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Overview
The complete tax implications of gambling are a big mystery to gamblers, accountants, and even the Internal Revenue Service itself. The IRS offers surprisingly few details to guide gamblers through the tax maze and what it does say is often general, vague, even contradictory.
Tax Help for Gamblers, first published in 2007, deals with the innumerable nuances and gray areas of gambling and taxes. It covers all the whys and wherefores of this complex subject, including tax-code specifics, record-keeping, filing your tax return, state-tax considerations, and audits and other tax problems. Numerous charts and forms help you see the practical application of the information.
This book is for recreational and professional gamblers, including low and high rollers, table-game and machine players, video poker and live poker players, online enthusiasts, international and cruise ship players, and people who live or gamble in states with income taxes. Whether you’re a do-it-yourself tax filer or you use a tax professional, Tax Help for Gamblers is an indispensable guide to staying square with the taxman.
Product Details
| ISBN-13: | 9781935396512 |
|---|---|
| Publisher: | Huntington Press |
| Publication date: | 03/01/2012 |
| Edition description: | Second Edition |
| Pages: | 192 |
| Sales rank: | 1,056,815 |
| Product dimensions: | 5.50(w) x 8.50(h) x 0.37(d) |
| Age Range: | 18 Years |
About the Author
At first glance, Jean Scott appears to be what she is—your average 60-something retired English teacher from the Midwest. In her secret life, though, she’s the most successful casino low roller in the country. Dubbed the “Queen of Comps” by CBS’ “48 Hours,” by using slot clubs, taking advantage of promotions and contests, gambling with coupons, and exploiting everything in the casino world that’s even remotely vulnerable, Scott has developed a technique for getting everything she wants from the casinos from Las Vegas to Atlantic City. She has been featured on “Dateline,” “Hard Copy,” “To Tell the Truth,” numerous Travel and Discovery channel documentaries, and “48 Hours.”
Marissa Chien is an Enrolled Agent and the president of her own firm, Advantage Tax Plus, Inc., where she provides tax accounting, financial planning, and wealth management services to her clients. She is a graduate of the University of Michigan and has approximately 300 individual and corporate clients, including Jean Scott and Phil Gordon as well as other poker champions and professional gamblers.
Read an Excerpt
“Paying taxes on my gambling wins? You’ve got to be kidding. Sure, sometimes I win, but my losses are always much larger than my wins by the end of the year. So I don’t have to mess with it on my federal or state tax returns.”
Wrong! You probably should “mess with it,” especially if you hold any of the following common, but mistaken, beliefs:
- I can lump together all my wins and losses for the year and, if I have a net loss, I don’t need to put wins or losses on my income tax returns. After all, I didn’t have any gambling income.
- The IRS can’t “catch” me, even if I win a lot of money gambling, as long as it’s done slowly over a considerable period of time in different gambling venues and I get no official forms from a casino like a W-2G or 1099.
- Federal and state tax agencies know most gamblers lose over the long term, so they aren’t very interested in auditing them.
- If I do get a few W-2Gs, I can just count that total as my gambling income for the year and be safe in an IRS audit.
- If I gamble online, the IRS doesn’t get any records of this, so I don’t have to report any of my winnings.
- If I gamble on a cruise ship in waters three miles from U.S. soil, I don’t need to report my winnings.
- If I play poker only in home games, I don’t have to report my winnings.
- Winnings from illegal gambling are not taxable.
Before we go any further, let me emphasize: It’s not the purpose of this book to moralize about reporting or not reporting your gambling wins and losses. However, now that casinos have sprung up all over the country and, as a result, more and more people gamble, the IRS is becoming more interested in this area of potential under-reporting. If you report any W-2Gs or don’t include them when you’ve been issued them, it’s more likely you might be asked by the IRS to provide additional details of your gambling. And it’s more likely that you might be questioned about gambling if you come to the attention of the IRS for other reasons, even a routine audit.
Table of Contents
Foreword Phil Gordon xi
Author's Notes xiii
Part I Federal Taxes
1 The Basics 3
Gaming Wins as Income 6
Online Gambling 8
Defining a "Wing" 10
2 Player Record-Keeping 15
IRS Guidelines for Records 16
Defining a "Session" 18
Casino Win/Loss Statements 22
The Gaming Log 25
How Jean Keeps Records 27
Always An Exception 29
3 Special Gaming Situations 31
Casino Comps and Gifts 31
Cashback and Free Play 32
Casino Tournaments and Drawings 34
Gambling Groups 38
4 Filing Your Tax Return 43
The Recreational Gambler 43
The Professional Gambler 46
5 Federal Government Issues 55
The W-2G 55
Income Tax Withholding 62
Social Security Numbers 64
Big Brother is Watching You 66
Gambling Issues for non-U. S. Citizens 67
6 Tax Help for the Poker Player 71
Poker Reporting and record-keeping 72
Poker Paperwork 76
Poker Gambling Groups 80
From Recreational to Professional Poker Player 82
7 Audits and Other Scary 87
Tax Problems for the Gambler 87
"The IRS Isn't Fair" 88
The 1040 Line 21 Problem 89
Getting Information From An IRS Human 93
Surviving an Audit 94
The Taxpayer Advocate 97
Part II State Taxes
8 States Add Insult to Injury 103
State Withholding Taxes 103
Taxes on Non-Resident Gaming 104
The Biggest Problem with State Taxation 106
Mississippi-A Category of Its Own 107
Any Relief from State Taxes? 108
9 How All 50 States Handle Gambling Wins/Losses 111
Summary 117
Who's Who in the Tax Business 118
Useful Websites 119
Part III Appendices
Government Forms
Appendix A1 Form W-2G 123
Appendix A2 Form 1099-MISC 125
Appendix A3 Form 5754 127
Appendix A4 Form W-7 129
Appendix A5 Form 1042-S 131
Appendix A6 Form W-9 133
Sample Tax Forms
Appendix B1 Recreational Gambler-Non-Itemized 135
Appendix B2 Recreational Gambler-Itemized 137
Appendix B3 Professional Gambler 141
Appendix B4 State and Federal Tax Forms for Indiana Residents 147
Basic IRS Information for Gamblers
Appendix C Revenue Procedure 77-29 153
Section 1 Purpose 153
Section 2 Background 153
Section 3 Procedures 154
Section 4 Limitations 156
Appendix D Groetzinger Case Gambling As A Business 157
Syllabus 157
Majority Opinion 169
Judge White's Dissenting Opinion 172
About the Authors 175