2a. Re: gambling taxes
Date: Sun Mar 2, 2008 2:00 am ((PST))
Again, all this is fine, but if the state law taxes gross gambling winnings, showing them that you had no NET gambling winnings will not change the amount that the law taxes you on, nor help you in any other way other than documenting for the state exactly how much the gross winnings were.
It is a totally inappropriate way to tax people, but as I've said before, gamblers, like cigarette smokers and alcohol consumers, are an easy target for legislators to tax, and tax inappropriately if they find it convenient. I don't know what the current environment is in most states, but I would think it unlikely that the time is ripe for gambling tax reforms, no matter how burdensome and unfair I personally find those taxes to be.
Certainly consult your tax advisor to find out what the tax laws are in your state, and whether it MIGHT work to try a "net gambling income" schedule. I've always said, the tax folks will never call you to tell you that you forgot a deduction or to ask you if you thought of this or that way to lower your taxes - the only help they offer is when you make a computational error -- but at the same time, be prepared to have those aggressive (and perhaps illegal) deductions or bizarre / unusual approaches to tax filing disallowed, and the tax found to be due, along with interest, and perhaps penalties. And also, be prepared, if your filing is clearly in violation of the law, to face criminal charges as well -- especially if "they" tell you once, and you keep on trying it.
Fair or not, the government has the upper hand in enforcing its tax laws, and the citizen has an uphill battle to fight to win - each of us must make the decision individually, as to whether the consequences and expenses of such a battle is worth the effort, expense, and risk.
--BG
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I agree that adding this schedule is a good idea, but keep in mine you should
include all winnings, not just those on W2G's -you are asking the state to be
honest with you-be honest with them as welltralfamidorgooglycrackers wrote:
--- In vpFREE@yahoogroups.com, "cbivitz99" wrote:
>
> What makes the whole things worse and truly unfair is if you live
in a
> state that calculates state income tax off of your gross income on
your
> 1040. The effect is that for the feds you can deduct your losses
from
> your winnings, but for the state you have to pay taxes on the
GS2's
> without the possibility of deducting losses. In my case, I have
85K in
> reported paper winnings I have to pay state taxes on even though I
have
> a 6K loss for the year.
> I've checked quite a bit into this and if anyone knows that I am
wrong
> (in this case CT), let me know.I would attach a schedule titled "Net Gambling Income/Loss" and show
all of your wins AND offsetting losses, and the corresponding
negative total, and enter that (or "zero") in the space for
Miscellaneous Income. Then let them try to prove that you had actual
taxable income from gambling activity--they won't be able to.This is not to say that they won't try to bully or intimidate you
into paying taxes that you don't owe.