My Gambling and Taxes Question

[wildemu]

Since the upcoming tax season is upon us, I thought I would be able to have the sbr faithful solve my dilemma for the past 2010 year.

I had an amazing run from mid-july to mid-september, turning about $100 to $16,000. Life was going well and then the NFL and NCAA decided to bend me over. I lost all the house money by mid-december.

Since the 16k did end up in my bank account at some point, do I have to report to the IRS still or am I off the hook because I lost it all?


Thanks for the replies, I'll be up in the morning if you guys need me to respond back.

[John Dough]

You are required to report all winnings. You may also report all losses as a deduction against winnings (up to the amount won).

Whether you put the money in your bank account, leave it offshore, or keep it under your mattress has no bearing on tax matters. You are required to report all wins and losses.

[wildemu]

will I have to pay taxes on it?

That's my major concern that I would have to pay a couple k on money that is gone.

[Hoja Verdes]

will I have to pay taxes on it?

That's my major concern that I would have to pay a couple k on money that is gone.

No. Did you read the post above?

You only pay taxes on winnings. If you started with $100, ran it to $16k, then lost it all, you have a net loss of $100.

[wildemu]

thanks for clarifying it up, no need to be snippy about it though.

I am not the sharpest neck in the woods when it comes to gambling taxes obviously.

Thank you.

[TomG]

Whether or not it will impact taxes owed will depend on the rest of your deductions. If you have a lot of deductions and already itemize, it won't make a difference. If you don't currently itemize, you will get screwed reporting the income. Buy TurboTax and run your return both ways to see the difference.

Even when you are fortunate enough to break even at gambling, you still get screwed.

[peeiempee]

It depends on if you did it online or not. Did you deposit all the cash at one time or was it a check? If you deposited all the cash at one time that would be hard to explain. If it was online and a check, you can claim that it was a loan which is tax free. No way of them confirming with Jamaica when they are the USA. If you deposit 2000 here and 2000 there, there is no way they will spend the time to cone after you for 16000. If you started with 100 chances are you don't make more than 1 million a year and you are not a business owner so u have nothing to worry about. The IRS main target are those rich people

[Hareeba!]

It depends on if you did it online or not. Did you deposit all the cash at one time or was it a check? If you deposited all the cash at one time that would be hard to explain. If it was online and a check, you can claim that it was a loan which is tax free. No way of them confirming with Jamaica when they are the USA. If you deposit 2000 here and 2000 there, there is no way they will spend the time to cone after you for 16000. If you started with 100 chances are you don't make more than 1 million a year and you are not a business owner so u have nothing to worry about. The IRS main target are those rich people

missing some vital issues here
the onus is on the taxpayer to provide evidence when it comes to an investigation - the IRS doesn't need to go to Jamaica - you need to provide evidence that it was a loan transaction

[ThaWoj]

ok, just me, but anyone that pays taxes on offshore/unregulated/illegal gaming or activity is nuts

even offshore poker sites, its the same thing.

lol you dont have to pay taxes on anything that is non-regulated or illegal. even if the irs says you have to. there is no way to enforce it.

[Trucker George]

Be aware that losses offset wins for federal income tax and most states' income tax. Unfortunately, there are a few states that do not permit this. If you are filing 16k in gambling winnings in one of these states, you can expect to get raped for around an additional $500 to $1000, depending on your income bracket and state. So if you win $16k and lose $16k betting sports, and you have to pay around $750 for breaking even. Sucks, doesn't it. These states didn't have betting on sports in mind when their made their gambling tax laws, but rather winning lottery jackpots. It's just another example of how sportsbettors are ****** over in the USA. Luckily, there are only maybe 5 states that do it this way. Wish I could name them, but don't recall. Of course, consult your local tax guy rather than trust George online. This topic basically sickens me anyway, considering how sportsbettors get shitted on from all angles in this country.

[ThaWoj]

No. Did you read the post above?

You only pay taxes on winnings. If you started with $100, ran it to $16k, then lost it all, you have a net loss of $100.

doesnt matter. lets say this was a regulate/liscened/legal book in this country (see above post). so lets say we were to pay taxes. YOU STILL have to report the wins and losses. also some ppl cant itemize, or it isn't worth it (i.e. the standard deduction results in a lesser payment/higher rebate). If that is the case then you can't even write off the losses. I know because I've had to report many horse racing "signers" before. If you dont itemize then it kicks your ass. Obviously it depends on the amount. But the difference with that is if I won 2000 in one day all on WIN wagers or just combined little hits here and there, i dont even have to report that. Only for the over $600 payouts on exactas, tris, supers, etc. same theory if i hit on a slot machine or VP.

but who cares because since this is all illegal and not liscensed none of it even matters. do what you want though.

[ThaWoj]

Be aware that losses offset wins for federal income tax and most states' income tax. Unfortunately, there are a few states that do not permit this. If you are filing 16k in gambling winnings in one of these states, you can expect to get raped for around an additional $500 to $1000, depending on your income bracket and state. So if you win $16k and lose $16k betting sports, and you have to pay around $750 for breaking even. Sucks, doesn't it. These states didn't have betting on sports in mind when their made their gambling tax laws, but rather winning lottery jackpots. It's just another example of how sportsbettors are ****** over in the USA. Luckily, there are only maybe 5 states that do it this way. Wish I could name them, but don't recall. Of course, consult your local tax guy rather than trust George online. This topic basically sickens me anyway, considering how sportsbettors get shitted on from all angles in this country.

lol exactly, again sports betting is ILLEGAL - except in nevada....so why the fuckk would anyone pay taxes on it outside of activity in nevada - i.e. legit betting. just my 2 cents. whats the government gonna do. o sir you made 20k income on your crack sales this year, you have to pay taxes on it....i dont think so.

[Double Bogey]

ok, just me, but anyone that pays taxes on offshore/unregulated/illegal gaming or activity is nuts

even offshore poker sites, its the same thing.

lol you dont have to pay taxes on anything that is non-regulated or illegal. even if the irs says you have to. there is no way to enforce it.

Were you Al Capones lawyer?

[Trucker George]

lol exactly, again sports betting is ILLEGAL - except in nevada....so why the fuckk would anyone pay taxes on it outside of activity in nevada - i.e. legit betting. just my 2 cents. whats the government gonna do. o sir you made 20k income on your crack sales this year, you have to pay taxes on it....i dont think so.

That's exactly what they do.

If significant money hits your bank account or is otherwise transmitted to you, those reports go directly to the IRS. If you ever find yourself sitting across the table from IRS investigators (in-person audit), good luck coming up with an explanation. And the burden of proof is on you to demonstrate that it is not taxable money.

[Hareeba!]

lol exactly, again sports betting is ILLEGAL - except in nevada....so why the fuckk would anyone pay taxes on it outside of activity in nevada - i.e. legit betting. just my 2 cents. whats the government gonna do. o sir you made 20k income on your crack sales this year, you have to pay taxes on it....i dont think so.

No it isn't!
Running a sports book is illegal
Betting at one isn't

Yes - regardless of legality or not, income is taxable - just ask Al Capone

[easywinner]

Online books don't report any activity to tax agencies.

[John Dough]

ok, just me, but anyone that pays taxes on offshore/unregulated/illegal gaming or activity is nuts

even offshore poker sites, its the same thing.

lol you dont have to pay taxes on anything that is non-regulated or illegal. even if the irs says you have to. there is no way to enforce it.

I think anyone who knowingly commits tax evasion is nuts. By US tax law, you have to declare all income, regardless of the source.

To each his own I guess.

[username474]

Be aware that losses offset wins for federal income tax and most states' income tax. Unfortunately, there are a few states that do not permit this. If you are filing 16k in gambling winnings in one of these states, you can expect to get raped for around an additional $500 to $1000, depending on your income bracket and state. So if you win $16k and lose $16k betting sports, and you have to pay around $750 for breaking even. Sucks, doesn't it. These states didn't have betting on sports in mind when their made their gambling tax laws, but rather winning lottery jackpots. It's just another example of how sportsbettors are ****** over in the USA. Luckily, there are only maybe 5 states that do it this way. Wish I could name them, but don't recall. Of course, consult your local tax guy rather than trust George online. This topic basically sickens me anyway, considering how sportsbettors get shitted on from all angles in this country.

Connecticut is the only one that I know for sure but there are more.

[jackkkk2009]

I also asked the tax report agent. they also told that if there isn't a W2 form, there's no way for them to report that kind of tax for me.

[Fishhead]

GEEZUS, listen to John Dough in this thread........


YOU ABSOLUTELY 110% MUST ACCOUNT FOR ANY MONEY HITTING YOUR CHECKING ACCOUNT!!!


REPORT WINS ON LINE 21 and DEDUCT LOSSES ON SCEDULE A............KEEP A DAILY DIARY SO THIS IS EASY TO DO.


For instance, if one has deposited 16,000 in their checking account from offshore sources, you must/should pay taxes on this.........for whatever your NET is..............so lets say your diary wins and losses are as follows.........


TOTAL WINS 49,000
TOTAL LOSSES 45,000

You simply put 49,000 on LINE 21(GAMBLING INCOME) and deduct 45,000 on SCHEDULE A(GAMBLING LOSSES)...............thus you will pay taxes on the net $4,000 and your taxes will depend on whatever tax bracket you are in..........if you are in the 15% bracket, you will be paying roughly $600 in taxes.

[ThaWoj]

I also asked the tax report agent. they also told that if there isn't a W2 form, there's no way for them to report that kind of tax for me.

exactly.

and yes hareeba i know "betting" isnt illegal, but im talking about the whole process being unregulated/uneforceable.

and again just a reminder, writing off your losses only works if you itemize your deductions. if you take the standard deduction, you cannot write off your losses. but again, you that only is necessary if you hit a "signer".

Shit, when i go to a casino and win 300 bucks on blackjack, do i have to report it? hell no. i dont care if i've won $100,000 for the year playing blackjack, i dont have to report. now if i hit a trifecta for 2,400, a slot jackpot for 1,400, the lottery for 5,000 etc etc etc then yes, you have to report that, and only that amount. then if you itemize your deductions, you can say you lost up to $5,000 playing lottery that year so that your wins/losses even out and you dont have to pay tax on the $5,000 that you won that particular night. of course you have to retain $5,000 in losing tickets (or horse racing tickets and programs, or letter from the casino with your win/loss total for the year etc etc)...

[Josy]

First of all I did not spot where wildemu states from which country he's doing his gambling. I think it is a vital part.
I do not know anything about US tax legislation but there are some countries you do not have to pay any taxes on your gambling winnings as far as you can prove it's not your main income disregarding how much are you doing from it.
Please enlighten me if I am wrong.

[MadTiger]

ok, just me, but anyone that pays taxes on offshore/unregulated/illegal gaming or activity is nuts even offshore poker sites, its the same thing. lol you dont have to pay taxes on anything that is non-regulated or illegal. even if the irs says you have to. there is no way to enforce it.

http://en.wikipedia.org/wiki/Al_Capone

[Fishhead]

exactly.

and yes hareeba i know "betting" isnt illegal, but im talking about the whole process being unregulated/uneforceable.

and again just a reminder, writing off your losses only works if you itemize your deductions. if you take the standard deduction, you cannot write off your losses. but again, you that only is necessary if you hit a "signer".

Shit, when i go to a casino and win 300 bucks on blackjack, do i have to report it? hell no. i dont care if i've won $100,000 for the year playing blackjack, i dont have to report. now if i hit a trifecta for 2,400, a slot jackpot for 1,400, the lottery for 5,000 etc etc etc then yes, you have to report that, and only that amount. then if you itemize your deductions, you can say you lost up to $5,000 playing lottery that year so that your wins/losses even out and you dont have to pay tax on the $5,000 that you won that particular night. of course you have to retain $5,000 in losing tickets (or horse racing tickets and programs, or letter from the casino with your win/loss total for the year etc etc)...

If you win $1 at blackjack and do nothing else for the rest of the year gambling, you ARE INDEED OBLIGATED TO REPORT THIS AS NET GAMBLING WINNINGS...........its up to you if you feel you want to cheat the IRS by not reporting it.

If you won 100,000 playing blackjack, you better damn well be reporting something, unless you soul purpose is to lose most of it back.

[TomG]

GEEZUS, listen to John Dough in this thread........


YOU ABSOLUTELY 110% MUST ACCOUNT FOR ANY MONEY HITTING YOUR CHECKING ACCOUNT!!!


REPORT WINS ON LINE 21 and DEDUCT LOSSES ON SCEDULE A............KEEP A DAILY DIARY SO THIS IS EASY TO DO.


For instance, if one has deposited 16,000 in their checking account from offshore sources, you must/should pay taxes on this.........for whatever your NET is..............so lets say your diary wins and losses are as follows.........


TOTAL WINS 49,000
TOTAL LOSSES 45,000

You simply put 49,000 on LINE 21(GAMBLING INCOME) and deduct 45,000 on SCHEDULE A(GAMBLING LOSSES)...............thus you will pay taxes on the net $4,000 and your taxes will depend on whatever tax bracket you are in..........if you are in the 15% bracket, you will be paying roughly $600 in taxes.

This example is correct. However it makes a very important assumption: the taxpayer is already itemizing their deductions. If this isn't true, the taxpayer will end up paying much more than an additional $600 in taxes as the person will essentially have lost their entire standard deduction.

[Legions36]

Hey do what you want if you want to pay do, if you don't then don't. Im pretty sure they won't kick in your door for lack of payment.

[ThisGuy]

You are to report all wins and losses (if an option) even offshore, I get that. But if you were to only list the deposits to your checking account as income and not attempt to itemize any deductions/losses where could this go wrong?

Say I were to have deposited 1k offshore and ran it up to 80k, while winning and losing much more along the way obv. If I have a grand total of 30k withdrawn and deposited to my checking acct and I claim it all as income while maintaining a 50k roll off shore what onus of proof would I need to provide if I were to be audited? There wouldn't be any leftover income they're able to see to explain.

The following year I could withdraw off of the existing account again claiming it as income during that tax year and hopefully growing it, where is my flaw?

[Hareeba!]

First of all I did not spot where wildemu states from which country he's doing his gambling. I think it is a vital part.
I do not know anything about US tax legislation but there are some countries you do not have to pay any taxes on your gambling winnings as far as you can prove it's not your main income disregarding how much are you doing from it.
Please enlighten me if I am wrong.

not entirely correct
I'm guessing you are an Aussie?
gambling winnings are exempt from tax so long as you are not conducting a PROFESSION or BUSINESS of gambling
how much or little of your total income is from gambling is irrelevant in theory at least, although one would expect that if you are gambling as a business or profession it would be a relatively high proportion but if for example you are say a wealthy retiree with a significant income from investments or superannuation you may be held to be conducting a profession or business of gambling despite your investment income being greater than your gambling income.
on the plus side I understand that a court has never ruled in favour of the tax office against a "mere punter", i.e. one who has no direct connection with the racing or bookmaking industry

[wildemu]

First of all I did not spot where wildemu states from which country he's doing his gambling. I think it is a vital part.
I do not know anything about US tax legislation but there are some countries you do not have to pay any taxes on your gambling winnings as far as you can prove it's not your main income disregarding how much are you doing from it.
Please enlighten me if I am wrong.

I am from the united states.

[scott235]

The best policy is to never ever ever win, and if any ever acusses you of it , make it very hard to prove.

Hint...keep your mouth shut

even better, why even let anyone know that you bet at all

[Trucker George]

You are to report all wins and losses (if an option) even offshore, I get that. But if you were to only list the deposits to your checking account as income and not attempt to itemize any deductions/losses where could this go wrong?

Say I were to have deposited 1k offshore and ran it up to 80k, while winning and losing much more along the way obv. If I have a grand total of 30k withdrawn and deposited to my checking acct and I claim it all as income while maintaining a 50k roll off shore what onus of proof would I need to provide if I were to be audited? There wouldn't be any leftover income they're able to see to explain.

The following year I could withdraw off of the existing account again claiming it as income during that tax year and hopefully growing it, where is my flaw?

Offshore books are indeed financial black boxes to the US government and they only way they can detect money is when it is transmitted to you (wire, **, **, online wallets, SARs, etc) or when it involves your bank account (CTRs and SARs). The flaws are that if you are audited you are going to have to follow through with your evasion strategy in conversation with an IRS investigator, who is a person trying to **** you over, so don't make any mistakes. Also, these books can go bye-bye and so will your money. Some reputable books in 2006 are not so reputable in 2011 when suddenly the payouts slow down. Would be a shame to have a significant amount of your 80k sitting in, say, WSEX these days. Another example is when Pinnacle refused US players without warning in 2007. If you had 80k there, your only way out is book to book. Probably not a problem, but now you would have to do a one-time rollover of 80k with the books you transfer in to before you can even think about having full access to it again. In the meantime, the US will continue to track down and seize check and cash processors for all books (an invisible war against online gambling - invisible because no one cares, except sportsbettors). There really is no terra firma offshore for US players. On one hand these black box books are accountable to no one and thus neither is your money, and on the other hand if you make one false move while in the middle of a tax evasion strategy, you risk getting bent over a rail by the IRS. Disclaimer: for the record, I'm not advocating doing anything illegal here, but just thinking about what the situations are. If any three-letter agency employees are reading this post, my official position is: pay your taxes.

[peeiempee]

missing some vital issues here the onus is on the taxpayer to provide evidence when it comes to an investigation - the IRS doesn't need to go to Jamaica - you need to provide evidence that it was a loan transaction

You are missing the vital issue here. You are not answering the guys question. He is not a high roller and if I had to make wager he probably makes the income of an average American. The IRS is NOT gonna spend the time to ask you were did this $2,000 come from, nor will you even hit the alert for red flags for the IRS on a W2 making 40 to 50K a year. They have big fish to fry than to call you in for a sit down interview to ask about the extra 2K in your account.

Now if you are a high roller, winning 100K a year, you probabaly have the means to bet that much. Small business owner, huge investor in other areas besides gambling. Then you are red flagged by the IRS.

[ThisGuy]

Offshore books are indeed financial black boxes to the US government and they only way they can detect money is when it is transmitted to you (wire, **, **, online wallets, SARs, etc) or when it involves your bank account (CTRs and SARs). The flaws are that if you are audited you are going to have to follow through with your evasion strategy in conversation with an IRS investigator, who is a person trying to **** you over, so don't make any mistakes. Also, these books can go bye-bye and so will your money. Some reputable books in 2006 are not so reputable in 2011 when suddenly the payouts slow down. Would be a shame to have a significant amount of your 80k sitting in, say, WSEX these days. Another example is when Pinnacle refused US players without warning in 2007. If you had 80k there, your only way out is book to book. Probably not a problem, but now you would have to do a one-time rollover of 80k with the books you transfer in to before you can even think about having full access to it again. In the meantime, the US will continue to track down and seize check and cash processors for all books (an invisible war against online gambling - invisible because no one cares, except sportsbettors). There really is no terra firma offshore for US players. On one hand these black box books are accountable to no one and thus neither is your money, and on the other hand if you make one false move while in the middle of a tax evasion strategy, you risk getting bent over a rail by the IRS. Disclaimer: for the record, I'm not advocating doing anything illegal here, but just thinking about what the situations are. If any three-letter agency employees are reading this post, my official position is: pay your taxes.

Right so that would be the fear as well, being taxed on funds it's possible you never receive (as opposed to actual cash in hand from withdrawals). If your sole income comes from betting and you claim all funds deposited throughout the year I would think the IRS would leave you alone and if they did come knocking I couldn't imagine how the conversation would go, would they inquire about outstanding balances? Does anyone have any experience?

[peeiempee]

http://www.wwwebtax.com/audits/audit_avoiding.htm

Areas of audit. The average American on a W2, making a few extra thousand a year through online sportsbetting, the IRS will not go after you. These posters making a big deal out of this are speaking for themselves. They probably make a shit load and gamble a shit load.

[LegitBet]

i dont understand why deductiond arent all the same