I feel like I'm going to get screwed over big time this year for taxes

[KJ]

you likely are in the minority, but, you, like most on this site are probably not paying their STATE & LOCAL taxes correctly...when you win money in another state you o ARE LIABLE for that state's state and local taxes where the win...

KJ, so that trip to the Parks and take a couple dimes from last year...you owe both PA state and Local taxes....DOES NOT matter that you live in a state w/o state/local taxes.

That's interesting and no doubt true, Sharky. I try to compute and pay my taxes as fairly a I can, but I am not going to break it down state by state and pay each state income tax. I guess like millions of other gambler, recreational as well as professional, I will be paying incorrectly. I am OK with that.

What I will do is lump all my gambling wins that are not accompanied by 'paperwork', together and then pay the proper amount of income tax to my state of residence. I think that's fair. (see 21forme's post for info on my state's tax income tax rate).

[Three]

In my state if you pay the required income tax on earnings in another state for that state they can't tax it again as in your resident state. I guess that means no home state taxes on earnings from Nevada. Everybody satisfies Nevada gambling tax burden.

[Sharky]

In my state if you pay the required income tax on earnings in another state for that state they can't tax it again as in your resident state...

yes, precisely what i stated..."I get like 5-6 W2 everyyear and need for fill out state and local taxes for each and adjust my local's accordingly"...so for clarification..."adjust accordingly" means i subtract taxes from my home state/local that i pay elsewhere...you are correct, NV has not state tax...so no tax liability

btw, all my w2 are for my job...no w2gs, unless, of course, required by law (like winning 1000x side bet)...nice prob to hv...

[Sharky]

...I am not going to break it down state by state and pay each state income tax. ....

then you ARE NOT paying you taxes properly...so if you are cheating anyway...might as well get off the horse and cheat the feds, too

[mcallister3200]

Tax experts? I just use the shoebox accounting method. Thanks Zee!

[biggg]

I spoke to a pro vp player who does everything by the book and gets audited every year for doing so, when if he filed incorrectly he would not.

I keep decent records and file schedule C. If I get audited my bank records will closely back up what I reported. I use a credit card for expenses and my travel records show that I visited the casinos in my log. Not sure what else you can do.

[moo321]

Yes, that is partly true. It is not true that in one session if you win $10 and then lose $10 and then win $10 and then lose $10 that you owe taxes on $20 of wins. Withholding is not the same as owing. Withholdings contribute to what you may ultimately owe. Withholdings are in your "account". You determine what you ultimately owe, and subtract withholdings to determine what you owe.

Again, consult an expert. It can save you a great deal. 98% of what you read on the Internet is wrong.

In Ohio, it is true. Wins are taxed, no deduction for losses unless you're a professional.

[moo321]

That's interesting and no doubt true, Sharky. I try to compute and pay my taxes as fairly a I can, but I am not going to break it down state by state and pay each state income tax. I guess like millions of other gambler, recreational as well as professional, I will be paying incorrectly. I am OK with that.

What I will do is lump all my gambling wins that are not accompanied by 'paperwork', together and then pay the proper amount of income tax to my state of residence. I think that's fair. (see 21forme's post for info on my state's tax income tax rate).

What you're saying is, on its face, quite reasonable. But it is not correct. You should be apportioning your income into each state, and paying state income taxes based on different factors each state uses to determine how much you owe. The difficulty is that states didn't contemplate professional gamblers when they drafted apportionment statutes, so it's difficult to figure out how to apportion when you have no "sales" "property" "wages" or revenue from providing personal services.

As to whether they'll catch you, I have no idea, but I don't advise people to break tax laws.

[moo321]

In my state if you pay the required income tax on earnings in another state for that state they can't tax it again as in your resident state. I guess that means no home state taxes on earnings from Nevada. Everybody satisfies Nevada gambling tax burden.

This is actually a very novel Constitutional idea that I am currently investigating. I believe the due process, equal protection, and dormant Commerce Clause would prohibit a state from taxing income earning wholly in another state. Some state courts, such as New Jersey, have agreed. I believe it has hit several Federal appellate courts, but I'm still working on it. I'll update if I find more case law on this.

Essentially, the argument is: Nevada has chosen not to tax gambling winnings. So a state taxing gambling winnings of its residents won in Nevada violates Nevada's sovereignty, and unfairly harms interstate commerce by imposing a tax on activity in another state.

[moo321]

Back to the original post, consider filing as a professional gambler. This would allow you to reduce wins by losses above the line (for AGI) rather than as an itemized deduction. There are a number of factors the IRS considers in deciding if you are a professional, and you should consult an expert if you want an actual opinion on what tax position to take. I can give tax information, such as laws and factors the IRS will consider, but I can't give any specific tax advise.

Russell Fox and Marissa Chien are both excellent accountants for professional gamblers.

[muffdiver]

In Ohio, it is true. Wins are taxed, no deduction for losses unless you're a professional.

And they wonder why there are tax cheats? Should perpetrators feel guilty in that climate? Most states that have an income tax see this as a BIG cash cow.

[KJ]

A thread entitled "I feel like I'm going to get screwed over big time this year for taxes" seems like the perfect space to share this little story.

First, let me say again, that I pay my taxes and I try hard to properly pay my taxes (Hello uncle Sammy, if you are reading).

After moving to Vegas, I started to 'supplement' my blackjack income with some machine play AP. I am not one of those machine play experts that can recognize and play +EV machines at a glance. My angle was and still is pretty simple (in keeping with my simplicity approach to AP). A limited amount of slightly negative video poker play, which generates disproportionate amount of free play mailer offer, from the Vegas casinos that are competing, especially the local type place competing for the local's play. It is this disproportionate amount in the mailers that makes the whole exercise slightly +EV.

So the problem is that this play generates some paper work, every time you hit a handpay above $1200, which is every Royal above the 25 cent level. Being that you want to limit time spent getting through play required to generate certain amounts of free play, as well as the free play itself, most of us doing this play $1 amounts, which generates some paperwork. In addition to paperwork from handpays, my partner and I (my partner handles all this machine play activity now) have also hit a number of large prizes from drawings in the past (car, 10 grand cash) which our machine play generated the drawing entries. So there is more paperwork that you think involved.

Now at the end of the year, you gotta go running around to all the different casinos (some you can do online) and get win-loss statements to match up with your own records and logs to "offset' some of these handpay wins.

So anyway in an effort to minimize some of this paperwork and time, this year I instructed my partner to play all our play at the 25 cent level to cut down or avoid handpays. This is more time consuming, but that is now his job. In the meantime, it avoids handpays and paperwork, saves time waiting for handpays and saves money that you are all but required to tip the attendants giving you a handpay.

But again the trade off is time and sometimes we are pressed for time, so my partner plays the multi-hand (50 or 100 play) machines at the 25 cent level. On these occasions I figured worse case scenario, if you hold 4 to a royal on your original hand, maybe you draw 2 or 3 royal out of the remaining 50 or 100 hands which would generate a handpay.

Well wouldn't ya know....my partner drew a royal on his initial 5 cards on a 50 play machine a couple months ago. That's 50 grand. I wasn't with him, but he was almost afraid to show my the check and paperwork. I mean, I can't be mad over something like that. This hit, plus a large prize drawing win earlier in the year, where a casino is paying my mortgage for the year insures that supplemental part of our AP play will be very strong for the year, but it is going to present problems at tax time. At our level of play, we are not going to be able to 'offset' some of that, and a sizable chunk will be eaten up by taxes.

[Avincow]

Back to the original post, consider filing as a professional gambler. This would allow you to reduce wins by losses above the line (for AGI) rather than as an itemized deduction. There are a number of factors the IRS considers in deciding if you are a professional, and you should consult an expert if you want an actual opinion on what tax position to take. I can give tax information, such as laws and factors the IRS will consider, but I can't give any specific tax advise.

Russell Fox and Marissa Chien are both excellent accountants for professional gamblers.

How much would such services cost me? I would be paying for a consultation fee, then on top of that I would want to have someone file my taxes for me?