Taxes

After reading lots of threads I am still fuzzy on a few things and maybe someone can help.
-You have non-BJ income of 100K, BJ winnings of 20K and losses of 10K. The
20K increases your taxable income to 120K, but the losses are itemized so they don't drop you back to 110K. If you are in a 20% tax bracket, for example, you only get 20% benefit from your losses, correct?

-Some say you have to keep records by session and others say the IRS regs do not mention "session". If your records are by "trip", will that suffice in an audit?

-If you have no job, retirement/investment income that is twice your BJ net winnings for the year, work at BJ 2 days per week (including travel, play, study and research) - can you declare yourself a professional gambler even though it is not "full time" and your "livelihood" is not based on BJ?

bj42 said:

After reading lots of threads I am still fuzzy on a few things and maybe someone can help.
-You have non-BJ income of 100K, BJ winnings of 20K and losses of 10K. The
20K increases your taxable income to 120K, but the losses are itemized so they don't drop you back to 110K. If you are in a 20% tax bracket, for example, you only get 20% benefit from your losses, correct?

-Some say you have to keep records by session and others say the IRS regs do not mention "session". If your records are by "trip", will that suffice in an audit?

-If you have no job, retirement/investment income that is twice your BJ net winnings for the year, work at BJ 2 days per week (including travel, play, study and research) - can you declare yourself a professional gambler even though it is not "full time" and your "livelihood" is not based on BJ?

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these questions should really be answered by tax accountants and lawyers...just saying is all.

Im not going into the deductions and write offs and all that. But if you want the laymans answer to calling yourself a professional gambler without consulting formentioned people....google words like "taxes, professional, gambler" etc. You will get enough information to formulate a conclusion as to how you can claim to be a pro gambler. Personally, if my "livelyhood" was not attained from gambling, i wouldnt claim to be a pro gambler. If i had no job and no income other than playing slot machines, poker, BJ, etc...then i would look into calling myself a pro gambler. :cool2:

bj42 said:

After reading lots of threads I am still fuzzy on a few things and maybe someone can help.
-You have non-BJ income of 100K, BJ winnings of 20K and losses of 10K. The
20K increases your taxable income to 120K, but the losses are itemized so they don't drop you back to 110K. If you are in a 20% tax bracket, for example, you only get 20% benefit from your losses, correct?

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You reported income, your AGI, would be roughly $120k. Then, when you're itemizing deductions, you'd toss in an extra $10k of gambling losses, along with mortgage interest, charitable contributions, etc. If your losses are more than winnings (true for most civilians), then you would only be able to deduct $20k.

So there's no real "benefit" to gambling losses, at best, they will only offset gambling winnings.

Your other two questions are good ones. No idea on the answer.

EasyRhino said:

You reported income, your AGI, would be roughly $120k. Then, when you're itemizing deductions, you'd toss in an extra $10k of gambling losses, along with mortgage interest, charitable contributions, etc. If your losses are more than winnings (true for most civilians), then you would only be able to deduct $20k.

So there's no real "benefit" to gambling losses, at best, they will only offset gambling winnings.

Your other two questions are good ones. No idea on the answer.

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Right. Losses are of no benefit in and of themselves, but without them, your winnings are fully taxable. Your winnings are offset against your losses dollar for dollar. Any excess winnings are fully taxable at your incremental tax rate (the appropriate tax rate for your next dollar of taxable income). Any excess losses are discarded; they are of no use for income tax filing purposes.

If you have non-BJ income of $100,000 and are preparing your own taxes,you are being foolish. Its really that simple.There are tax professionals out there. Use them.

shadroch said:

If you have non-BJ income of $100,000 and are preparing your own taxes,you are being foolish. Its really that simple.There are tax professionals out there. Use them.

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What if you have no deductions other then the standard one ?

2007 standard deductions

Filling status Amount Married filing jointly or qualifying widow or widower
$10,700

Head of household
$7,850

Single
$5,350

Married filing separately
$5,350


Still think you need a tax profesional ? :grin:

shadroch said:

If you have non-BJ income of $100,000 and are preparing your own taxes,you are being foolish. Its really that simple.There are tax professionals out there. Use them.

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I am a tax professional. Shadroch is correct. But find someone highly recommended, because there are a lot of operations that are working on a volume basis with trained but less than truly professional help who rush you in and rush you out. The yellow pages is not a recommendation. I did a lady's taxes which had previously been done by an attorney who was also a CPA. He did a rush job on her, I guess because she had so little income. He missed a number of things requiring me to refile her taxes back several years for additional refunds. I'd get a copy of Turbo Tax before I'd employ someone who does not come highly rated.

bj42 said:

After reading lots of threads I am still fuzzy on a few things and maybe someone can help.
-You have non-BJ income of 100K, BJ winnings of 20K and losses of 10K. The
20K increases your taxable income to 120K, but the losses are itemized so they don't drop you back to 110K. If you are in a 20% tax bracket, for example, you only get 20% benefit from your losses, correct?

-Some say you have to keep records by session and others say the IRS regs do not mention "session". If your records are by "trip", will that suffice in an audit?

-If you have no job, retirement/investment income that is twice your BJ net winnings for the year, work at BJ 2 days per week (including travel, play, study and research) - can you declare yourself a professional gambler even though it is not "full time" and your "livelihood" is not based on BJ?

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Do you have any W2 issued to you for any amount of money that you won? If so claim the amount that was W2 to you and nothing else !

aslan said:

I am a tax professional. Shadroch is correct. But find someone highly recommended, because there are a lot of operations that are working on a volume basis with trained but less than truly professional help who rush you in and rush you out. The yellow pages is not a recommendation. I did a lady's taxes which had previously been done by an attorney who was also a CPA. He did a rush job on her, I guess because she had so little income. He missed a number of things requiring me to refile her taxes back several years for additional refunds. I'd get a copy of Turbo Tax before I'd employ someone who does not come highly rated.

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Since you are a tax professional how do you handle state taxes. When you earn your money in one state and live in another? You ought to know this I am talking about a professional gambler. All the people profess to pay taxes but nobody knows the answer to this question as a professional you should spit this one out pretty easy!

InPlay said:

Since you are a tax professional how do you handle state taxes. When you earn your money in one state and live in another? You ought to know this I am talking about a professional gambler. All the people profess to pay taxes but nobody knows the answer to this question as a professional you should spit this one out pretty easy!

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You pay state taxes in the state in which you reside, not the state in which you earn your income. In any state returns that I have done, the state return uses the income declared on the Federal return as a starting point for state income taxes. So, in answer to your question, the income filters down from your Federal Income Tax return as adjusted gross income.

Many people in the Washington, DC area work in Maryland or DC, but live in Virginia. They pay Virginia income tax only. I know. I've done so all my life. If you move mid-year from one state to another, you will have to file a part-time residence filing in both states, dividing your income between what you earned while living in one state with what you earned while living in the other state. It's a royal pain in the ass.

aslan said:

You pay state taxes in the state in which you reside, not the state in which you earn your income. In any state returns that I have done, the state return uses the income declared on the Federal return as a starting point for state income taxes. So, in answer to your question, the income filters down from your Federal Income Tax return as adjusted gross income.

Many people in the Washington, DC area work in Maryland or DC, but live in Virginia. They pay Virginia income tax only. I know. I've done so all my life. If you move mid-year from one state to another, you will have to file a part-time residence filing in both states, dividing your income between what you earned while living in one state with what you earned while living in the other state. It's a royal pain in the ass.

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Don't professional atheltics pay tax in the state where the games is played ? Are they not pro rated for each state?

Different states have different laws and all states have the right to tax work/services perfomed in said state as income.

I think california works something like taking the total yearly sum of income an athlete makes, say 1 million dollars for example. California says you are in our highest tax bracket based on a 1 million dollar salary, so you pay...whatever amount of state income percentage. So say the top percentage in california is 10% for state income, again example. Then they divide up what was actually earned in California and 10% would be taken out of that.

So for example (all numbers are example, not real)..... 1 million means top CA state income tax bracket of 10%. You play 1 basketball game in CA, and that is an income of 25k. so you pay 10% of 25K or $2500.

Other states like NY i think do it this way. You only made 25K in NY. 25K is no where near the top state income tax bracket....lets say its 5%, or somewhere in the low-mid range.

So in this example, they would pay 5% on 25K, or $1250.

And then some states have no income tax etc. And some states probably dont tax at all, its just based on where you reside....probably why everyone lives in FL and TN, non income tax states if i recall.

Moral of the story: Become a rich basketball player and get complicated tax problems....but make tons of money for putting a ball in a hole. :cool2:

InPlay said:

Don't professional atheltics pay tax in the state where the games is played ? Are they not pro rated for each state?

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FYI, here's a link to a good write-up, "State taxation of professional athletes and entertainers."

http://goliath.ecnext.com/coms2/gi_0199-688528/State-taxation-of-professional-athletes.html (Archive copy)

Professional athletes and entertainers are an exception. Generally, a professional athlete will pay taxes in both their resident state and in the state where they play "home" games. As a rule, they don't pay taxes in different states where they play "away" games. But the rules are all over the map.

I've never heard of this with regards to gambling, but you never know. Maybe some state people will read these posts and get an evil thought.

Nevada, which could prosper most from such a tax, has no income tax. It would be hard for states to keep track of every gambler's comings and goings. However, sports events and shows (e.g., Broadway shows) are publicly scheduled and advertised, plus are a very profitable source of income. The average gambler is steeped in losses. :dog:

toastblows said:

Moral of the story: Become a rich basketball player and get complicated tax problems....but make tons of money for putting a ball in a hole. :cool2:

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Sure beats diggin' holes! :grin:

ChefJJ said:

Sure beats diggin' holes! :grin:

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Amen to that, Brother!

InPlay said:

What if you have no deductions other then the standard one ?

2007 standard deductions

Filling status Amount Married filing jointly or qualifying widow or widower
$10,700

Head of household
$7,850

Single
$5,350

Married filing separately
$5,350


Still think you need a tax profesional ? :grin:

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If you have no other deductions,then you have a very simple form and the tax pro won't charge you much. But unless you live with your parents,don't pay for your own health insurance,don't drive,and don't have much of a life,a good pro shouldbe able to find you much more than the standard deductions.They always have,in my case.
Just like in advertising,a good tax preparer doesn't cost,it pays.

If you are a NY resident,and win money in Vegas,it is treated just like money won in NY,London,Tiapai or Bangkok. NY wants its share.
I made the mistake of listing my parents address in NY as my home when I was commisioned into the Army.Had I never stepped foot in the state for the next thirty years,I'd still be considered a NY resident and the US Army would withold NY taxes.Unfair,but thats how it is.

shadroch said:

If you have no other deductions,then you have a very simple form and the tax pro won't charge you much. But unless you live with your parents,don't pay for your own health insurance,don't drive,and don't have much of a life,a good pro shouldbe able to find you much more than the standard deductions.They always have,in my case.
Just like in advertising,a good tax preparer doesn't cost,it pays.

If you are a NY resident,and win money in Vegas,it is treated just like money won in NY,London,Tiapai or Bangkok. NY wants its share.
I made the mistake of listing my parents address in NY as my home when I was commisioned into the Army.Had I never stepped foot in the state for the next thirty years,I'd still be considered a NY resident and the US Army would withold NY taxes.Unfair,but thats how it is.

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When I was on 100% travel with the Federal government, some of my colleagues claimed Nevada and other no income tax states for their residence. Consequently, they paid no state income taxes. As I recall, they waited until they had an assignment to that state, then claimed it as their permanent residence from that point on. They had their paychecks sent directly to their bank account, not home address, and all correspondence was through their Washington, DC work address.

aslan said:

You pay state taxes in the state in which you reside, not the state in which you earn your income. In any state returns that I have done, the state return uses the income declared on the Federal return as a starting point for state income taxes. So, in answer to your question, the income filters down from your Federal Income Tax return as adjusted gross income.

Many people in the Washington, DC area work in Maryland or DC, but live in Virginia. They pay Virginia income tax only. I know. I've done so all my life. If you move mid-year from one state to another, you will have to file a part-time residence filing in both states, dividing your income between what you earned while living in one state with what you earned while living in the other state. It's a royal pain in the ass.

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you're telling me it's a pain in the ass. I live in Indiana and work in Illinois - I have to file non-resident every year for Illinois. Then since my work only takes out Illinois taxes I basically get a refund from them then turn around and pay back Indiana what I got refunded. It all works out in the end, but I hate doing it.

Isn't Derek Jeter in some kind of tax trouble for playing in New York but claiming he resides in Florida where there is no state income tax? Anyways there is a book sold right here on this site, maybe it could help answer a few questions anyone might have. It's called "Tax help for the frugal gambler".

http://www.blackjackinfo.com/store/general-gambling.html

NY is famous (or infamous) for going after lots of people who may or may not be NYS residents.