So I was recently thinking about my expenses after incurring some unexpected expenses (bound to happen on any trip I guess) and how that is affecting my bottom line. And then I started thinking about the biggest expense I haven't even paid yet: taxes. This is probably going to screw me over big time. Of course the IRS doesn't give a shit about what my actual profit was, they are just going to tax my gambling straight up. And then I started doing some research to find the true cost of gambling.
For starters, I am missing out on the standard deduction of $6000. So what is the true cost of this? Like 25% of $6000? So by playing blackjack, I am incurring a $1500 cost?
Next we have the normal income tax. Well this wouldn't be so bad since I have to pay this on my normal job, IF I could deduct expenses. But i can't deduct expenses! So now I am paying way more than 25% on my gambling profit. So let's say I have $9000 in net gambling wins but $3000 expenses. Well I'm going to get taxed about 25% of $9000, which turns to be 37.5% of about my $6000 actual profit. God damn. I might as well bend over right now.
Okay, but let's keep going. So there's this thing called AGI, I don't even know what the hell this is, but supposedly the higher it is the worse it is for you. And it seems that you cannot deduct losses from this. WTF? So my AGI is going to be through the roof! I estimate that my AGI is pretty much going to be double my salary on my regular job by the end of the year! So shit, what does this even mean? I think it affects IRA and medical expenses. For the IRA, I think that if I reach a certain AGI, I can no longer do a before tax IRA. So pretty much I should be telling my company to transfer all my shit from before tax IRA to after tax IRA since I probably won't qualify anymore? And then for medical expenses, they can only be claimed if they are above a certain percentage of the AGI. Hopefully I stay healthy during my blackjack career I guess.
So after a while I just stopped reading this stuff. It was just too demoralizing. Am I making a bigger deal out of this than it really is, or is it as shitty as I think it is? How are you guys dealing with this? And is it worth trying to go for professional status (assuming that I can get IRS to agree)? How does self-employment tax even work? Is that on top of the income tax? So going off my previous example, if I make $6k after expenses, then I would be paying (25% + 15%) * 6000 = 2400 in taxes? That seems equally as shitty.
Play within your bankroll, pick your games with care and learn everything you can about the game. The winning will come. It has to. It's in the cards. -- Bryce Carlson
Originally Posted by ZenKinG
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