Won/Loss Statement

The lighter side... playing for entertainment, less concerned about "the math."
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olds442jetaway
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Re: Won/Loss Statement

Post by olds442jetaway »

There are many many adverse consequences to have a boost in AGI. I have posted about the ones that cost me over 10 k in each of the last several years in state and Federal income taxes and fees over and above what I otherwise would have owed without Gross gambling winnings. By the way, each and every year has been a loss gambling wise. So far for 2020, no gross gambling winnings and no W-2Gs.

FloridaPhil
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Post by FloridaPhil »

Great stuff. What works for a professional player may not always work for a recreational player. In the eyes of the IRS, a professional player is operating a business. Their tax returns reflect this. When you are operating a business, you are allowed to deduct legitimate business expenses. If you itemize, you can deduct losses up to the amount of your winnings. If you travel for business, travel is deductible. If you are giving seminars, you may deduct those costs as well. It would be interesting to see the returns of a true professional video poker player. I suspect anyone who has done this for any time at all has been scrutinized by the IRS and knows what they can and can not do.

If you don't have everything it takes to profit from playing with an advantage, playing video poker is going to cost you. Playing bigger to gain better odds may help reduce that cost. It may very well cost you more. The equations and simulations used to estimate returns, should take taxes into consideration. Just because a game looks better on a pay schedule doesn't mean it will put more money in your pocket.

olds442jetaway
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Post by olds442jetaway »

Every 4,000 hand pay/ W-2G in Ct you lose 280 bucks if you elect to have the max withheld. Since these are last dollars in, one may very end up in that 7 percent bracket when you file your return. That is just one example and one small part of the cost. The largest other two items for me were losing the state and local tax deductions over 10,000 on Sch 1 of the 1040 and being forced to itemize to write off the gross gambling winnings when the standard deduction would have worked so much better.

FloridaPhil
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Post by FloridaPhil »

Everyone knows gambling taxes exist. If you live in a tax State, you know you will be taxed twice. If I play in Biloxi, I know the State of Mississippi will take 3% out of any hand pay. This is not going to prevent me from taking my wife to the Beau Rivage. It does affect the games we play.

If you are going to use math to determine the play-ability of a video poker game, taxes should be part of the equation. I suspect most members of this forum are in a minimum 22-24% Federal tax bracket. This makes Uncle Sam a 22-24% partner in all W2-Gs wins. If you live in a tax State, you have two Uncles. "Hand pays are overrated".

Tedlark
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Post by Tedlark »

So Phil, you would turn down hand pays because of any possible tax implications? I bet Lucky Larry's daughter Carrie may not agree with you either.

H4KD4N
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Post by H4KD4N »

I don't know what your talking about.

FloridaPhil
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Post by FloridaPhil »

Tedlark wrote:
Wed Mar 11, 2020 10:42 am
So Phil, you would turn down hand pays because of any possible tax implications? I bet Lucky Larry's daughter Carrie may not agree with you either.
Great question. The difference between my hand pays and someone who plays big all the time is substantial. The only time I am going to receive a hand pay is if one of my very limited pot shots pays off. Last year all my significant pot shot jackpots were $1,000 quad deuces (3) with no W2-G. If I had played dollar or five dollar games all year, I would have had a stack of W2-Gs and the government would have taken their cut. If I hit enough of them, it may have put me in a higher tax bracket.

Personally, I have no problem with playing bigger than quarters in limited amounts. To me "limited" means no more than $50 a day. If I play big all the time, I could post photos of my wins on this forum and be a hero. I would also have to endure frightening losses which I would not tell anyone about. I have lived in that hell before and I don't wish to go back.

tech58
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Post by tech58 »

FP you have touted the value of investing many times before on this forum. So we ride the same roller-coaster right now. What is your take on this anomaly of the current market.
I lose $1500 at VP on a day last week,and suffer a bad meal and not good night sleep. Yet on that same day my portfolio shrinks by $250,000 And i know it will come back,no problem.
No similar confidence in VP. :pinch: :cry:
Answering my own question, i know past results say nothing about the future.Any thoughts on the subject of the difference? Short version please. :)

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