vpFREE2 Forums

2b. Re: Bob Dancer's LVA - 20 JAN 2015

#1

They can return the next day and give it all back and more, but brag

about their win from the previous day. Stopping at some winning goal is
popular with certain bogus "money management" strategies. It can result in
higher taxes.

Chris<<

It's maybe just me, but if people have these serious concerns about how
coming out ahead on any gaming sessions will mess up their Medicare and/or
taxes and their proposed alternative is to play in a way where you don't have
any profit at all, then I'd begin to question why they bother to play VP to
begin with.

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#2

rwhannu: "It's maybe just me, but if people have these serious concerns about how
coming out ahead on any gaming sessions will mess up their Medicare and/or
taxes and their proposed alternative is to play in a way where you don't have
any profit at all, then I'd begin to question why they bother to play VP to
begin with."

Someone may have already mentioned it, but just in case...

An artificially inflated AGI can, indeed, wreak havoc with one's Medicare B & D premiums. However, premium increases are not permanent. If, e.g., one's Line 21 income (and AGI) in the very next year* is down sufficiently, then one's premiums will be reduced correspondingly.

*Actually, I believe there's a "lag time" involved. I.e., high AGI in 2014 will affect 2016 premiums, not 2015. And a lower AGI (if enough lower) in 2015 will affect 2017 premiums.

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#3

Born loser,

Let me clarify my post on managing session wins. If you are an advantage player or not you will still have big wins, but you can manage your winning sessions to reduce the amount of wins you have to report on line 21. If it is important for you to leave with a small win whenever you can that is up to you. This will inflate your reportable wins, but not your net win or loss for the year. Most players probably don't have a tax problem because of line 21 so this is not an issue for them.
  
IRS regulations actually tell you to report gambling wins on line 21 not W-2Gs. But surprise surprise ... The IRS doesn't follow their own regulations because most people just report their W-2Gs. You need to explain to them that you are just following their regulations and reporting the actual wins from your gambling records. You also want to include a list of your W-2Gs so they know you are including all your W-2Gs. I believe some gamblers have been succesful in using this method and I will probably give it a shot for 2014.
  
I am also tempted to file schedule C because I think I should qualify as a professional. I don't know if I want to pick that fight with the IRS. I think my gambling is a business and not a hobby, but it will actually cost me more in taxes because of the self-employment tax.
  
Chris
  
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#4

Chris said:
IRS regulations actually tell you to report gambling wins on line 21 not W-2Gs. But surprise surprise ... The IRS doesn't follow their own regulations because most people just report their W-2Gs. You need to explain to them that you are just following their regulations and reporting the actual wins from your gambling records. You also want to include a list of your W-2Gs so they know you are including all your W-2Gs. I believe some gamblers have been succesful in using this method and I will probably give it a shot for 2014.

I understand what you are saying, Chris, and it makes perfect sense to me. That is how I would like things to be. From all I read, the IRS has no hard and fast rules and no real precedence has been set. Things have been (purposely?) left very vague. Anecdotally, it seems as if IRS audits depend on the individual conducting the audit and that they vary considerably.

Thanks for your very clear explanation. I'd like to know how things work out for you in the 2014 tax season. Good luck to you!

..... bl

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#5

I have been using the session method for several years. My gross winnings on my 1040 are always significantly less then the sum of my 1040G's. I was audited a few years ago which was a small business audit. After looking at the business they began to question my gambling winnings. After several conference calls with the agent and her boss, educating them on the session method and providing copies of my gambling log and other requested information the audit was completed with no changes to my return. My accountant includes with my taxes a list of my W2G's provided from each casino and a detailed explanation that I am using the session method for my gambling winnings. After using the session method successfully for a few years, I filed an amended return for one year just before the tax deadline. The feds send me a check within few months due to my lower AGI while the state denied my claim stating that gambling winnings cannot be deducted on your 1040. I appealed the denial. A few months before the court date I called the state attorney. After several calls and providing detailed information we settled on approx 65% of what I was requesting. The amount was substantial so for me in was worth the effort. Everyone needs to decide the amount of risk they are willing to take and this approach is not right for all gamblers. In my case the dollar amount justified the risk and I was successful. Joel ----------------------------------

#6

Joel,
  
Thanks for another confirmation that the IRS will accept the session method of reporting.
  
Chris

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#7

Joel:

Yes! That is GREAT news, having the IRS responding to you the way they did. I apologize to all for having been a "doubting Thomas". But, with IRS matters, perhaps I may be excused.

..... bl

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