Hypothetically, if you claimed earnings of 10k or less as your sole source of income (i.e. a professional gambler), how likely would it be that you get audited by an IRS agent? This is keeping in mind that you do not deposit any more than 10k at the bank during the year and do not make any purchases over 10k.

27.4%

Depends how much you are actually making.

Could range from 0-100% basically. Kinda poorly done hypothetical. The conditional is irrelevant as well.

why would it depend on what you are actually making? It could be 100k or 10k and on paper it would make no difference. They have no way of knowing. if you are not depositing your money or making large purchases (over 10k).

My question is how likely would an IRS agent look at someone who claims to make 9k a year as a professional gambler and say to themselves "how can someone survive on such low wages, I want to audit this guy."

Is this really not a legitimate question?

Generally threads thinly veiled as "how do I commit tax fraud?" aren't going to get much responses, for obvious reasons.

It's more 'how likely am I to get in trouble if I commit income tax fraud' but it isn't even veiled. No one has anything to offer the OP except anecdotal evidence that could get the person responding into trouble.

I'm actually super happy I don't know anything about what the OP is asking in this thread.

This isn't asking how to commit tax fraud. It's asking what is the likelihood that someone would be audited if their reported income was 10k or less? This means that someone could have actually made 8k without lying about it. It could also mean the person made 80k and was committing tax fraud. It's not relevant to the question being asked.

It's like asking, "if someone were to take chips from a players stack, what is the chance they would get caught?" Then someone could respond by saying "its extremely likely because all the person would have to do is go to the floor manager, and the manager could then call surveillance to the check the tapes, which would clearly show the person taking the money from someone's stack. So the likelihood is 90% or greater the person gets busted."

So far, nobody has provided any detailed response. Thinking that you will get in trouble for responding to a hypothetical scenario over the internet is lol.

Obviously stealing money from a player's stack is wrong, just like committing tax fraud is wrong. We have a thread going on the fastest way to make 5million in 5 years and people have advocated crime as the fastest way to get there (Ponzi schemes, ransoms, etc.) It's hypothetical, it doesn't mean people are ACTUALLY going to do it.

Your post isn't very detailed. Are you doing everything in cash? Paying your own rent? Living on 8k?

It is a silly post and your followup isn't anymore cogent.

I knew a guy who delivered pizzas for twenty years at a small restaurant like 25 hours a week on the side of other PT gig. Probably made 2k a month under the table. Never declared a penny.

Please don't take my friend to jail for me writing this...

Yes, everything in cash. Rent, gas, food, everything.

This is a slightly different example since he had another part-time job as an employee. He couldn't get audited by the IRS if he was not claiming any income from self-employment.

This was belly laugh LOL.

You probably won't get audited assuming there is no paper trail for your earnings and you don't claim the EITC. If you make the government cut you a 4 figure check on <10k in income that will throw up some red flags and might get you audited.

EDIT: This means no W9. Your counterparties can't be claiming the money they paid/lost to you on their taxes or you'll throw up flags.

Lol, you're right.

What I meant was that as long as the guy paid all of his expenses in cash (no purchases over 10k) and didn't deposit the extra cash from pizza in the bank then he wouldn't be audited.

about three fiddy....

No seriously, remember too that getting audited depends on # and type of exemptions you claim too. there are triggers like claiming your rent as an office expense etc that can flag you, but by itself generating a low amount of income doesnt necessarily mean you will be audited. do you have a legal corp you pay yourself through?

Pretty much this. He had a hard-core sports betting problem with bookies back in the day. He would smoke weed, deliver pizzas, and listen to games 7 days a week. He would eat at the pizza place for almost all meals. He was a big dude, over 250 and probably lost 15 of the 20 bills he made on the pizza to sports. He did go on a run once and had like 20k that he did not know what to do with so just keep under mattress and bet that away with time and used for all expenses.

i would think the odds are pretty high in the medium to long term... in the short term, who knows.......... take the % of people they audit and multiply by 3 or 4 i would think.

it of course will depend whether you are making $40K and claiming $10K - they may not care and it'll be hard to prove - vs. making $150k and claiming $10k.

hard for them to prove stuff and they may not care that much... but OTOH, i would not screw with the IRS. they might throw you in jail.... other countries are much more easy-going about this stuff.

OP, you are a bit disingenous sp? about the original question.. if you legit make only $8k then i wouldn't care much about an audit. just have some reasonable documentation of such.

If you have regular FT job and have a W-2G for winnings, do you think itemizing losses on Schedule A significantly increases chances of audit?

I imagine it increases your chance of an audit but how do we quantify significant?

Are people really choosing not to take audit-prone liberties because they're scared of the hassle?

50%, you will either get audited or won't get audited

I think it would be very low. 1. There is no paper trail so it is your word vs. the IRS and they really have nothing on you and it is only $10,000. I mean some people win jackpots everyday on $5 video poker for $20,000.

Just keep records. But, if you file as professional get a book on it. You might be able to deduct health care even Obamacare, mileage, flights, and hotel rooms. With your standard deduction your income will probably be zero.

Regular businesses you can go below zero, but poker you can only go to zero. You can't use losses in poker to offset other income.

But filing is not bad, you get deductions, and if you play a tournament and win big you get to keep it. Then you can offset it by playing $500 tournaments and if you lose, you deduct it and all the travel and meals.

https://www.amazon.com/Turn-Your-Pok.../dp/0977486206

It also depends a lot on the State you live.

Low income by itself is not a red flag, but a significant drop in income is. The IRS has a number of other flags not directly related to what you report as well.

Thank you this was helpful