Busted by IRS now i owe back taxes on winnings

[Seattleallstar]

so basically all i have to do is show the documentation I already have that I lost more than what i won that was taxable, and all i will owe for are the penalties?

[blackthroatedwind]

In general, while the account info is great, and probably enough, the best thing you can do going forward is to keep a daily diary of profits and losses.

[Holland Hacker]

Did you itemize you deduction in 2007? If so you may have to file and amended 1040 to show the higher income and higher itemized deductions which should net to close to zero, assuming you dodn't have a huge amount of winnings.

Just a heads up that if you plan on using your statments to substantiate / document the fact that you did not come out ahead for the year, you should probably be prepared to include ALL of your winners and not just the ones covered by the w2G. If you had a lot of winnings it may change your tax by way of phaseouts, limitations etc as your AGI will be higher.

PM me if you want some assitance or need help figuring out the tax you may owe.

Originally Posted by Holland Hacker

Did you itemize you deduction in 2007? If so you may have to file and amended 1040 to show the higher income and higher itemized deductions which should net to close to zero, assuming you dodn't have a huge amount of winnings.

Just a heads up that if you plan on using your statments to substantiate / document the fact that you did not come out ahead for the year, you should probably be prepared to include ALL of your winners and not just the ones covered by the w2G. If you had a lot of winnings it may change your tax by way of phaseouts, limitations etc as your AGI will be higher.

PM me if you want some assitance or need help figuring out the tax you may owe.

This what's so f'd up about taxes on gamblers, especially horse players. Your AGI is adjusted above the line causing you to possibly lose deductions such as child tax credit, college tuition, mortgage interest reduction ...etc, even though you may have the losses to offset the wins/signers.

If I walk up to a blackjack table with $500 and cash out for $1500, do you sign any forms? Is anything reported? Hell no, you're suppose to report the income, but there isn't anyone handing you a form W2-G when you walk away. Could you imagine how empty the BJ tables would be? John McCain a notorious high rolling craps player who is reported to play once a month claimed exactly $0 in gambling winnings on his last 2 disclosed 1040's. No adjustments to AGI and no itemized deduction for gambling losses.

So again why shouldn't someone play offshore, with large rebates and no IRS reporting. The racetracks should get there lobbyists arguing that if the casino's don't require W2-G's, why should the racetracks? You can't tell me a pit poss doesn't know what a person buys in for and what he/she leaves the table with.

[the_fat_man]

Originally Posted by SundaySilence

So again why shouldn't someone play offshore, with large rebates and no IRS reporting. The racetracks should get there lobbyists arguing that if the casino's don't require W2-G's, why should the racetracks? You can't tell me a pit poss doesn't know what a person buys in for and what he/she leaves the table with.

Does anyone who actually beats the game pay taxes? I mean, anyone with that much ability surely can dig up some relatives abroad and bet with Betfair (or others). WTF, is this as 3rd world country?

Betfair would never produce the 300-1 requirement for a signer, unless I'm mistaken and they market exotics. I thought Betfair was just a market exchange on individual runners? Could be wrong since I don't use them.

Does anyone who actually beats the game pay taxes? I mean, anyone with that much ability surely can dig up some relatives abroad and bet with Betfair (or others). WTF, is this as 3rd world country?

It's not even actually beating the game, if I end up with 40 signers over a year let's say for 60K and have lost 60K, the adjustment to AGI means that even though I don't have any profits, I've lost money on taxes for standard exemption allowances, child tax credits, college tuition deductions, itemized deduction allowances. So many deductions are tied to your AGI, and that is just royally f'd up that a person gets penalized for having W2-G income but not any actual winnings.

[randallscott35]

You will definitely pay a penalty. Not declaring is a problem. It doesn't matter that you can show the losses. You must declare the signers. That is why they take your social security info...Remember, winnings can put you into a different tax bracket which is why even if you can show losses to that amount, your gross income will result in higher taxes for the rest of your income.

[jms62]

Problem with offshore is that they have limits on payments and you have to deal with cashing a check from a known offshore book. Banks have to report this stuff nowadays. I used to love the rebates at Pinnacle and Ibetx until they tossed out US accounts. My best play was laying money on Odds on favorites to lose...

[westcoastinvader]

Originally Posted by SundaySilence

If I walk up to a blackjack table with $500 and cash out for $1500, do you sign any forms? Is anything reported? Hell no, you're suppose to report the income, but there isn't anyone handing you a form W2-G when you walk away. Could you imagine how empty the BJ tables would be? John McCain a notorious high rolling craps player who is reported to play once a month claimed exactly $0 in gambling winnings on his last 2 disclosed 1040's. No adjustments to AGI and no itemized deduction for gambling losses.

I've had many four digit wins in a single day at blackjack in Nevada, but never a five digit.

I may be mistaken, but somehow I thought that if cashing in a large enough amount of chips at the window at one time there was some tax transaction of note that would take place.

Not a "holier than thou" thing, but I always declare my annual gambling winnings......and the offsetting losses. Candidly, most of the time I declare "a wash" for year end by my estimates and keep enough supporting detail around to have a reasonable defense if audited.

If playing at a casino on a regular basis with monitored play for comps, I'd highly recommend making an effort to acknowledge in some way on tax filings.

Originally Posted by westcoastinvader

I've had many four digit wins in a single day at blackjack in Nevada, but never a five digit.

I may be mistaken, but somehow I thought that if cashing in a large enough amount of chips at the window at one time there was some tax transaction of note that would take place.

Not a "holier than thou" thing, but I always declare my annual gambling winnings......and the offsetting losses. Candidly, most of the time I declare "a wash" for year end by my estimates and keep enough supporting detail around to have a reasonable defense if audited.

If playing at a casino on a regular basis with monitored play for comps, I'd highly recommend making an effort to acknowledge in some way on tax filings.

Exactly, I declare the winnings and itemize the losses, but the winnings effect your adjusted gross income before you can itemize the losses. So basically gamblers are screwed (with W2-G's) unless you can claim professional gambler status. A lot of deductions are reduced or phased out based on AGI, and the signers effect your AGI before you can deduct/itemize your losses.

[Seattleallstar]

So I finally went down to the IRS to get to the bottom of this, guy at his computer recrunched the numbers told him I certainly lost more than i wont but that you can only deduct the losses up to the amount won. So final verdict after 10 minutes of inputing things into his IRS computer, is that since I dont own any property, pay any other taxes, no state income tax, and basically nothing else. It wasnt enough to offset the taxes from the reported gambling income's taxes. He was like all ready for my check, and im like I didnt come here with the intention of paying, he had a good laugh and was like I understand and I am sorry. I should pretty much trust the IRS?

[Port Conway Lane]

Originally Posted by Seattleallstar

So I finally went down to the IRS to get to the bottom of this, guy at his computer recrunched the numbers told him I certainly lost more than i wont but that you can only deduct the losses up to the amount won. So final verdict after 10 minutes of inputing things into his IRS computer, is that since I dont own any property, pay any other taxes, no state income tax, and basically nothing else. It wasnt enough to offset the taxes from the reported gambling income's taxes. He was like all ready for my check, and im like I didnt come here with the intention of paying, he had a good laugh and was like I understand and I am sorry. I should pretty much trust the IRS?

I had a situation where I won a contest and because it was free to enter I had no outs.I spoke with an irs guy and he let me know I could have offset the winnings had they been achieved from gambling if I could prove I had losses up to the winnings.

I had a similar situation to yours only in that I didn't own property but did pay state taxes.

It wouldn't hurt to try a different representative.

[NoLuvForPletch]

Originally Posted by Seattleallstar

So I finally went down to the IRS to get to the bottom of this, guy at his computer recrunched the numbers told him I certainly lost more than i wont but that you can only deduct the losses up to the amount won. So final verdict after 10 minutes of inputing things into his IRS computer, is that since I dont own any property, pay any other taxes, no state income tax, and basically nothing else. It wasnt enough to offset the taxes from the reported gambling income's taxes. He was like all ready for my check, and im like I didnt come here with the intention of paying, he had a good laugh and was like I understand and I am sorry. I should pretty much trust the IRS?

Honestly, I have no idea what you just said. So, are they making you pay more or not? Are they taking your word for it that your losses equalled your winnings or do you have to show proof? Are they going to audit you now, or basically are they asking you to fork over a few hundred bucks?