tax question in video poker

[stevel96a1]

suppose i hit 5 royal flushes on .50 which means 2k$ and i have to pay 1/5 of that when tax season comes
suppose i lose 5 royals flushes on .50 and all my profits + my bankroll i started with is depleted.

is it correct i owe uncle same 1/5 of those royals i got earlier that year?

if so thats really painful and not worthy to play really poor negative vp games imo

if anyone knows the answer will be grateful for the response thanks.

[Vman96]

Depends on whether you itemize or not. If you save on taxes by taking the standard deduction, then you're on the hook for the W2G regardless of the net result.

[pokerpokerpoker]

Right you are Steve. If you can't itemize on your taxes, you will pay income tax (at whatever your tax rate% is) on those 5 royals you hit. Don't forget about the state tax-man too.

But, if you can itemize on your taxes, the 5 royals can more or less be wiped out by your losses.

The rules to itemize have changed in the last couple of years. If your mortgage interest, charitable contributions, and state and local taxes total $24,000 (for married) or $12000 (for singles) you can itemize. If you can't reach those numbers, you are better off with the standard deduction.

I am not an accountant, but the gist if this is accurate.

[Sandrina Roc]

With the higher standard deduction this is harder to answer. Assume your married and your standard deduction is $24,000. You have $10,000 in tickets (you know you're supposed to claim all winnings, not just tickets right?) and $10,000 in losses. If your deductible medical expenses and taxes and mortgage interest and charity total $18,000, and you have $10,000 in losses, your itemized deductions would be $28,000. Although you're able to deduct the $10,000 in loses only $4,000 of those loses actually help you. If you're single and live in a state with state income tax, or have a mortgage and RE tax, the $10,000 in loses will help you more. I am a CPA and just got done with a rough tax season.

[stevel96a1]

so im taxed for entertainment?
im losing when im winning and losing when im losing?
thats it im moving to canada

[olds442jetaway]

Boy, did I get clobbered this year Sandrina and I knew it was coming before the ink was dry on the new tax law before it made the news. My state and local taxes were 15k so I lost 5k in deductions right there. I had to itemize to offset the gross gambling winnings which were over 50k. My wife and I are both over 65 so our standard deduction would have been even higher. The problem is we were only able to itemize 10k on state and local taxes and 5k in charity or so. So in effect, because we were forced to itemize to offset on the Federal side all of the gross gambling winnings, we lost a bundle. If I had no gross gambling winnings, I would have been an idiot to itemize as the standard deduction would have been 26,600 and we would only have had 15k in itemized deductions. On top of it, we nearly lost our ability to make a Roth IRA due to the high gross income due to the gross gambling winnings. We aldo lost out on the 7.5 percent medical because the gross winnings boosted ip our agi too high. Of course the state destroyed us too. No writeoff ability there at all on gross winnings ( CT ).