Proposed IRS Tax Reporting from Gambling Winnings

[alpax]

I've seen this on the VPFree forums, but I thought it might be something to bring up since most here play Double Double Bonus or Triple Double Bonus at $1 denomination.

The IRS is defining what a gambling session is, sounds like coining in $1200 and coming out a winner will need to be reported. They are proposing reporting winning requirements from $1200 to $600 on a single wager. Might annoy moderate rollers who play $1 a spin on penny slots or $1+ denomination on VP, they might need to report more W2Gs than ever.


http://www.irs.gov/pub/irs-drop/n-15-21.pdf

https://www.federalregister.gov/article ... t-machines

[alpax]

Simplified summary of the changes proposed

https://gallery.mailchimp.com/03373c05c ... _04_15.pdf

[olds442jetaway]

Thanks. That is very good information and it sounds like it or something very similar will go through. This will greatly affect those who file their returns netting out wins and losses using the casino provided win loss statement. I think it is scheduled to start in 2016 but is not cast in stone yet. They give you various methods of providing input as an individual in the link.
     I see several booby traps here. First if the 600- win rule goes into effect with it, there will have to be a W-2G issued for that. For those who live in states like I do where you are taxed on gross gambling winnings, that will be a big problem. I think the casinos will lose even more business over this. There will also be much more record keeping for them. The link gives several examples on how it would work.
     Here is another booby trap. Let's say I have a 6 hour session at Mohegan Sun on the same day and get lucky with a 700- win and cash out. I then head over to Foxwoods which is only 20 minutes away and blow the entire or a good chunk of the 700 I made at Mohegan. I would still be considered to have a gross win of 700 bucks for the day since I changed casinos. To me, their definition of what a session is is really dumb and designed just to rake in more revenue.
     The other bombshell I noticed is this. Let's say I cashed out the 700- net win at Mohegan Sun at 11:55 PM, went upstairs for a nap or even had a late dinner. Then I start play again at 2:00 AM which would be the next day. I then blow the entire 700- and then some. The way this is worded and written, I would have a gross session win of 700- and even though I blew it on the same trip, I would not be able to net everything out as one session even though it was on the same trip. That really s...s.
     Hopefully, the accounting community and casino industry will provide input to the IRS on this and get the definition of what a session is changed to something more reasonable. There will be more to follow on this I'm sure, but this is not good news at all.

[JIMDUECE`SWILD]

Sometimes I'll ask for a win/loss per trip statement. The information is in there computer system. I'm sure this is the info that the host and marketing people look at.   

[olds442jetaway]

I think the casinos will still have a handle on our play no problem that way, but income taxes could get a lot more complicated and expensive depending on which state you live in.

[MPD001]

Thanks. That is very good information and it sounds like it or something very similar will go through. This will greatly affect those who file their returns netting out wins and losses using the casino provided win loss statement. I think it is scheduled to start in 2016 but is not cast in stone yet. They give you various methods of providing input as an individual in the link.
     I see several booby traps here. First if the 600- win rule goes into effect with it, there will have to be a W-2G issued for that. For those who live in states like I do where you are taxed on gross gambling winnings, that will be a big problem. I think the casinos will lose even more business over this. There will also be much more record keeping for them. The link gives several examples on how it would work.
     Here is another booby trap. Let's say I have a 6 hour session at Mohegan Sun on the same day and get lucky with a 700- win and cash out. I then head over to Foxwoods which is only 20 minutes away and blow the entire or a good chunk of the 700 I made at Mohegan. I would still be considered to have a gross win of 700 bucks for the day since I changed casinos. To me, their definition of what a session is is really dumb and designed just to rake in more revenue.
     The other bombshell I noticed is this. Let's say I cashed out the 700- net win at Mohegan Sun at 11:55 PM, went upstairs for a nap or even had a late dinner. Then I start play again at 2:00 AM which would be the next day. I then blow the entire 700- and then some. The way this is worded and written, I would have a gross session win of 700- and even though I blew it on the same trip, I would not be able to net everything out as one session even though it was on the same trip. That really s...s.
     Hopefully, the accounting community and casino industry will provide input to the IRS on this and get the definition of what a session is changed to something more reasonable. There will be more to follow on this I'm sure, but this is not good news at all.
It will actually be no different than it is today, only the dollar "hurdle rate" will be lower. You can collect a $1200 hand-pay, with your W2G, today, and feed it right back in the same machine. Your net may be zero in that session, but you still have to report the $1200 win, at least at the federal tax level. You can, of course, take the loss equal to your win, but your federal AGI is still inflated by the W2G amount.

[OTABILL]

Simplified summary of the changes proposed

https://gallery.mailchimp.com/03373c05c ... _04_15.pdf


Link didn't work. Here is another article on this subject.

IRS Proposes Session Method for Slot Machine Play and a Revision to the Regulations on Gambling Information Returns

[olds442jetaway]

I backed into the article another way after finding the link didn't work somehow. Lots of financial and accounting firms writing about it. Where it will probably affect us all the most is for State taxes. If the Federal AGI is bumped up due to the new regs, you will lose in Ct at least 5 percent if not more of the gross gambling winnings even if you offset all of them with losses. The interpretation of the word session has ended up in appeals and tax court for some over the years. To me a session should be simple. Just coin in vs coin out for the year. They will never let that one go through though.

[ko king]

I agree with what the author of the article posted by OTABILL, {If anything, the threshold should be raised, not lowered. The value of a 1977 dollar today is a bit over $4. Thus, an equivalent threshold today is $4,800. I doubt the IRS will like my opinion on this. I am certain that casinos will not want the threshold lowered.} Either way I'm not sure if I care anymore as I've about had my fill of playing anyway.

[olds442jetaway]

Can't argue that point too much KO> Only 3 or 4 Royals in about 1.3M hands for me. I gave up trying for them with max bet and am concentrating on other premium hands. So far for 2015, different versions of Martingale methods have been working well as others have posted too. I just start really small. We know somehow we are usually going to get screwed and not hit the numbers of good hands we should, so I have resorted to this method and being happy with very small wins just to keep the enjoyment factor going. Sometimes you only need only 1 or 2 decent hands at the higher levels you may have progressed up to to get all of your money back for the session and then some. Flat betting is a complete loser for me and as much as I like Phil's method, I just can't seem to connect on the pot shots for bigger hands. My big hands almost always seem to come after a terrible run of dud hands. It may have something to due with the programing on the newer machines. I don't know for sure, but so far for 2015, I am holding my own. My samples aren't that big yet do to the horrible weather we all have had up here as well as other family commitments. Should have a much larger sample as the spring gets closer. Good luck and hang in there if possible.