I got a 1099-MISC from Taj Mahal because I won money for hitting the bad beat jackpot in July. I was wondering if I could offset these winnings with my losses and how? I have proof for equal losses but I don't know where to put this into my taxes, it is still taxing me for the winnings.

BTW I'm using Turbotax

This money you won, as well as all your session gambling winnings, go on your Form 1040 as gambling income. Your session gambling losses, up to the amount of your total winnings, are deducted on your Schedule A Itemized Deductions. (You won't be able to take a standard deduction if you want to take a deduction for your gambling losses.)

See the first sticky in this forum for details on how to count session wins and losses.

BTW, you should note on your tax return that these winnings were miscoded: it should have been reported to you by the casino on a W2-G, not a 1099-MISC, as long as the jackpot is player funded. If it wasn't player funded, then this gets reported as a sweepstakes win income on your 1040, not gambling income, and you cannot offset it with gambling losses.

By the way, I'm not a tax pro, so my responses here are for entertainment only.

Russ Fox just discussed this exact situation on the podcast that's being discussed here:
http://forumserver.twoplustwo.com/57...odcast-703903/

The information in the podcast is in agreement with what PokerXanadu said.

Thanks for link, for anyone else interested the discussion starts at 44mins in

OUCH! Wouldn't THAT sux just a bit....

Would that mean that any winnings from a freeroll tournament wouldn't count as gambling income either?

Goo-ood question. IMO, the freeroll winnings are different than a jackpot - you are playing competitive poker to win rather than a random chance event. It doesn't meet the "player funded" standard, but on the other hand does meet the irs "poker tournament" standard (http://www.irs.gov/irs/article/0,,id=174937,00.html) for reporting winnings over $5K on a W2-G. Maybe Russ Fox will chime in on this one.

Two IRS sources for Indian Casinos state that Poker Bad Beat Jackpots should be on Form 1099-Misc and not Form W-2G.

http://www.irs.gov/pub/irs-tege/west_0409.pdf

At the bottom of page 13 this IRS Pub for Indian Gaming it states that:

"Casinos had also frequently questioned the bad beat poker filing requirement. The longstanding position of the Service is that a bad beat poker win is a prize received with no wager, as the wager is on the poker hand, and the applicable information return is a Form 1099."

ALSO see IRS Pub 3908 again for Indians on Page 24, Example 1 for a discussion of player funded prizes (though not specifically bad beat) and the Chart on Page 30 including bad beat jackpots as Prizes

http://www.irs.gov/pub/irs-pdf/p3908.pdf

I am a CPA tax pro but the answers are still for entertainment purpose

Thanks for the correction! I'm very entertained.

I won a Badbeat Jackpot In may of last year at Morongo Indian Casino for $7500. I havent received any paperwork on this but I have received my W2 from my job and went to file today with TurboTax online and it said I owed $1759.62 So with my tax refund which was like $1100.00 it was saying my balance due was $659.

What and how do I avoid paying some of these charges if not all of them. As far as proving I have lost the only thing I can do is get bank statements from May to Now showing I haev pulled out money at casinos and also a few tournament receipts. Im only 20 years old and that link you posted is like a foreign language I need someone to dumb it down on what best way to go about this is.

You need to keep a gambling log (the IRS term). That way, you can offset some of your gambling winnings with gambling losses (not via netting your declared wins, unless filing as a pro, but by taking a separate deduction for the total of your losses...that deduction cannot exceed your winnings).

How do I do that. I have no paperwork or logs or anything. I haven't received any tax forms regarding the jackpot just turbotax saying I owe 1700 dollars. Aren't they required to send me some sort of paperwork

I recommend you start. Just check www.irs.gov for instructions and start maintaining a log. I also recommend you contact a tax professional.

You should contact the casino and request the form.

Also, I don't get the significance of the TurboTax number. It bases its result on the data you provided to it and nothing more.

For what it's worth, I got a 1099-W for the BBJ I hit at Winstar.

Offsetting w/ losses was not worth it as I was down only about 100 bucks last year.

Losses = all losing sessions.

I'm assuming you havn't been commiting tax fraud by not declairing all your winning sessions as income.

I have a similar "problem" of having hit a BBJ at the Bicycle Casino in LA and they are refusing to issue me a W2G instead of the 1099-MISC they already issued.

Any suggestions? Can I just classify the 1099 as miscoded on my taxes or do I also need the casino to issue a W2G?

See my post above. The form is correct but it is still gambling income. Check withyour taxpro to make sure. Don't take tax advice from a public board.

For a casino-funded jackpot, what exactly should the winnings be labeled as for line 21? Should it be considered income from "sweepstakes", "prizes", or something else altogether?

Id love to reopen this topic. I won a bad beat jackpot in May and have since being keeping a spreadsheet of my gambling activity. I typical file my own taxes on turbo tax and I am starting to think about the badbeat jackpot I hit and the 1099 I will receive vs a WG2 (from everything I am reading)

Based off everything I read even though I get a 1099 it still gets entered as gambling income so that you can deduct your losses (the bbj i hit is from the pokerroom promotional funds - i.e. $1 drop on each hand)

How do you report this on your taxes correctly? Do just enter the information as gambling income vs where you would typically enter it as 1099 income?

It's fairly common for individuals to receive a 1099-MISC for gambling winnings. Most software allows you to enter the 1099 as "winnings" (which will make it flow into gambling on the tax return). I can't speak to TurboTax (I don't use it), but I suspect it has that capability.

Assuming that your jackpot is paid for from a drop and not fully casino funded, you should be able to take gambling losses against your winnings. You do have to include your other gambling winnings during the year on your tax return, though.

-- Russ Fox

Well, I tried doing this on turbotax and here's what I learned.

I entered the 1099-misc and my refund went down.
I checked the box labeled, "Prize winnings" and my refund went up, but not to where it was before.
I entered the full amount as a gambling loss and nothing changed.

1. As expected. Your tax liability went up due to the increase in income.
2. Weird. It shouldn't make a difference that the income is prize winnings. There is just one scenario I can think of that might prompt this outcome: If your tax forms include a Schedule C Profit or Loss from Business, the 1099-MISC might have been assigned as business income at first, adding to your Schedule C income. After you check "prize winnings", it would switch that amount to the Other Income line on your Form 1040. This would increase your refund because Schedule C income is subject to self-employment tax while Other Income (prize winnings) is not, so there would be some tax savings.
3. If you aren't itemizing deductions (i.e., you are using the standard deduction), you don't get to take a deduction for gambling losses but still pay the tax on the gambling/prize winnings.