witholding taxes on winnings

[Rupert Pupkin]

Originally Posted by obie1

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.

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.

[Dunbar]

Originally Posted by Rupert Pupkin

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

[Rupert Pupkin]

Originally Posted by Dunbar

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

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.

[Dunbar]

Originally Posted by Rupert Pupkin

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.

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

[obie1]

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.

[skippy3481]

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..

[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.

[Dunbar]

Originally Posted by skippy3481

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..

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

[docicu3]

Originally Posted by Dunbar

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

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.

[Dunbar]

Originally Posted by docicu3

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.

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