Jean Scott has made a lot of valid points in her postings. IRS rulings on
gambling winnings have a lot of gray areas. Jean and Marissa Chien's book
"Tax Help for the Frugal Gambler" has a lot of information and is must reading
for anyone getting W2Gs or wondering how to report gambling winnings. And it
also points out some of the gray areas.
I was a bit upset the other day, and perhaps my post was a bit confusing.
My point is that if you wish to use the Session method of reporting, and your
Session Win total is less than W2G total, you could easily trigger an audit,
whether you list all the W2Gs or add a note, or not. However, even if you
don't use Sessions, and have a high amount of W2Gs, you could also get an
audit.
But doing Sessions may mean you have to come up with a lot more
justification for how you did your return, than just totaling W2Gs, because low-level
casino employees usually go over computer-generated audits, and they know little
about reporting gambling. And you are probably more likely to get audited
with Sessions if there are discrepancies with W2Gs.
Getting an audit is stressful.
In my case it seems very stressful, and for me, I think I'd rather lower my
chances of auditing in the future, even if costs me more in taxes (by raising
the Adjusted Gross Income) to use W2Gs as a basis.
I was trying to warn people using Sessions to think very hard about the
stress factor of possible audits, especially when low-paid IRS employees might
calculate you owe 10s of thousands of dollars for gambling winnings, when
actually you were a net loser at gambling!
I'd like to thank list members who've written me privately with their
experiences and thoughts, some of whom have had no or few problems using Session
totals, and others who have had some problems akin to mine. Also special
thanks to Jean, Judy, John, TB, and others who have given me specific help and
advice.
As inflation has gone up and gambling become a national pastime,
unfortunately more and more people are affected by the low jackpot levels that trigger
1099s ($1200 for slots) and more tax reporting headaches.
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