Taxes on winnings a ripoff

[iluvsummer]

If you hit a royal on a quarter machine there is no tax if you hit a royal on a 50 cent or higher you get a wg2.This is wrong since you collect more because your betting more.You still only receive 4000 coins for the royal.Someone should challenge the irs on this.If you dont have to pay tax on 4000 quarters you should not have to pay tax on 4000 50 cent pieces.If you hit a quad on a high limit game you get a wg2 this is  unfair.

[gr8bowlr]

If you are smart enough you can write off your w2g winning on the bottom of schedule a as a gambling loss as long as you don't claim more for a loss than you won.  It makes it a wash but the irs dosen't tell you these things like a tax program or a tax person will.

[rascal]

The tax doesn't have anything to do with how many credits you win. It has everything to do with the actual dollar value of the win. If I play 5x50c and luck out and win $2000 on the first hand, my net win is $1997.50. If I play 5x25c and luck out and win $1000 on the first hand, my net win is $998.75. For an increase in wager of only $1.25 I won $1000 more. Sure it can go the other way also, but the point is, the IRS and state tax enforcers could give a flip about credits won -- they are solely interested in whether or not you cross the taxable threshold, and when you cross it the tax is based on dollar value. I look at wins below $1200 as being akin to homestead exemption.

[rascal]

And like gr8bwlr said, you can wash out the federal tax every year by claiming losses, leaving you just paying the state tax.

[iluvsummer]

So rascal what your saying is it doesnt matter how much you bet once you cross the 1200 win line you must pay taxes on your win.So if i bet 2000 on the crap tables and win my pass line bet i should get a wg2.Yet they dont do this.What about the fact that instead of hitting a royal on a 50 cent machine on the first hand i play two 25 cent machines side by side and i hit the royal on both machines on the first try?Same investment same payout but no wg2 is given dont seem fair to me.

[MikeA]

So rascal what your saying is it doesnt matter how much you bet once you cross the 1200 win line you must pay taxes on your win.So if i bet 2000 on the crap tables and win my pass line bet i should get a wg2.Yet they dont do this.What about the fact that instead of hitting a royal on a 50 cent machine on the first hand i play two 25 cent machines side by side and i hit the royal on both machines on the first try?Same investment same payout but no wg2 is given dont seem fair to me.I think it was already stated that on table games, there is something like a $10,000 minimum before a W2G is issued by the casino informing the IRS of the revenue.But regardless of how you accumulated the winnings (One $.50 royal or Two $.25 royals) you are required to report the winnings to the IRS.  The only difference is that the Casinos inform the IRS in the case of the $.50 win where they do not with the two $.25 wins.  Either way, you as the one receiving the income are liable for the taxes on that income whether it was reported or not.  It has nothing to do with "fair" or "not fair".  Folks seem to get confused about not having to report the earnings and pay taxes on the winnings if they don't receive a W2G.  If you do accumulate winnings and chose not to report them and pay taxes on them then you are opening yourself up to an IRS audit and possible Tax Evasion litigation. 

[shadowman]

[If you do accumulate winnings and chose not to report them and pay taxes on them then you are opening yourself up to an IRS audit and possible Tax Evasion litigation. 

 
This is absolutely true. However, I have yet to hear about anyone being audited for gambling winnings where a w2g wasn't involved. Most people ignore them and do not keep track of their wins/losses and have no idea whether they should pay taxes or not.
 
My wife and I typically get w2Gs that total over $50K for a year. Since I have to report these "winnings" I also keep track of all other wins and losses (they are always net losses) and deduct them. One must itemize to get this deduction.
 
I'm thinking about filing as a professional next year to allow some other deductions and to reduce the impact on medical. I've started playing more dollar VP and that will result in even more w2g amounts. The IRS is very cautious about the gambling profession and I will almost certainly be audited if I do this.

[ravenbynight111]

Just make sure you use a players card at all casinos. The card records every dime you play. At the end of the year you can get your win/loss statement from the casino. Most of the big casinos you can get the statement right on line. In 2005 I had 20,000 in jackpots, after me and my wife won/loss statements we lost 1400 dollars no Tax. You will have losses so just use the players card end of problem.

[jmason@dc.rr.com]

Watch your players card carefully.  I know for fact that Fitzgerald's in Las Vegas screws with your points.  They don't want to give the comps, and say it is the player.  They informed me I had to sit for 20-30 minutes on a machine to get any points.  Would you stay @ a machine that kept taking money and gave little/no play?  NOT! Funny, nobody else does that!  They have cheated me out of tons of comps, and would that make you question the win/loss statement you receive?

[MikeA]

 
This is absolutely true. However, I have yet to hear about anyone being audited for gambling winnings where a w2g wasn't involved. Most people ignore them and do not keep track of their wins/losses and have no idea whether they should pay taxes or not.
 
My wife and I typically get w2Gs that total over $50K for a year. Since I have to report these "winnings" I also keep track of all other wins and losses (they are always net losses) and deduct them. One must itemize to get this deduction.
 
I'm thinking about filing as a professional next year to allow some other deductions and to reduce the impact on medical. I've started playing more dollar VP and that will result in even more w2g amounts. The IRS is very cautious about the gambling profession and I will almost certainly be audited if I do this. Yep.  I haven't heard of anyone being hassled by the IRS either where a W2G wasn't involved.  But, the potential liability is there.  I don't know how they would run down the info short of demanding records from casino player's clubs.  But if you got in some other hot water with them, they will start digging and might turn something up but bury you with!