Busted by IRS now i owe back taxes on winnings

[Seattleallstar]

Originally Posted by the_fat_man

If, in fact, you lost for the year, why would you pay a penalty?

cause its back tax from 2007 filing

[docicu3]

Originally Posted by Seattleallstar

cause its back tax from 2007 filing

If you can document you have a net lost for the year in 2007 then you are starting with no tax owed from 2007.

There are no penalties for not reporting taxes you don't owe. You have to be careful that you can document your losses and that the pattern of your wagers is consistent to get credit for your loses to offset the capital gains of winnings. There are several suits here that can give you more detail if you need it.

[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.

[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.

[the_fat_man]

Originally Posted by Seattleallstar

cause its back tax from 2007 filing

if there's no income for the year then there are no back taxes