Slot machines and taxes

[ysi]

So if I take $10 of my already taxed income and go to the casino and play it into the slot machine (after inserting my casino tracking card) and I win 5 lose 10 win 10 lose 5 win 15, and leave, my tax statement from the casino will say what?

[Angel!]

Is this something new? I don't think casinos have to issue tax statements unless a single winning exceeds $600 & the statement won't include details of your spendings. However, you can deduct losses up to the point where they equal your winnings.

[reader79]

The raceway casino near me emailed out a Win/Loss request form a few weeks ago. As long as you used your Players Card, they can track what you've pissed away.

[souldoubt]

Generally nothing because they don't issue forms for amounts that small. Even if you win something and get a form you're allowed to write off gambling losses up to the amount of your winnings. You don't get slips for the losses so in theory you can easily write off your losses that you racked up at other casinos or during other trips to that casino where you won.

[alabamagal]

Feb 10, 2012 14:45:17 GMT -5 reader79 said:

The raceway casino near me emailed out a Win/Loss request form a few weeks ago. As long as you used your Players Card, they can track what you've pissed away.

Seems like this would hurt their business when they tell you how much you have lost.

Of course those addicted to gambling would say, "Yeah but I could win it all back next time!"

[nalto]

Feb 10, 2012 14:45:17 GMT -5 reader79 said:

The raceway casino near me emailed out a Win/Loss request form a few weeks ago. As long as you used your Players Card, they can track what you've pissed away.

Hmm. This may be a dumb question, but is it a Tribal casino? I wonder if there's a difference in rules there?

[reader79]

Not tribal, it's Empire Raceway Casino in Yonkers, NY.

[jeffreymo]

+5 - 10 + 10 -5 +15 = 15 in taxable winnings, and you're walking away with $25 ($10 of which was your original investment).

At leas that's the way I'd interpret it.

[hoops902]

The gambling tracking generally "requires" (as in the law states but no one follows) that wins from each wager must be reported. So if you went +5, -10, +10, -5, +15. You would need to report $30 in gambling winnings and then write off $15 in losses. You're not allowed to "net out" your winnings from your losses. You are supposed to report all winnings, then write off the losses.

They don't really enforce this for small bets though. For example, in poker you should basically record a winning every time you win a pot, and a loss every time you put money into a pot and lose it. Each hand of blackjack should have it's own reporting. Nobody actually does it that way, but if you were being technical about it, that's how you're supposed to do it I believe.

[showtime]

Hoops brings up a great point.

But, you can "net" out your gambling "winnings" with your "losses". But it must be itemized.
Which means....
If you file your taxes and you use the standard deductions given to you, you won't be allowed to itemize your gambling losses.
In other words, you have to determine if whether itemizing your deductions is worth it.

An interesting case. A friend won $2,000 on a slot machine. Fortunately this winning allowed her to offset her losses (she lost about $2,000 earlier).
So, when she left vegas, she "broke even"

However, when it came time to do her taxes. She had to add the $2,000 winnings to her income. She couldn't deduct because then she wouldn't be able to use the standard deductions.
So, even though it's true that you can offset up to your entire winnings with losses, you lose the ability of the standard deductions if you do so.

My 2 cents

-Showtime

[hoops902]

"An interesting case. A friend won $2,000 on a slot machine. Fortunately this winning allowed her to offset her losses (she lost about $2,000 earlier).
So, when she left vegas, she "broke even""

Furthermore, if you do it the "right" way, you could sit down, put $1,000 in a slot machine. You have a bunch of little wins as you dink your money away over many hours, and if you reported it as the IRS says you should, you might have tens of thousands or more in "winnings" since they consider each wager it's own independent event, and not even the actual gambling "session". Of course you'd also have that same tens of thousands in winnings in your loss column. But the itemization issue can come back to bite you.

You could never actually have more than your initial investment into the machine and still technically have a boatload of IRS "winnings".

[iono1]

Feb 10, 2012 17:00:25 GMT -5 hoops902 said:

"An interesting case. A friend won $2,000 on a slot machine. Fortunately this winning allowed her to offset her losses (she lost about $2,000 earlier).
So, when she left vegas, she "broke even""

Furthermore, if you do it the "right" way, you could sit down, put $1,000 in a slot machine. You have a bunch of little wins as you dink your money away over many hours, and if you reported it as the IRS says you should, you might have tens of thousands or more in "winnings" since they consider each wager it's own independent event, and not even the actual gambling "session". Of course you'd also have that same tens of thousands in winnings in your loss column. But the itemization issue can come back to bite you.

You could never actually have more than your initial investment into the machine and still technically have a boatload of IRS "winnings".

In NY State the letter of the law says that you have to report every dollar of profit & then deduct them as losses, but unlike the feds, where you can deduct dollar for dollar, if the combination of your income & gambling "winnings" goes over $100,000, you lose 25% of those "winnings" on your itemized deductions. So if you break even or worse, they still tax you about 1.7% on all "winnings".
Very few people file their gambling wins & losses the correct way because the IRS wants people to keep ledgers like it's their business, yet they don't get the breaks that the actual professional gamblers do.

[NoNamePerson]

The only time I report gambling winnings is when I have received a W2-G.

[mwcpa]

some good and bad information here... and some "illegal" acts....

facts on gambling and what Congress put into law, as interpreted by the IRS can be found here...

www.irs.gov/taxtopics/tc419.html
www.irs.gov/newsroom/article/0,,id=108277,00.html

"Gambling winnings are fully taxable and must be reported on your tax return. Here are the top seven facts the Internal Revenue Service wants you to know about gambling winnings.

Gambling income includes – but is not limited to – winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other noncash prizes.


Depending on the type and amount of your winnings, the payer might provide you with a Form W-2G and may have withheld federal income taxes from the payment.


The full amount of your gambling winnings for the year must be reported on line 21 of IRS Form 1040. You may not use Form 1040A or 1040EZ. This rule applies regardless of the amount and regardless of whether you receive a Form W-2G or any other reporting form.


If you itemize deductions, you can deduct your gambling losses for the year on line 28 of Schedule A, Form 1040.


You cannot deduct gambling losses that are more than your winnings.


It is important to keep an accurate diary or similar record of your gambling winnings and losses.


To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. "

[TheOtherMe]

Shaking head at reading all the incorrect and some illegal advice.

mwcpa is telling you the proper tax treatment.

[TheOtherMe]

A little tax law. Tax law requires that all income unless otherwise excluded is to be reported on your tax return. It does not exclude gambling winnings of less than $1200, which is the threshold for issuing 1099-Gs.

You can not deduct losses in excess of your winnings because the Internal Revenue Code does not allow it. The losses go on Sch A, itemized deductions, so if you don't itemize and your losses that you have records for do not give you enough deductions to itemize, your losses are not going to appear on your tax return.

[gobermitcheese]

For the tax professionals, how would you actually report poker winnings. I have a relative that lives on them and seems to believe that he does not need to report amounts for which a tax form was not issued. Can you net out your net winnings and just report that if no form was issued. NOBODY would actually claim ALL pots won and deduct ALL losses that would be insane. Also I think he might qualify as a pro gambler and I think the rules are slightly different then.

[tloonya]

Feb 10, 2012 17:31:56 GMT -5 NoNamePerson said:

The only time I report gambling winnings is when I have received a W2-G.

[NoNamePerson]

Feb 11, 2012 11:41:29 GMT -5 TheOtherMe said:

A little tax law. Tax law requires that all income unless otherwise excluded is to be reported on your tax return. It does not exclude gambling winnings of less than $1200, which is the threshold for issuing 1099-Gs.You can not deduct losses in excess of your winnings because the Internal Revenue Code does not allow it. The losses go on Sch A, itemized deductions, so if you don't itemize and your losses that you have records for do not give you enough deductions to itemize, your losses are not going to appear on your tax return.

I have never received a 1099-G from a Casino. Have always gotten a W-2G. Regardless, I know my winnings have been reported to IRS and I report that income on tax return.

[cpadvisor]

Feb 11, 2012 13:07:39 GMT -5 gobermitcheese said:

For the tax professionals, how would you actually report poker winnings. I have a relative that lives on them and seems to believe that he does not need to report amounts for which a tax form was not issued. Can you net out your net winnings and just report that if no form was issued. NOBODY would actually claim ALL pots won and deduct ALL losses that would be insane. Also I think he might qualify as a pro gambler and I think the rules are slightly different then.

Professional gamblers fall under different rules (active trade or business) than the normal person that just wins a jackpot on the slots here and there.

My understanding is that you would net each time you went to the casino. You arrive with $100 and leave with $1,000, you would report the $900 profit. I think that is the only reasonable way to account for the poker winnings/losses.... not on a hand by hand basis.

I think it is fairly obvious most gambling income does not get reported unless there is a W-2G. It is just a fact, doesn't make it right. However, if the IRS was really going to go after this, they could make the casinos report your little "players club" activity report on a W-2G and then every person would be F#CKED!! because all your winnings would go to page 1 and the losses to schedule A....... not good for the taxpayer...

[TheOtherMe]

Feb 11, 2012 15:18:16 GMT -5 NoNamePerson said:

Feb 11, 2012 11:41:29 GMT -5 TheOtherMe said:

A little tax law. Tax law requires that all income unless otherwise excluded is to be reported on your tax return. It does not exclude gambling winnings of less than $1200, which is the threshold for issuing 1099-Gs.You can not deduct losses in excess of your winnings because the Internal Revenue Code does not allow it. The losses go on Sch A, itemized deductions, so if you don't itemize and your losses that you have records for do not give you enough deductions to itemize, your losses are not going to appear on your tax return.

I have never received a 1099-G from a Casino. Have always gotten a W-2G. Regardless, I know my winnings have been reported to IRS and I report that income on tax return.

Sorry for the incorrect form number, but all winnings are still taxable regardless of whether a W-2G has been issued.

[mwcpa]

I so wish the law was, if it's not on a 1099 you do not report it.... I never get 1099s, so I guess I never have income....

I always love when a client tells me that if it's not on a 1099 they are not required to report it... then I ask them if the same rule should apply to me, since I am set up as a "professional corporation," no one has to give me a 1099 (I am not a lawyer, because they get them no matter what), so I have no income.... after they realize how stupid their statement is they do it right or I show them the door.... my questionnaires to clients (and in my interviews) I specifically ask about "cash" or "not reported" income.... you know if they get audited they will throw me under the bus, it's my get out of jail card.... I asked and you said no... now do not blame me when the cell door slams on your back...

to the poster with the professional gambler question, I believe the "net" winnings are reported.... I believe there have been court cases on the matter of who is and who is not a professional gambler... I think you need to win some bracelets on TV first... it's not an area I practice in, maybe some tax pros in Vegas or AC can chime in....

[gobermitcheese]

So even if you are not a pro how would you go about reporting poker winnings?

If someone plays the lottery frequently, the ones I see are usually low income so don't itemize, do you expect them to report the $3 winners even though they had lost it again within 5 minutes?

[mwcpa]

"If someone plays the lottery frequently, the ones I see are usually low income so don't itemize, do you expect them to report the $3 winners even though they had lost it again within 5 minutes? "

I do not expect it, Congress does. Please read IRC section 61....I play the lottery a few times a year, most of the time I lose (I actually played yesterday, the power ball was 300ish million), but once in a while I win 5.00 or 2.00..... Do I report those winnings, yes.... something about practicing what I preach and being as honest as possible.

Advocating for and knowingly suggesting that someone do something that is contrary to the law is a crime too.....

[mwcpa]

morris.... as a licensed CPA and as a qualified tax professional with 23+ years of experience, it is my responsibility to let you know the tax law to the best of my ability, what you (and others)do with that information is your call..... please just do not post about trying to "get away with it".... we get more than our fair share of that here... keep the positions that advocate someone commit a crime (no matter how small) on other site, just not here....

as as we know it's never an issue until you get caught....

if the speed limit is 35mph and you do 37mph for 364 days in a row and on the 365th a cop pulls you over and gives you a ticket will you say geesh then.... wrong is wrong (and I am not saying I do not make mistakes, I am sure I go over the limit once in a while too, but, I am not going to tell someone going 37 is okay)

lots of people (who claim to be upstanding and honest citizens to their priest and others) lie, cheat and steal....

I am only here to tell the informed and uninformed what the tax law is (with links where possible to it), again, what you do with the information is up to you.... we do not need people advocating to those who want to do the right thing and are not sure how to cheat and justify it....(personally, we are in the mess we are as a country due to all of the lying, cheating and stealing by all the self professed honest citizens out there....)

Again, I do not claim to be perfect, but I do my best to not intentionally do the wrong thing and provide incorrect information to those who have legit questions and concerns here (there are many posters here who do the same as I), while I make mistakes, like everyone else, I do not and will not advocate that anyone cheats on their tax filings. The audit lottery is not effective tax planning.

[TheOtherMe]

Feb 12, 2012 11:19:42 GMT -5 morrisr2d2 said:

I expect you as a cpa to follow the letter of the tax law. If I came to you for tax advice you wouuld never know about my gambling winnings because its not worth the time or effort given how small they are,not cause I am trying to get away with it. If the IRS truly found out about my winnings I cooperate and pay but I really see no way how they would know. I am advocating being practical and not sweat the small stuff.

Sent from my ADR6400L using ProBoards

So you would lie to your tax pro when asked about any other types of income? Gambling is usually one of the specific questions we asked of our clients when I did this work.

I do know that any of the places I worked, would have fired you as a client if they found out that you had lied to them about any type of unreported income.

You are trying to get away with it and that is part of the reason this country has financial problems. There is so much unreported income going on that the IRS can not possibly find all of the taxpayers who don't report properly.

[mwcpa]

"This reminds me of the accountants at work who forget to look at materiality and instead reconcile to the penny. As an actuary I report numbers in the billions yet the accountant is like why are you off 10k. Who cares its nothing!!!"

"I expect you as a cpa to follow the letter of the tax law. If I came to you for tax advice you wouuld never know about my gambling winnings because its not worth the time or effort given how small they are,not cause I am trying to get away with it."

So, I guess we have two tax laws.... one that you apply and the other for the rest of us....

Other posters and readers be aware of the tactics put forth by morris, they are contrary to the law and speaks volumes about his character.

[mwcpa]

I do not mean to be a complainer here, but morris is advocating that others intentionally misrepresent their tax filings (the size of the misrepresentation is not relevant). Most posters come here for direction to the right answer, not to see what a tax protester who advocates doing the wrong things writes. I do not believe posts on the tax corner should be where people can come and advocate for doing wrong. This is not about morris and other tax protesters opinions, it is about the actual law and the proper application of it. His opinions are merely that, and they are unsupported by the law. If you take his advise and get caught, his opinion will not keep you out of trouble, but the links I provided and some of the other direction given by others may. Thank you.

As is noted in the purposes of the tax board, from our lead moderator (who has a thankless job)

"Tax Talk is a board for members to post questions about the technical operation of income tax law in the United States and for knowledgeable members to post answers to those questions."

[moon/Laura]

morris, your posts are being removed since you are insisting that it's ok to break the law.

[gobermitcheese]

So to clarify you must report ALL lottery winnings even if you never recieved any net income from the activity? This seems insane no wonder people cannot figure out the tax code. Also you are double billing people for paying the "stupid tax". To be honest with you I would not report "winnings" if it was small relative to my losses because I did not have income or recieve any benefit. Does that make me a tax criminal?