kcace1024 (Chris) wrote:
> I am not sure what bornloser means by your "tax situation"
> remaining the same
Stuart replied:
I believe that bornloser was pointing out that if you strictly follow
the letter of the tax laws, you must report all gambling winnings,
whether or not you receive a W2G.
In practical terms, the vast majority of people don't strive to
follow the tax laws precisely. Far more commonly, people strive to
file their taxes in a way that conforms to their own ethical beliefs,
while keeping the chances of an audit or IRS problems to an absolute
minimum. When this is the case, the W2Gs do make a difference, since
not reporting a W2G jackpot will very likely result in IRS problems,
whereas failing to report a non-W2G jackpot has practically zero
chance of doing so.
Chris contributed a caution that Triple Deuces (TD) play carries tax
risk over the potential liability associated with NSUD, depending on
your tax position.
bornloser replied, in essence - as I read him, that if your bottom
line result in each game were the same, the tax situation should be
the same.
Stuart responds that added TD W2-G's are pertinent if you report
winnings a little at odds with strict IRS guidance.
···
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Chris is alluding to something a little more substantive than simply
the fact that ending up with a fistful of W2-G's from TD play (since
each set of deuces pays $3K instead of $1K) may mess with your ability
to temper the gross win you report on your play. W2-G's are not the
core source of the potential tax problem he's referring to.
No matter how you report TD results for taxes vs those of NSUD (for
example, whether your report gross wins as the sum of your W2-G's or
as the sum of your session wins), TD will necessarily yield higher
gross wins (of course, offset by equally higher gross losses, if play
results in either case are identical).
Gross wins are reported on the face of your 1040; gross losses are
taken as a Sched A offset to the wins. When reporting W2-G's as your
gross win, it's a no brainer that TD will yield a higher gross win --
you look to generate $30K in W2-G's generated from deuces hits in $1
TD for every RF hit that you won't see playing NSUD. If you instead
report net session results, the higher variance of TD means that gross
sessions wins will be greatly inflated as will losses.
In either reporting assumption, the reporting of higher TD gross wins
as a distinct hazard. When your adjusted gross income (AGI) rises
above $150K (approx ... higher, in some cases, on a joint return), you
begin to be subject to a loss of a portion of your tax credit from
personal exemptions and itemized deductions. If you play through 4 or
5 royal cycles of $1 TD in a year (a mere few hours per weekend), the
impact on AGI can be tremendous -- with a very painful increase to
your total taxes ... no matter whether the play ends in a net win or
loss for the year.
This is a hazard that needs to be considered for any higher denom
play. There have been more than a couple of players who have found
play above the quarter level to be more costly than is reasonable.
- Harry