Quote:
Originally Posted by jms62
Cant you write it off vs any out of pocket you used in qualyifying or any out of pocket used on the trip?
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It really depends on how you file. If you are self employed, you are probably itemizing so while being careful, there is alot more you can 'play' with but the killer is when you get a 1099 and are taking a standard deduction. Absolutely nothing you can do.
It would almost be better off that they give you a w2-g instead because of the ability to write off anything up until your winnings.
And honestly, I'm surprised someone hasn't contested it, that the room and board is 1099 and the prize winning is a w2G. I have to think someone alot smarter then me has already looked into it. That being said, I think w2G only happens at certain thresholds for the type of gambling you are doing.
I also wonder if people will start requesting that they take 25% out to cover them, because someone that hit large at one of these things could be in some deep trouble if they didn't plan properly.
Just thinking this through, and I would consult a CPA on this just to make sure, but if you are going to play in contests on a full time basis, I would consider maybe starting an LLC where you can file a schedule C. On this scenario, you could really protect yourself from something like this. Imagine you get in 100 $500 tourneys in the year (500,000 'invested) and you finished last in 499 of them, yet in one of them, you win 475,000. Without some protection of this, you would get a 1099 for 475k and be on the hook for whatever % that would be, prob between 25 and 33%. Under the LLC scenario, it would be only operate on a loss for that year.
The issue would be having to show a profit twice out of 7 years, and also things like this are HEAVILY scrutinized by our lovable friends.
For the record, just thinking out loud of scenarios from some of the stuff I learned a while back, I might be completely and utterly wrong about the LLC idea.
Maybe Steve can get Beychok or someone on and ask them how they handle all these 1099's. Hell, Pweizer, what do you do with your 1099's, how do you handle them? (He plays in a ton of these tourneys)