Since about two years ago I've learned how to be profitable in sports and it's worked for the past two years. Regardless of my record or what I do, how do I fill out my 1040, do you guys put these incomes under other income and then what? Ive made ~10,000 so far this year and want to declare it.
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You have to file all your winning bets under other income, and all you losing bets under deductions. No kidding. Makes for a silly looking tax form.
What you can NOT do is file 10,000 profit.
You have to file, say 60,000 winnings and deduct 50,000 in losses, or whatever your numbers actually are. But that is the way you have to do it.
But I feel obligated to say "talk to a tax pro."Comment -
who do you say the income is from? Illegal offshore book? Or Bookmaker.Comment -
Why would you wanna declare taxes? I mean, wtf-- the government is stealing enough money as it is.
How close do they look at that in the USA? In Sweden I think the banking system automatically flags any transaction over something like equivilient of 4k USD. If you withdraw less than that at a time they wount bother you.
Well if you make huge amounts of money I guess its better to pay them off than risk prison or whatever
but Id just not declare if I were you
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You can declare it as "gambling winnings".
There are other ways to legally pay your winnings also. If you win $1.1 million, lose $1 million netting $100k, you get raped on taxes. Your AGI goes up and you pay all kinds of extra things. If you are betting a lot, you need to find another (legal) way to file.Comment -
in Sweden all winnings at sportbetting is taxfree.Sportbetting goes under the swedish lotterylaw,it means that all winnings at lottery,sportbetting,casino is taxfree..For Poker you need pay taxesLast edited by swede71; 10-09-09, 11:49 AM.Comment -
Thank you Justin I was actually waiting upon your opinon. I'm currently in a tax class about individual taxation on the individual aka income tax. How are you raped in taxes? You pay the middle class tax bracket of like what 25%? so you lose 25,000 to taxes. Or because it's gambling winnings that you pay extra things?
There are other legal ways to pay off gambling winnings tax?Comment -
how does it benefit us to report our taxes?Comment -
It's not because of gambling winnings you pay extra. In Justin's example, having a higher AGI means your itemized deductions get phased out on Schedule A. You may have alternative minimum tax to deal with, also. It may not necessarily be as cut and dry as your example, Freefall. I would just get blank tax forms to see what your tax liability would be or use the worksheet in estimated tax instructions (I believe it's Form 1040-ES). You could probably find them at IRS web site.Comment -
Change the way you approach sports betting and begin saying and believing it is a business... Structure it as a business and you will be able to have lots more deductions. You could also claim being a professional sports bettor and that will allow you to claim other deductions also, but making a little sole-proprietorship called Freefall Sports or something will go a long way to helping with your bottom line.Comment -
If, when Justin says you file it under gambling winnings, he means all the winning bets there, and all the losing bets under deductions, that's what I said. But I repeat, you CAN NOT just report profits under gambling winnings. The IRS isn't intelligent enough to allow that.
As far as filing as a professional, or a little sole-propietorship, it isn't that simple. For example, you can not do this as a part-timer. Again, no kidding, it just isn't that simple. IIRC, you have to have proven yourself to have a winning expectation going forward, and be engaged full-time in the activity. But research it yourselves.Comment -
This is good to know. So when I file I put all of the loses under deductions and the winnings under other. Then find the profit?Originally posted by Pokerjoe;2363899[B
Sounds like I need to change my tracking spreadsheet to remember this for me, come tax time.Comment -
So report deposits into sportsbooks as "losses", and deposits into your bank accounts as "winnings". Nothing else has a paper trail.
Who am I kidding, fruits don't pay taxes!Comment -
In Canada, winnings are also tax free from gambling UNLESS you do it in a systematic way to make money. Revenue Canada has internal memos where they are attempting to pursue this more vigorously. They have never (as far as I know) successfully won a well publicized appeal. The difficulty comes with 150K + tax free income and no job.Comment -
You are NOT paying into SS if you do not declare yourself a professional................
Filing professionally allows one to take deductions such as office space, gas, publications, .........anything associated with your gambling income.
There are positives and negatives in regards to one filing professionally or not............each individual person and case is unique...........and often the money profited from gambling is not the main factor.Comment -
Sometimes I forget how lucky I am to be a British Citizen.
I would hate to be giving any of my winnings to tax. Especially at the 40% tax band.
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in canada the government wants it both ways ,they say it tax free to win the lottery ,but if you win at sports you should be taxed, there have been several high profile cases and the courts always rule against revenue canada, but the jerks at revenue canada keep tryingComment -
That's probably because they consult with your political neighbors to the south as far as ways to separate people from their money. They probably take out a higher "juice" on the lottery like all governments so they can say lottery winnings are tax free. What our governments fail to realize is we need more taxpayers, not higher taxes.
The top 1% taxpayers paid more in taxes than bottom 95% combined did in the United States. Over 40% pay nothing at all in taxes, and a number of them get sizable refunds to boot!Comment -
I'm no expert in the subject and a person may need to research or contact a tax professional. However, it would seem to be a rare situation where an individual would want to file as a "professional". What I'm saying is don't get any bright ideas thinking you can somehow right off gambling losses in excess of winnings by filing as a "professional" to help offset other income. I'm sure that would come under close scrutiny by IRS. It wouldn't be looked at the same way a real estate agent may show a loss due to no sales or an independent trucker showing a loss on their tax return.
As far a consistent winning gambler filing as a "professional", it would only seem feasible if they could somehow prove a large amount of expenses related to the business, not even talking about gambling losses. In addition to the income tax you pay depending on your marginal rate, one would have to pay about 15% social security and medicare tax on approximately first $100,000 in annual profit. Would someone have at least $15,000 in expenses (again not counting gambling losses, yet) they can prove to make up for the additional self employment tax one would pay if there was a 100k profit from gambling? The only thing that would come to my mind would be a successful tournament poker player who does lots and lots of traveling.
Just my 2 cents.Comment -
To be considered a business rather than a hobby the activity has to have produced a profit in 3 of the last 5 years. If not then it's a hobby.
As for the extra deductible expenses that can be deducted on a schedule c for a "professional" gambler who gambles mainly online the big one might be business use of your home (depreciate a home office). Other than that you have computers you can depreciate, software you can write off, and maybe some health insurance. All in all probably not worth filing the schedule c unless you lose a lot of money in an off year.Comment -
I file my winning as "earned income" in a business. I am a Sports Consultant and Professional Gambler. If you treat it as a business, you can gain all the benefits of filing as a business, such as writing off trips to Las Vegas to legally transact your business, which is wagering, taking depreciation on computers and other items that are used for normal business deductions.
This is a lot better than getting slam ducked by the IRS for Tax evasion. If you wage off shore, you have also broken numerous Federal, State, and Local laws and ordinances. Feds will build such a huge case up against you that you will think that paying back taxes, plus penalties and interest is the easy way out.
One other thing. There are people who make a living by loging on to sites like this, taking names of the people who boast about not paying their taxes, and turning them into the IRS. The IRS has a section that is devoted to finding out who you are (very easy to do), tapping into your gaming habits, and going from there. The reward for rating someone out is 10% of what Uncle collects. If you do not pay taxes, do not advertise that fact.Comment -
I've never paid taxes on my winnings and I never will.. The way I see it, I'm laying my $$ to win $$, it's fair game. If I lose, then I lose my $$, If I win, then I get $$ for what I laid down to begin with.. not about to have some 3rd party come and claim my winnings. I know a bunch of people who feel the same way and don't pay taxes on this, and from what I understand you're more then likely able to get away with it.Comment -
This is probably the most ignorant statement in the entire thread. There is no difference from a lawyer who paid for his degree and invested his money and then has to pay tax on what he earned. He lay his "$$" to win "$$". Your fooling yourself, and judging by your typing you probably won't ever make enough for the IRS to audit you anyway.Comment -
You make an excellent point about having to produce a profit in 3 of the last 5 years or else it's a hobby. I would be paranoid, though, about a tax agent trying to change your returns if you did show a loss in 2 of those 5 years if the losses were more than winnings overall (e.g. winning years of 4k, 5k, 6k, while losing years of 20k and 15k). It may not be viewed like being a tech consultant, paper route, or lawn service since typically IRS would tell you to report winnings as other income and losses up to the amount of winnings as an itemized deduction on Schedule A. Even if you're right who would want to go through the hassle of tax court if IRS agent doesn't see it that way.
Now if you showed a profit of like 30k in 3 separate years, and 10k losses in 2 years you'd probably be fine. However it gets back to whether a schedule C would be best to file when there's the additional self employment tax to deal with. If you arbitrage lines for large amounts, then schedule C would probably be the way to go.Comment
