witholding taxes on winnings
 

I was lucky enough to have (2) dollar tickets on the derby winning exacta does it make any tax difference if I cash them both in at the same time? How much will they take out in taxes each ticket is worth just over a thousand dollars. Someone told me they take out 25% is that of the amount over $600 or is it of the entire amount. Hate paying taxes when I finally have a winner.

I think the auto takeout starts at $5k. you'll still get a 1099-G but won't have to do anything until you fill out your taxes next year.

person ahead of me in line at Arlington hit a $2 exacta and didn't get any taken out then... only the 1099-G

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Mine wasn't a signer, only a future ticket that for some reason or other wasn't in the system at the time, so had to see the supervisor for my 9-5 field bet from pool 1.

As stated the w/h kicks in at $5.K you should not have any on the exacta. Congrats on the hit!

Congrats. They won't take any out. If you are worried about future tax liability some people have friends sign for them.

Some states, if you cash them together, will combine them and if they are over 5k, you get nailed. IL is one of those states.

last year I hit a P4 for $7, all $1 tickets, that paid $1200 per $1. I cashed four the first day, and the next day I cashed the next three.

they are suppose to ask if you have identical tickets to combine, same amt,bet , race etc.. then they will withhold if over 5k, now if you cash on seperate days you can get out of taxes up front but they will catch it when you send copies of 1099 along with return, they probably won't do anything since you did declare , but bad idea on your part,they might flag you and watch your gambling winnings close, iv' been thru it. and all irs withholdings is handled this way state laws have nothing to do with it.

Cash them at different times....and you did not hear this from me but dont claim the income on your tax returns, how would they track it to you?

hey hey don't tell him that. They record o copy of your DL and #ss no. you cannot cash without these you will get him in trouble for not declaring gambling winnings, a federal offense duh!!! the track sends copies to irs and you had better send copies to match on your return.

GREAT ADVICE!!!

Be careful if you bet at a Racino, they are trying to rid the similcast and horse parlors of stoopers,and signers to get them away from the casino patrons, which most racinos care less about racing anyway. Wheeling Downs , Tri-state both in WV had some stings and the regulars who made a living doing this got barred for life. also guys who walk around checking slot machines for vouchers not cashed out. You don't want to get caught using a signer unless you know him. they know who these guys are, also i never use any players club card at any racino not worth the points for anyonr(irs) knowing how much you bet and win(excluding) signers which you can't hide.

^ Unable to detect sarcasm

my miss, i'm IQ challenged

I'm pretty sure everyone who bets much knows about the guys who make a living signing for people. I would never ask someone like that to cash a ticket for me, they might keep walking! The advice about the players card is spot-on, that is watched more than a grocery club card.

If he had to sign, I was thinking just straight cashes

If you have to sign then yes, you are screwed tax wise and will have to pay it one time or another.

If you save your losing tickets and you can show that despite hitting the exacta that you still lost money gambling this year, then you will have no tax liability. On your tax return, you will need to show that you won the money on the exacta, but along with that information you will need to show that you had losses higher than that amount to offest the win. Then you will not be required to pay taxes on the winnings.

Rupert, this is true only if you itemize deductions (or if you file Sch. C as a professional gambler). If you take the standard deduction, you are screwed.

http://www.irs.gov/taxtopics/tc419.html

--Dunbar

And people wonder why we are subject to withholding on tickets > $5K.

Yes, that is true. But why wouldn't a person itemize deductions? If a person has net gambling losses for the year but he happened to hit a Pick 4 for $4,000, why wouldn't that persom itemize deductions? He would be a fool not to, unless he likes to pay taxes that he doesn't owe.

Why would you have to list yourself as a professional gambler? I was unaware that you had to list an occupation to be able to offset your capital gains from gambling. I thought you were pretty safe keeping your losing tickets and/or your logs from ADW's to document losses for evidence if your audited.

Let's say his itemized deductions (before gambling losses) are 5K less than the standard deduction. He gains nothing by itemizing. He gives up 5K in deductions in order to gain a 4K deduction.

Let's say his itemized deductions (before gambling losses) are 1K less than the standard deduction. Then he gains by itemizing, but the net effect is that he is paying tax on 1K of his winnings. He can write off 4k of losses, but he's already 1K behind by giving up the standard deduction.

--Dunbar

I wrote that there are two ways to write off losses against gambling wins. One way is to itemize deductions. The second way is to file a Sch C saying gambling is your business.

Filing a Sch C has the advantage of being able to deduct expenses in addition to losses. (and it also bypasses the itemizing requirement) Filing a Sch C has the disadvantage of having to pay self-employment tax on net profit and possibly inviting IRS scrutiny, too.

--Dunbar

I want to thank everyone on the tax info. I do understand now that if you can't itemize your taxes you get screwed! No wonder why people look for the 10 percenters. I really think a lot of people are confused about this issue. The good news is that I had a hit the bad news is that it no way comes close to my loses. I only wish we could do something about this.

Well there are several ways around it. One could "pick up" losing tickets at a racetrack. Two things about this. 1. The tickets you pick up, need to be checked for time-stamping. You dont want to have tickets that have nearly identical time stamps as you cant be in two places at once. 2. Try to find tickets that are clean. If it looks like people have stepped on them, or put a cigarette out on them, it wont work. You can do this for however many losers you need. Just make sure you pick them up on several diffrent days..

A friend of mine was audited and the irs wasn't interested in any tickets he had,they only wanted to see the programs he had saved and the wagers that were written down in those programs.

[quote=Port Conway Lane]A friend of mine was audited and the irs wasn't interested in any tickets he had,they only wanted to see the programs he had saved and the wagers that were written down in those programs.[/QUOTE]


Even for the IRS, that's crazy...I've never written a wager down in a program in my life. Well..maybe once, but still...

I agree, it's insane. Everyone does things differently. Sometimes I just have a Racing Form, no program. Am I supposed to save every form? Maybe the IRS should post some guidelines.:zz:

I got this from the irs site:
"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."
My friend was told that is many cases but not all that what the irs was most interested in was consistency in a persons wagering habits rather than a bucket full of tickets that could easily be picked up off of the ground. He was aware of this and had both,the tickets and his wagers written in his programs.If someone only had tickets I suppose that would be acceptable as well.In any event the irs didn't bother to ferret through his losing tickets.

I wonder if somebody like sdjcom could just print out all his posts in the selections forum for evidence?

Your suggestion does not help someone who takes the standard deduction on his/her taxes, which is probably most people who don't have a mortgage.

--Dunbar

I laughed

i have a mortgage and am still better off with standard deductions...

Couldn't tell you the last time I even bought a program. My racing forms get recycled (printed on both sides) and when the races are over, they get tossed. Any scribblings on them would be incomprehensable to an IRS agent. I would have to rent a storage space to keep them for audit possibilities.

As long as you have tickets, the IRS is not going to bother you. They can ask for programs all they want, but the burden is on them to prove that those tickets are not mine and in my experience they really dont give a damn. As long as nothing looks real sketchy, they are not going to do the legwork required to even attempt to verify the tickets.

Dunbar,
I dont have a mortage and i still itemize. It all depends on what your doing with your money. Lot of ways to get deductions now a days. You are correct though if your taking the standard deduction there is nothing you can do. In that case the government is giving u a bigger deduction then you could normally get so your already getting some tax benefits out of it.

The worst part is that "signers" are above the line, that is they effect your adjusted gross income and a lot of credits are based on your AGI... so even though you can offset wins with itemizing, you can lose out on other items where you would have qualified such as the child tax credit, college tuition costs, and exemption allowances.

It is total BS that even though you have equal losses to offset wins, your wins are added to your AGI, then your tax credits are based on your AGI, and then you take your standard (or itemized) deduction. Only way to get around that is claim professional gambler status that Dunbar mentioned.

So not only are you getting f'd by the racetrack with 25% takeout on exotics, then the IRS gives it to you if you lucky enough to hit a few signers.

Dunbar mentioned it but you get really royally screwed if you were taking the standard deduction to begin with.

You hit the nail on the head, total BS. I lost the child tax credit this year, even though I was able to offset my winnings.

Right. The effect on AGI penalizes even those who ARE able to deduct losses by itemizing.

Filing as a pro gets around those problems but creates other issues. The self-employment tax comes into play, and that will add as much as another 14% of your net profit from gambling to your tax bill. If someone is already itemizing, filing as a pro is better only if expenses exceed some threshold amount that depends on tax bracket and how close the taxpayer's income is to the social security max.

And there are state and local income tax issues, too. Some states flat out prohibit deducting gambling losses from wins. And some states make filing as a professional gambler even harder than the IRS does.

No one is in a rush to give a gambler a tax break.

--Dunbar