnings) but none on paying taxes on winnings above losses (and all at a person's top rate).
Quote: beachbumbabsthey can't be more than winnings
and no carryover of losses from a previous year - unless billionaires have a different set of rules to go by
Quote: LandoI've been trying to figure out what people traditionally do with w2g type wins at casinos in a different state from their home state, regarding taxes. I know the IRS gets these and one should report those on yearly taxes, but if the casino you are at deducts the state taxes, do people really submit a nonresident tax form to that state, having paid them? I can't imagine anyone would go to the trouble in that state or even their own (let's be honest) by reporting it on paper. It doesn't seem to me that the local casino sends anything out except to the Feds, anyway. Correct?
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I do. Louisiana requires a 6% withholding on all jackpots but you can file as an out-of-state resident and get most of it back.
The only two states I have gotten have gotten W-2G's where they withhold state taxes are Louisiana and Mississippi. For LA, I filed and got back about 90% of the withholding. For MS, I was told not to bother, so I didn't. (Google says MS withholding is non-refundable.)Quote: LandoI've been trying to figure out what people traditionally do with w2g type wins at casinos in a different state from their home state, regarding taxes. I know the IRS gets these and one should report those on yearly taxes, but if the casino you are at deducts the state taxes, do people really submit a nonresident tax form to that state, having paid them? I can't imagine anyone would go to the trouble in that state or even their own (let's be honest) by reporting it on paper. It doesn't seem to me that the local casino sends anything out except to the Feds, anyway. Correct?
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For other states, assuming they are all the same, you can pay the federal but not the state if you are not a resident.
I often have a lot of jackpots from NYS (where I live) and Massachusetts. I'm not allowed to deduct state taxes in Massachusetts.
When I file my NYS tax refund is almost always swallowed up by what I still owe Massachusetts
Quote: LandoI was just curious as to how many people bother with any of this, especially if they take taxes out at the point. Also, if you move to another state and still retain the old state's ID (since most carry a drivers license as ID not passport, as they go from place to place), just wondering if you hit a big jackpot and you're living in a new place it wouldn't provide a problem for you regarding the old - rather, just IRS considerations (Feds).
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I have probably had close to 1000 W2G's and I have never voluntarily had taxes taken out. Some states take it out for everybody.
Quote: DRichQuote: LandoI was just curious as to how many people bother with any of this, especially if they take taxes out at the point. Also, if you move to another state and still retain the old state's ID (since most carry a drivers license as ID not passport, as they go from place to place), just wondering if you hit a big jackpot and you're living in a new place it wouldn't provide a problem for you regarding the old - rather, just IRS considerations (Feds).
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I have probably had close to 1000 W2G's and I have never voluntarily had taxes taken out. Some states take it out for everybody.
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Most people don't but I always do because I don't want a big irs bill at the end of the year.
I didn't do that originally but of course that year I wound up paying late because the casinos had all shut me down simultaneously and I had been famously robbed. Suddenly I owed a ton to the government with a lot less than I expected to have. That changed my mind. I got hit with so many late fees and penalties it was ridiculous as I fought to catch up
