IRS statements on reporting gambling income- from 2007 - Poker Legislation

Lottery Larry · 03-16-2009, 04:17 PM

Because this is buried in another thread, from a year ago, I'm adding it in separately so it's easier to find.

Check the IRS website for any updates, pertaining to 2008 taxes.

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Here's the information on gambling diaries, and information on what a session is:

http://www.irs.gov/publications/p552/ar02.html#d0e121

Quote:

Gambling Winnings and Losses
You must keep an accurate diary of your winnings and losses that includes the:

Date and type of gambling activity,

Name and address or location of the gambling establishment,

Names of other persons present with you at the gambling establishment, and

Amount you won or lost.

In addition to your diary, you should keep other documents. See the discussion related to gambling losses in Publication 529, Miscellaneous Deductions, for documents you should keep.[/QUOTE]

http://www.irs.gov/publications/p529/index.html

Quote:

Gambling Losses Up to the Amount of Gambling Winnings
You must report the full amount of your gambling winnings for the year on Form 1040, line 21. You deduct your gambling losses for the year on Schedule A (Form 1040), line 28. You cannot deduct gambling losses that are more than your winnings. Generally, nonresident aliens cannot deduct gambling losses on Schedule A (Form 1040NR).

You cannot reduce your gambling winnings by your gambling losses and report the difference. You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as an itemized deduction. Therefore, your records should show your winnings separately from your losses.

Diary of winnings and losses. You must keep an accurate diary or similar record of your losses and winnings.

Your diary should contain at least the following information.

The date and type of your specific wager or wagering activity.

The name and address or location of the gambling establishment.

The names of other persons present with you at the gambling establishment.

The amount(s) you won or lost.

Proof of winnings and losses. In addition to your diary, you should also have other documentation. You can generally prove your winnings and losses through Form W-2G, Certain Gambling Winnings, Form 5754, Statement by Person(s) Receiving Gambling Winnings, wagering tickets, canceled checks, substitute checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided to you by the gambling establishment.

For specific wagering transactions, you can use the following items to support your winnings and losses.

These recordkeeping suggestions are intended as general guidelines to help you establish your winnings and losses. They are not all-inclusive. Your tax liability depends on your particular facts and circumstances.

Keno. Copies of the keno tickets you purchased that were validated by the gambling establishment, copies of your casino credit records, and copies of your casino check cashing records.

Slot machines. A record of the machine number and all winnings by date and time the machine was played.

Table games (twenty-one (blackjack), craps, poker, baccarat, roulette, wheel of fortune, etc.). The number of the table at which you were playing. Casino credit card data indicating whether the credit was issued in the pit or at the cashier's cage.

Bingo. A record of the number of games played, cost of tickets purchased, and amounts collected on winning tickets. Supplemental records include any receipts from the casino, parlor, etc.

Racing (horse, harness, dog, etc.). A record of the races, amounts of wagers, amounts collected on winning tickets, and amounts lost on losing tickets. Supplemental records include unredeemed tickets and payment records from the racetrack.

Lotteries. A record of ticket purchases, dates, winnings, and losses. Supplemental records include unredeemed tickets, payment slips, and winnings statements.

From that, I extrapolated that a "session" in the B&M world is

- table you're at
- time you're playing until you leave that table
- amount won/lost during that period

New table, new session. I usually don't record the table change if I'm staying in the same limit (like a must-move game or consolidation)..... and there's no way I'm ever recording the names of others.

I'd always assumed that the IRS would try to treat an online table in the same manner. But, I don't know of any specific regulations.

I also found this (on poker tournaments) and it makes it seem as if the IRS might be expecting net tournament reporting (per tourney) rather than buy-in as expense and cash prize as miscell income, from the card rooms.

Both the instructions on the W2-G form, and this:

http://www.irs.gov/instructions/iw2g/ar02.html

Quote:

4. Poker Tournaments
File Form W-2G for each person to whom you pay more than $5,000 in winnings, reduced by the amount of the wager or buy-in, from each poker tournament you have sponsored. Winnings and losses of the participant from other poker tournaments you have sponsored during the year are not taken into account in arriving at the $5,000 amount.

Withholding and backup withholding. If you file Form W-2G for the person to whom you pay more than $5,000 in net winnings from a poker tournament, and provide a copy of Form W-2G to such person, regular gambling withholding does not apply to such winnings. However, if the person who wins more than $5,000 does not provide a TIN, you must apply 28% backup withholding to the full amount of the winnings from the tournament. Net winnings of $5,000 or less are not subject to reporting, withholding, or backup withholding.

The last part applies to the reporting by the tournament provider, NOT the individual on his/her own tax return.... as we should know.

"The IRS reminds tournament winners that, by law, they must report all their winnings on their federal income tax returns. This rule applies regardless of the amount and regardless of whether the winner receives a Form W-2G or any other reporting form. This is true for 2007 and earlier years, and will continue to be the case after the new reporting requirement goes into effect."
http://www.irs.gov/irs/article/0,,id=174937,00.html

I'm looking for anything on how individuals should report tournament buy-ins and cashes.... but can't find it.

Skallagrim · 03-16-2009, 04:31 PM

Very good general advice (though there will always be unique details that come up). The only thing you missed was a link to Russ Fox's blog

.

Thanks Lottery Larry!

Hey Berge20, how about making this a sticky?

Skallagrim

LaredoChris · 03-16-2009, 07:47 PM

Quote:

Originally Posted by Lottery Larry

I'm looking for anything on how individuals should report tournament buy-ins and cashes.... but can't find it.

Great stuff - as far as the tourneys, until I come across something better, I'm treating them like my cash game session recording.

Buy-in goes into a "loss" session if I don't cash; winnings less buy-in go into a "win" session if I cash.

I treat a satellite win as nothing until I get my results from the target tourney; if I don't cash, then my satty buy-in is my loss for the session. If I cash, then winnings less satty buy-in is my net win for that "session".

If I sell my satty win, then that less my satty buy-in will be the net win for the session.

I find it funny they want names of persons at the table with you.

LotsOfOuts69 · 03-17-2009, 03:20 AM

what a joke. Report the names of people who were at the table with you? GTFO.

This session stuff tilts me to no end. I win $1000 bucks one night and the next night a lose it all. Now I have to pay taxes on that $1000 I won and I cant even deduct my losses because its less than the standard deduction and I cant itemize. ***.

The IRS needs to realize how bad their regulations are. If a person wins a couple hundred playing BJ and then the next night they lose it all back, you think that person is going to report their *winnings* just because it was on a seperate day or at a new table? Anyone who does is a fool imo. That is the most unfair thing I have ever heard of.

When the system is set up in a way such that I could win $10,000 playing poker and stuff that cash under a mattress and spend it on hookers and blow, and no one would be the wiser, meanwhile if I report it and try to deduct some losses on my tax return I will get audited and F-ed up the butt because I dont know the name of the d-bag who called off his whole stack to me with a gut-shot, then the system needs fixing.

POKER IS ONE LONG LIFETIME SESSION, I WILL PAY TAXES ON MY NET PROFIT AT THE END OF EACH YEAR ( or quarterly

)BECAUSE THAT IS WHEN TAXES ARE DUE. PERIOD. i cant wait for the court case where they try to define what a session of poker is. Oh wait it will never happen because there are actually people out there paying like a 90% marginal tax rate on poker profits. LMAO.

Lottery Larry · 03-17-2009, 04:58 PM

Quote:

Originally Posted by LotsOfOuts69

what a joke. Report the names of people who were at the table with you? GTFO.

I will get audited and F-ed up the butt because I dont know the name of the d-bag who called off his whole stack to me with a gut-shot, then the system needs fixing.

I think you're overstating the need for the names, but I've never been audited.

Quote:

POKER IS ONE LONG LIFETIME SESSION, I WILL PAY TAXES ON MY NET PROFIT AT THE END OF EACH YEAR ( or quarterly

)BECAUSE THAT IS WHEN TAXES ARE DUE. PERIOD. i cant wait for the court case where they try to define what a session of poker is. Oh wait it will never happen because there are actually people out there paying like a 90% marginal tax rate on poker profits. LMAO.

I look forward to the "LotsOfOuts69 vs. US IRS" lawsuit coming up, so we can finally get these silly ass, moral-infliction tax laws straightened out once and for all.

You do realize that the regs were probably written because a number of people do NOT report the income (and, I suspect, they were assumed to be criminals of some sort as well, thus the "names of players at the table" portion)?

LotsOfOuts69 · 03-18-2009, 01:48 AM

Let me give you this senerio. You have a normal job and make $50k per year and take the standard deduction on your taxes.. You go to Vegas during this year and run $500 into $5500 at the black jack table. You then switch tables and lose all $5000 profit. Are you going to pay taxes on the $5000 you won? You cant itemize.

What if you left the table and it was 11:59pm and when you joined the new table it was 12:01am? Are you claiming your winnings?

What if you went to bed and woke up the next day and lost it all back. Still paying taxes?

What if you left vegas and came back a month later? Now do I pay taxes on my winnings?

Please show me the fool who claims the $5000 gambling winnings and pays taxes on money he does not have. Then point him in the direction of the poker room.

Oh and there wont be any LotsOfOuts vs. IRS case anytime soon cause I actually pay my taxes on poker winnings ( small as they might be) and the gov't pees their pants in happiness because 98% of people who win money gambling (casino, poker, lottery, sports betting with bookies, home games, bets with firends etc.) dont pay a dime.

BigAlK · 03-18-2009, 10:36 AM

Quote:

Originally Posted by LotsOfOuts69

You cant itemize.

This discussion probably doesn't belong in this stickied thread, but why can't he itemize in your scenario? I agree that in your scenario this person will probably end up worse than if he didn't report his winnings and losses. But anyone who makes 50k a year is almost certain to have some legitimate deductions. Alone they won't add up to his standard deduction, but combined with his gambling losses they will. There has been a ton of discussions about this in other tax threads.

Lottery Larry · 03-18-2009, 10:53 PM

Quote:

Originally Posted by LotsOfOuts69

Oh and there wont be any LotsOfOuts vs. IRS case anytime soon

But all of the things you were ranting about is what the lawsuit is supposed to cover!

Do it for the team!

**Rainbow Warrior** · 03-27-2009, 07:26 PM

More general tax info, esp on-line stuff:

http://www.gambling-law-us.com/Artic...mbling-tax.htm

http://www.irs.ustreas.gov/newsroom/...108277,00.html

http://forumserver.twoplustwo.com/27...13/index2.html

http://www.taxabletalk.com/gambling/

http://forumserver.twoplustwo.com/57...-taxes-377778/

Canadian Thread from IG forum: http://forumserver.twoplustwo.com/28...-tax-thread-7/

Poker Clif · 03-30-2009, 05:35 PM

Quote:

Originally Posted by Lottery Larry

I think you're overstating the need for the names, but I've never been audited.

I look forward to the "LotsOfOuts69 vs. US IRS" lawsuit coming up, so we can finally get these silly ass, moral-infliction tax laws straightened out once and for all.

You do realize that the regs were probably written because a number of people do NOT report the income (and, I suspect, they were assumed to be criminals of some sort as well, thus the "names of players at the table" portion)?

You're probably right about that.

For a long time, wait staff underreported their tips, or didn't report them. Everyone knew what was going on. I know of a case where a bunch of waitresses lost their jobs, and only one was eligible for unemployement--because she had reported all of her taxable income, including tips. The others "didn't make enough" to be eligible for unemployment.

The IRS finally got tired of all this tax evation, and the hammer came down. Now, if you are wait staff, you are required to claim a certain percentage of your wages as tips, whether or not you actually made that much in tips.

The moral of this story is pretty clear. Don't mess with the IRS.

otter · 04-04-2009, 04:50 PM

I can't keep track of everybody I Played with. Normally it's the same people all the time. I keep track of just about everything else though

tiltyass · 04-05-2009, 02:28 AM

**** taxes .. ive made 170k playing poker last 3 years and dont plan on declaring any of it .. i pay enough in my real job

HundredsOfStuff · 04-05-2009, 09:24 AM

Quote:

Originally Posted by tiltyass

**** taxes .. ive made 170k playing poker last 3 years and dont plan on declaring any of it .. i pay enough in my real job

Good luck transferring 170k from your poker account to your bank account without anyone noticing.

If it was all from private live games, better get a nice big shoe box to keep it in.

bav · 04-05-2009, 08:05 PM

Quote:

Originally Posted by tiltyass

**** taxes .. ive made 170k playing poker last 3 years and dont plan on declaring any of it .. i pay enough in my real job

Have we mentioned recently the rewards the IRS gives for turning in tax cheats? 25% of the tax on $170K should be in the $10K range.

Lottery Larry · 04-05-2009, 10:35 PM

Quote:

Originally Posted by bav

Have we mentioned recently the rewards the IRS gives for turning in tax cheats? 25% of the tax on $170K should be in the $10K range.

dammit, bav, I was just going to finish up my IP search and sicc my PIs on this one!

NOW how the heck do I fund the skiing vacation??