Video Poker jackpot tax offset possible?

On page 15 of "A Winners Guide to Double Bonus Poker - Volume II" by
Bob Dancer and Liam Daily it says, "If you are a dollar player and receive a $4,000 royal, you will be required to pay tax on this unless you have documented records of offsetting losses."

Well, I have never heard of anyone doing this. Has anyone?

I have thousands of dollars of losing sports tickets, but I don't know of a casino who would want to add them all up to see how much they would offset a jackpot.

Well, I have never heard of anyone doing this. Has anyone?

Yes, most of the people on this site do this. I do it, and almost all the players I know do it. But I think you misunderstand what Dancer is talking about.

You offset the losses on your tax form. You don't pay an immediate tax on your jackpots in LV casinos when you win (although, you may pay a state tax in other gambling areas).

If you hit a 4K Royal in LV, you're paid 4K�no taxes are taken out by the casino. The win (1.2K and over) is reported to the government and it is then your responsibility to report the win (and offset it with any documented losses) on your yearly tax form. The casinos does nothing but give you a copy of form W2G which shows the win (again, only for slot/VP wins 1.2K or above. Table game winnings aren�t reported).

You keep records of your wins and losses, so you have them on hand to show the tax man should you be audited.

Is it correct that you must itemize deductions to claim the gambling losses?

Yes, you must itemize on your Federal Income tax form to be able to deduct gambling losses. You can only deduct losses less than or equal to winnings. If you "win" $4k and lose $20k, you can only deduct $4k.

The IRS doesn't like Win/Loss statements and prefers an actual Gaming diary to be kept by the taxpayer. Win/Loss statements should be used only as a supporting document if the actual Gaming diary is questioned. Of course, if you've got no paperwork, a casino generated win/loss statement is better than nothing.

The IRS says a diary should be kept, the casino statements are not enough according to one audited individual who lost his losses in an audit because he only had the players card statements.

My standard deduction was $8750. Can't figure a way to get that in itemized deductions. No mortgage payments, no med, I guess I could donate $8750 but can't see the profit. So my first $8750 in losses goes to match the itemized deduction. I can't write off more than my winnings, so I must make a hefty profit to write off just the standard deduction I am loosing. I am really confused now. Am I missing something?

the fact that the IRS is a bunch of greedy bastards.

Also note that you cannot roll your loss over to the next year, so if you lost a net $35K in 2002 and win a net $40K in 2003, you pay taxes on the full $40K (unlike, say, stock market losses, which you can deduct against for three years).

Stanf/Dave, please don't give my IP address to the feds when they come knocking. :-)

OK! To write off losses, you have to have a huge mortgage, lots of medical problems, and give away alot of money; plus have gambling losses. This means that IRS is collecting on every win which is reported and later lost. Its really worse than that though. According to the code, its not just the reported winnings you pay taxes on, its any winning is reportable (by you). So lets say, I win $100 at a table slot, then go to another and loose the $100. You might think you have won $0. But not so, you have $100 in income and, if you itemize, you have $100 in losses to offset the $100. If you don't itemize and have diary (records) according to the code, you are supposed to declare the $100 and pay the taxes on your income to the IRS. You lost $20-25 to the IRS!!!! And they say the casinos are taking peoples money.

are easy to manipulate with use of multiple accounts, card pulling, and other techniques.

if you play a lot of slots/VP each and every year you should simply file schedule C and declare it a side-business. You can then offset your wins with losses (and expenses) before the final amount hits the 1040 form.

If you just play table games (or don't have much in the way of W-2G's just net out your wins and losses and put the final figure on the 1040 form. If you don't attempt to offset your wins with itemized losses the IRS will have nothing to complain about...especially if you don't keep any official records of your play and you always report the proper net amount for your lifestyle and bank deposits.

No! The IRS assumes you are honest with your gambling diary unless proved otherwise.

to not manipulate the casino's records

I like it. Maybe IRS will like it. I just start a business and take the tournament winnings (reported to IRS) as a business income, write up a few plus days on the tables, write up alot of minus days, write off my bj books, subscriptions, my car expenses, my hotel, a few meals, etc. I like it, but will IRS consider this a business?

I seem to recall a discussion from several years ago on this stuff. The IRS's position is that in order to be allowed expenses, "professional gambler" must be your primary occupation.

Come to think of it, I remember that Stanf has something about this in "Professional Blackjack". My copy got "borrowed" about five years ago, though, so someone else will have to look it up.

if you don't itemize (and not a pro ) you pay the tax . Plus if it is a state like MS they hit you with their state tax of 5%when they pay you,which you will get almost all back if you are in lower income brackets.

> So lets say, I win $100 at a table slot, then go to another and loose the $100. You might think you have won $0. But not so, you have $100 in income and, if you itemize, you have $100 in losses to offset the $100.

When you say you "won $100 at a slot machine" you are netting off the results of several winning and losing spins. In the scenario you described, you problem have over $1000 in income and you'd need to itemize every losing spin to offset the losses. The mind boggles!

Right! And at the table, each bj hand is either a win or a loss of X dollars and would need to be accounted for by IRS regulations. Can you imagine the diary entries:

Date: 1/1/2003
Time
8:01 - 5
8:02 + 5
8:02:30 - 10

Total won +5
itemized loss -15

Ask the dealer to slow down so you can keep accurate records for the IRS.

seriously, like a real business. It must be substantial enough (you must put serious effort into it and keep good records) or the IRS can (and often does) declare it is a hobby and not eligible for Schedule C filing. You will also have to pay SE tax on your businesses net profit.

There are plenty of gamblers who file Schedule C each year.