If anyone has last minute questions as they're filing returns, just post them here, and I will make my best attempt at answering. All responses will be general tax information for you to make your own decision, not tax advice for your specific situation.
The Cash Cow.
1. What's considered a session?
2. Are gambling winnings taxed when gambling outside the U.S.
3. If I'm a resident of a state with no state income tax, and gamble in a state with state income tax, do I owe state income taxes? What about if I gamble in those bad states where I can't deduct losses? Can I deduct since I am resident of a good state?
4. How can I file as a pro if this is only part time gig for me.
1. IRS Publication 529 states:Originally Posted by Avincow
Diary of winnings and losses. You must keep an accurate diary or similar record of your losses and winnings. Your diary should contain at least the following information.
- The date and type of your specific wager or wagering activity.
- The name and address or location of the gambling establishment.
- The names of other persons present with you at the gambling establishment.
- The amount(s) you won or lost.
You may net together all of the games you play at the same casino in the same day Shollenberger v. Commissioner http://scholar.google.com/scholar_ca...=1&oi=scholarr
There is also a proposed IRS regulation on a "safe harbor" approach for slot machine sessions:http://www.irs.gov/irb/2015-12_IRB/ar09.html. (Section 3.04 is what you're looking for). If you'd like, you can comment on this regulation! I think this regulation would be good for people in our line of work, as it would apply a less stringent standard of a gambling session for machines.
The Cash Cow.
2. Generally, all income earned by US citizens, at home or abroad, is subject to the income tax. So, your gambling winnings abroad would be subject to US income tax. There could be an exception within a tax treaty. There could be an exception if you live abroad for the tax year (I don't know if this applies to professional gamblers). http://www.irs.gov/Individuals/Inter...come-Exclusion.
3. This depends on the state. Some states have a minimum amount of taxable income in order to file a return (New Jersey)http://www.state.nj.us/treasury/taxation/njit24.shtml. Some states (Ohio) treat professional gamblers differently than casual gamblers. For professionals, each state has different rules regarding how you "apportion" your income, based on how much business you did in the state, or other factors. Sales (winning sessions?) are probably the closest thing to a clear factor to apply. For a hobby gambler, reporting the win or loss in each state would probably be ok in most cases.
Candidly, I've been looking at this issue for several years now, and there is almost no guidance that is on point. I'm seriously considering writing an article of my own. I don't know that a "right answer" exists.
4. The IRS is going to look at these 9 factors to determine if you are a professional or not.http://en.wikipedia.org/wiki/Treasur...lation_1.183-2. It is possible to be a part-time professional, but it's hard.
The Cash Cow.
Some of these questions will probably fall under "personal situation," but here they are anyway.
1. I play rated. My accountant told me that as long as the casino does not have my SSN, they can not report my wins/losses. This made sense to me b/c a SSN is the only thing that confirms that the person being reported is the person in question. Any words of wisdom to add?
2. I keep records of casinos visited, date of visit, and amount won/lost. I do not however keep track of how long I play each day. I also keep track of other information that probably doesn't apply to taxes (average win/loss at each casino for example). Anything else I MUST keep track of (I read your previous posts, but am asking anyway in case there is some type of uniqueness to the situation)?
3. If you make under a certain amount each year (like if you had a bad year), is there a certain amount that is not considered important enough to report?
4. If I ask for a win/loss statement from the casino, obviously, due to ratholing and inaccuracies on the part of the casino, it will show an amount different from what I have. If I did decide to report, how do I implement this conflicting information?
5. My accountant seemed to think (unofficially of course), that casinos would rather not report your earnings. This was somewhat good to hear that both parties would rather not report. I didn't understand why though. What say you?
6. Is there a reason to be concerned as a counter if you show much different records than the casino does when reporting? Is the casino somehow able to identify you as a counter due to how you report (they shouldn't know what I put on my forms anyway, but can this somehow come back to me)?
Last edited by marriedputter; 04-02-2015 at 08:02 AM.
Thank you Moo for fielding tax questions.
Trying to sort through the double-speak tax language.
This regulation is for determining whether a non-business activity qualifies as "for-profit" or not, correct? And the reasoning is to determine whether it can deduct expenses. Is that correct?
Is AP activity a non-business activity?
1. If you hit a large payout, they have to collect your social: http://www.irs.gov/pub/irs-pdf/iw2g.pdf
2. Frankly, as long as you have good, organized records with date, casino, win/loss and it doesn't look like a mess, I think it would hold up on audit. The cases where people lose in the Tax Court, their records are usually a disaster.
3. The law says you have to report your gambling wins, no matter the amount.
4. Always report what is in your journal. Casino win/loss records are not viewed favorably in tax court, except as sort of a general reference (i.e. it says you lost $300k, and your W2-g winnings are $20k, they MIGHT agree that you are a net loser). I haven't seen any cases where this has come up, but I would be inclined to think they might view records from machine play more favorably, because there was no room for human error.
5. Casinos don't want you to have to pay taxes. They certainly don't want gambling winnings to be subject to tax. The tax laws are absolutely horrible for hobby gamblers.
6. I can't imagine any way a casino would find out you filed as a professional gambler. This is private information, and it's a felony for the IRS to misuse it.
The Cash Cow.
Yes, these are the tests that the IRS will apply to decide if you are doing this as a business vs. a hobby. A professional takes an above-the-line deduction for gambling losses, while a hobby gambler has to itemize. And a professional gambler can claim travel and other expenses, while a hobby gambler gets none of these (gambling is different from other hobbies in this regard). This might help: http://www.irs.gov/Businesses/Small-...For-Profit-ATG
The Cash Cow.
Dumb thread. Hit the casinos hard for 10 years, and take a boat to the other side of the world and never come back(This country sucks anyway). I would love to see the IRS catch anybody. As you can see you're not even taking a plane so no ID tracking possible to know where you could've left to.
Last edited by ZenKinG; 04-04-2015 at 04:18 PM.
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