Lower denominations (5/25cent)

[VP_vp]

So I usually only play VP a few times a year - usually FPDW (say 30-50 hours/year), clearly not enough to really get close to the long-term average. Really only playing for fun, so not really tempted to play any higher than 25 cents (other than if I had to burn through some freeplay quickly).

One of my "concerns" of higher denomination play is taxes on gambling winnings. If I play $2 VP and hit a royal ($8000?), I'll likely be a net winner that year (reported to IRS), while a net loser the next year. Since you can't offset net losses with net wins across years, a near break-even situation can easily become a huge loser for me.

e.g. win $6000 in year1, lose $5900 in year2. If I get taxed 1/3 of the win, then overall I lose $1900 (instead of winning $100). If I had played a smaller denomination, I wouldn't trigger any tax forms and end up a net winner (although technically I should also be reporting a smaller win to IRS in year1 on my own - but who does that?)

Is this a legit concern for anyone else? Or am I just overthinking things.

[Vman96]

Most people just overlook it because they are long term losers and typically write off as much of the w2g they can with their losses.

But not worrying about taxes is one advantage about not playing above quarters. And full pay deuces doesn't exist above quarters anyway. The best game you can typically find at higher denoms is 10/7 DB (100.17%) up to dollars. But negative games like 9/6 JoB (99.54%) will be offered at big denominations at fancy casinos.

[FloridaPhil]

If you are not already doing so, you need to start keeping accurate records.  It's all documented pretty well on the Internet.  I keep the date, location, machine numbers, wins , losses, Etc.  I carry a tiny notebook in my pocket for this purpose.  Years ago when I was a dollar player, I got a lot of W2gs. I have never been audited by the IRS for my gambling, but I'm ready if it happens.   These days, I play mostly quarters so I don't get many W2Gs unless I hit a pot shot on a big machine. Frankly, I don't think gambling winnings is a problem for most players.  Gambling losses is another matter entirely.

[Vman96]

Yeah if you plan to play things that create a significant amount of w2gs best to start a gambling log otherwise you won't be able to write anything off in an audit.

[MPD001]

Yeah if you plan to play things that create a significant amount of w2gs best to start a gambling log otherwise you won't be able to write anything off in an audit.
Not always true. I have been audited twice, and in both instances, the IRS accepted the casino's Win/Loss Annual Statement as appropriate back-up for declared losses.

That said, it doesn't mean the next time they will accept it.

[Lucky Larry]

[QUOTE=Vman96] Yeah if you plan to play things that create a significant amount of w2gs best to start a gambling log otherwise you won't be able to write anything off in an audit.
Not always true. I have been audited twice, and in both instances, the IRS accepted the casino's Win/Loss Annual Statement as appropriate back-up for declared losses.

That said, it doesn't mean the next time they will accept it. [/QUOTE]

I request not only my Win/Loss statements I also request a Coin-In/Coin-Out report when I can get it. The CI/CO statements provide a base average of the amount of money played each year. This give us a clearer perspective of our annual play.

[alpax]

I think avid recreational players will not have to deal with problems when seeking losses as tax reliefs to W2Gs. I know its just an example, but $6000 win on year 1 and $5900 loss on year 2 is going to be an unrealistic swing. Only people who play very little will have such swings to deal with such dilemma. Over tens of thousands of hands, the swings and bankroll will seem to normalize into the negative overall result. Most video poker games is rewarding over the long term and not just a handful of sessions, like jacks or better, you lose little by little until you get that royal flush to get most of your money back.

I can understand the reason that a win/loss record is not enough. If you put in money in first and play, then put the casino club card in, it will not accurately know your starting point. One year I got a win/loss record that showed my losses to be greater than my income, not sure if that will fly with the IRS.

I do believe Dancer stating the importance of keeping a log of play, and would carry more weight than a win loss record. What remains a void to keeping gaming logs is, how does it get its credibility?

[Vman96]

Oh you could easily fudge the log i would think to be able to write off losses. Hence the IRS not always accepting the player's club report is fairly short-sighted.

[VP_vp]

Well, +$6000 and -$6000 is pretty reasonable. I was playing nickels (nearly all the time) last year and this year. I'm down about $300 last year and up $300 this year. If I had been playing $1 denomination, that would scale up to +/- $6000!

[Lucky Larry]

Since we started in 2006 we've never had a year where we both were positive for the year. Individually yes but not both of us in the same year. We play often $1-2 M coin-in per year. The Win/Loss statement could be of little help if it doesn't have certain data. The best ones we seen have not only W/L but Coin-In/Coin-out but also dates and hours played. This would really help in an IRS audit.

A simple W/L may not be real helpful. eg.
$20,000 in G2's - $19,990 Losses gives you a W/L = $10.

Our biggest problem is adding $5, 10,15K wins to your annual income before you get to deduct your losses.