vpFREE2 Forums

re IRS tax code and W2Gs

#1

I recently posted several long articles about my problems with the IRS - I
suggest you search for my posts on the subject.

I used "session totals" and have been told by IRS you must list W2G totals
for gambling income. All losses (in my case all other gambling) goes into
itemized deductions. After 6 months of having the IRS lose responses to letter
audit, etc., I gave up and agreed with them and filed an amended return. If
session wins are larger than W2G totals - your return will go through, if it
is less than W2G totals you are likely to be audited.

If you are using Sessions be prepared to be audited, and you probably will
end up having to appeal the ruling. I only specifically know of one person who
won during the appeal process. Other people apparently have used this
method sucessfully, but some not.

To find out about Sessions the best source is Tax Guide For The Frugal
Gambler by Jean Scott and Marissa Chien. This can be purchased at amazon.com.

After my experience I can only say if you are going to use Sessions be
prepared for audits and a lot of worry. The tax code is a gray area and the
people you will deal with at the IRS interpret it one way and are mostly low level
employees. Getting to anyone who has a knowledge or understanding of
Sessions is problematical - I couldn't do it nor was the Taxpayer Advocate office I
contacted able to substantiate that I could use Sessions.

[Non-text portions of this message have been removed]

#2

Unfortunately, being "told" something by anyone, even people working for the IRS, means
nothing. All of this is kind of "hearsay", and is subject to personal interpretation by each
individual with whom you might have been talking with.

The "truth" is in the "code" as written. Unfortunately, the "code" is poorly written with respect
to this whole gamblng situation.

Just my opinion...

.....bl

···

--- In vpFREE@yahoogroups.com, misscraps@... wrote:

I used "session totals" and have been told by IRS you must list W2G totals
for gambling income.

#3

I've been reading these posts about W2G's and sessions and how
people have been filing for a few weeks now.

It seems in these discussions that people having IRS problems are
those that are getting W2G's & aren't listing their total amounts of
W2G's in the appropriate line and then deducting thier losses in
their itemized deductions. Instead what seems to be happening is
they are taking their total amount of W2G's and subtracting their
losses from them and entering THIS number instead, and not writng
off the losses under their itemized deductions.

Folks I'm far from being a tax expert but this seems to be totally
wrong here. Being that you've gotten W2G's you MUST list them in
total on the appropriate line and take your decutions on the
appropriate line as well.

W2G's are for the most part no different than a W2 that you'd get
from your employer. Let's say you worked 2 jobs and at the end of
the year got your W2 from each employer. You wouldn't subtract your
deductions (mortgage interest, property taxes, work related
expenses, etc) from your total amount of W2's before entering them
on the appropriate line would you? Of course not.

So that brings me to this question: Why would you try to subtract
deductions from W2G's if you wouldn't do it with W2's?

While I don't get many W2G's and some years I get none I would never
even consider doing it the way some of you have. For example this
year I have $8000 in W2G's as well as enough in losses to cover the
whole amount. I wouldn't DARE enter zero on the line for gambling
income while submitting two W2G's valued at $8000. It's a guarenteed
way to get audited.

On the same note if I get a W2 from my employer for $50000 and I
have $10000 in deductions, I wouldn't enter $40000 on the line for
income either.

I know the tax laws aren't well written especially when it comes to
gambling but do yourselves a favor. List everything the way it's
expected to be listed and save yourself the aggravation of getting
audit notices. We all know as gamblers we get screwed royally (no
pun intedned) when we get W2G's. The only real way around these
screw jobs is to not gamble at all or gamble at levels that don't
get us W2G's.

#4

That's a very well written diatribe, but you've completely missed the point.
No one is trying to enter their net on line 21. They are trying to enter
their session win total, which is what you're supposed to do. W-2Gs are
issued for individual bets, not sessions, and only for certain types of
gambling. When I play the $5000 Double Diamond at the Wynn, I get several
million dollars worth of W-2Gs a day. Since I normally walk away with less
than I started with, it defies all common sense (and tax law) to say I have
"won" that money.

The reason it is an issue is that it unfairly penalizes slot players by
reducing their exemptions and deductions even if they had no true gambling
income.

Cogno

···

-----Original Message-----
From: vpFREE@yahoogroups.com [mailto:vpF…@…com] On Behalf Of
stungazed
Sent: Saturday, December 2, 2006 3:35 PM
To: vpFREE@yahoogroups.com
Subject: [vpFREE] Re: re IRS tax code and W2Gs

I've been reading these posts about W2G's and sessions and how people have
been filing for a few weeks now.

It seems in these discussions that people having IRS problems are those that
are getting W2G's & aren't listing their total amounts of W2G's in the
appropriate line and then deducting thier losses in their itemized
deductions. Instead what seems to be happening is they are taking their
total amount of W2G's and subtracting their losses from them and entering
THIS number instead, and not writng off the losses under their itemized
deductions.

Folks I'm far from being a tax expert but this seems to be totally wrong
here. Being that you've gotten W2G's you MUST list them in total on the
appropriate line and take your decutions on the appropriate line as well.

W2G's are for the most part no different than a W2 that you'd get from your
employer. Let's say you worked 2 jobs and at the end of the year got your W2
from each employer. You wouldn't subtract your deductions (mortgage
interest, property taxes, work related expenses, etc) from your total amount
of W2's before entering them on the appropriate line would you? Of course
not.

So that brings me to this question: Why would you try to subtract deductions
from W2G's if you wouldn't do it with W2's?

While I don't get many W2G's and some years I get none I would never even
consider doing it the way some of you have. For example this year I have
$8000 in W2G's as well as enough in losses to cover the whole amount. I
wouldn't DARE enter zero on the line for gambling income while submitting
two W2G's valued at $8000. It's a guarenteed way to get audited.

On the same note if I get a W2 from my employer for $50000 and I have $10000
in deductions, I wouldn't enter $40000 on the line for income either.

I know the tax laws aren't well written especially when it comes to gambling
but do yourselves a favor. List everything the way it's expected to be
listed and save yourself the aggravation of getting audit notices. We all
know as gamblers we get screwed royally (no pun intedned) when we get W2G's.
The only real way around these screw jobs is to not gamble at all or gamble
at levels that don't get us W2G's.

vpFREE Links: http://members.cox.net/vpfree/Links.htm

Yahoo! Groups Links

#5

That's a very well written diatribe, but you've completely missed the

point.

No one is trying to enter their net on line 21. They are trying to

enter

their session win total, which is what you're supposed to do.

If you enter your session win instead of total w2g's on line 21 you
will definitely get audited. I have had numerous clients in the past
few years that have been audited because line 21 didn't equal or exceed
the amount for w2g's they received.You must show gross wins on line 21
and losses on schedule A. I don't think it is fair but that's the way
the law is written.
The only way you can show net results on front of 1040 is to declare
your gambling as a business and report on schedule C. You could then
declare your travel and all other related expenses.
If gambling is not your business, then you are stuck with the law as
written.

···

--- In vpFREE@yahoogroups.com, "Cogno Scienti" <cognoscienti@...> wrote:

#6

<<If you enter your session win instead of total w2g's on line 21 you
will definitely get audited. I have had numerous clients in the past
few years that have been audited because line 21 didn't equal or exceed
the amount for w2g's they received.

I believe many professional tax preparers interpret this differently than you do - and many have advised their clients to use their "sessions" total win on Line 21. If that amount is less than the W2G amount, they advise that you attach a list of the W2G amounts and explain they are incorporated into your session wins and losses. Then they advise you put the sessions total loss on Schedule A if you itemize. And many have done this and have not been audited. So that is not a "definite" happening.

<<You must show gross wins on line 21
and losses on schedule A. I don't think it is fair but that's the way the law is written.>>

This is not a cut-and-dried interpretation. Many would say that a W2G is not a "gross" win. Why would you keep a diary, as the IRS IS clear about? What do you do with the "winning" sessions when you don't have a W2G. Where do you put that? Couldn't go in the "losses" on Schedule A??? Sounds like to me that if you count your W2G's as your total "win," you have to "make up" some figure for your losses. Your diary would be useless?

···

________________________________________
Jean $¢ott - "FRUGAL VIDEO POKER"
This new book (autographed) and other
   frugal products are now available at my
   new Web site, http://queenofcomps.com/.
   E-mail address is queenofcomps@cox.net.

[Non-text portions of this message have been removed]

#7

The Illinois State Law does NOT let you deduct losses from winnings.
Technically we're supposed to keep track of all our winnings and pay
them 3% on them. As it is, they only tax the amounts on W2-G's ...
they require us to adjust our State Income Tax to add back in any
deductions we've made for gambling losses on our Federal Tax report.

The applies even if the W2G's are from out of state, the only break we
get there is for the amount of State Income tax we paid to the other
state.

Makes me angry often ... as I end up paying taxes on a lot of money
that I don't take home.

Do any other states have anything like this?

#8

Don't move to Wisconsin because our taxes are the same. It is a big rip-off!

Lavona Rann <Lavona@Larann.com> wrote: The Illinois State Law does NOT let you deduct losses from winnings.
Technically we're supposed to keep track of all our winnings and pay
them 3% on them. As it is, they only tax the amounts on W2-G's ...
they require us to adjust our State Income Tax to add back in any
deductions we've made for gambling losses on our Federal Tax report.

The applies even if the W2G's are from out of state, the only break we
get there is for the amount of State Income tax we paid to the other
state.

Makes me angry often ... as I end up paying taxes on a lot of money
that I don't take home.

Do any other states have anything like this?

···

---------------------------------
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#9

<<If you enter your session win instead of total w2g's on line 21 you will
definitely get audited.>>

That does seem to be a recent point of emphasis for the IRS, although I did
it for years and didn't get the letter audit until the 2004 tax year.

<< I have had numerous clients in the past few years that have been audited
because line 21 didn't equal or exceed the amount for w2g's they
received.You must show gross wins on line 21 and losses on schedule A. I
don't think it is fair but that's the way the law is written.>>

Can you give a pointer to the text of the law? I've researched this a bit
and didn't find anything that supports the assertion that line 21 must equal
or exceed the W-2G total.

<<The only way you can show net results on front of 1040 is to declare your
gambling as a business and report on schedule C. You could then declare your
travel and all other related expenses.
If gambling is not your business, then you are stuck with the law as
written.>>

Nobody is suggesting you put net results on line 21. The consensus of most
experts is that IRS regulations require total of winning sessions on line
21. The W-2G total may be more or less than that.

By the way, you can deduct travel and other expenses against wins reported
on form 1099-MISC even if you are not a professional.

Cogno

#10

In my opinion, this is the crux of the problem, i.e., what do you do
about "winnings" for which here are no W2-G's?

It has become my thought, that is why one goes to the "sessions"
concept.

.....bl

···

--- In vpFREE@yahoogroups.com, "queenofcomps" <queenofcomps@...> wrote:

What do you do with the "winning" sessions when you don't have a
W2G. Where do you put that?

Jean $¢ott

#11

--- In vpFREE@yahoogroups.com, "Cogno Scienti" <cognoscienti@...>
wrote:

<<<That's a very well written diatribe, but you've completely missed
the point. No one is trying to enter their net on line 21. They are
trying to enter their session win total, which is what you're
supposed to do. W-2Gs are issued for individual bets, not sessions,
and only for certain types of gambling.<<<

You say they are trying to enter their total session wins not their
net. Isn't someones session totals their actual net? I would think
it is.

···

------------------------

When I play the $5000 Double Diamond at the Wynn, I get several

million dollars worth of W-2Gs a day. Since I normally walk away
with less than I started with, it defies all common sense (and tax
law) to say I have "won" that money.

The reason it is an issue is that it unfairly penalizes slot players
by reducing their exemptions and deductions even if they had no true
gambling income.

Cogno<<<

Exactly why I said gamblers get screwed royally!! Our AGI goes up
even if we had a losing year. It's not fair but then again, most
taxation isn't!
------------------------

--- In vpFREE@yahoogroups.com, "queenofcomps" <queenofcomps@...>
wrote:

<<<You must show gross wins on line 21 and losses on schedule A. I
don't think it is fair but that's the way the law is written.>>>

<<<This is not a cut-and-dried interpretation. Many would say that
a W2G is not a "gross" win. Why would you keep a diary, as the IRS
IS clear about? >>>

Well the problem here is "many would say". It doesn't matter what
many say. It matters what the IRS says! Of course they don't make it
very clear.

You keep the diary to show your session wins/losses for the year to
try and offset any W2G wins that you entered.

-------------------------

What do you do with the "winning" sessions when you don't have a

W2G. Where do you put that?

You don't put it any where. (Yes, I know ALL gambling income is
taxable as is finding money on the ground and any other source of
income even illegal activity such as robbery). Honestly though, who
in their right mind would claim gambling wins if there isn't a paper
trail of W2G's??? No one I know that has had a winning year and no
W2G's ever claimed any of their wins. On the same note I don't know
w single person that ever claimed money they found on the floor!
--------------------------

Couldn't go in the "losses" on Schedule A??? Sounds like to me

that if you count your W2G's as your total "win," you have to "make
up" some figure for your losses. Your diary would be useless?<<<

No, you enter your total W2G's. This isn't your total wins. You'd
then use that diary to add up your sessions. This number would be
your total wins or losses. You wouldn't need to "make up" a figure
for your losses. Your diary would back up the amount you say your
losses are.

I think things would for sure be different if you're filing as a
professional though. However for most on this board I don't think
they are filing as pros. They all have regular "normal" jobs and
just want to cover their butts when it comes the their win/losses.
--------------------------

Again, I'm no tax expert and don't claim to be. As far as sessions
go, if I were in a situation with multiple W2G's (and I do have 2 so
far this year) here's how I'm planning to handle it. I'd enter my
W2G amounts on the appropriate line. I would then add up my sessions
subtracting the amounts of the W2G's (because they are already
accounted for) and this number would be my session total. If it's
showing a loss (and it is so far this year for me) I'd then enter
this total for my deduction (up to the amount of my W2G's). If this
number shows a win for the year, I'd either ADD it in as income
somewhere (I don't know exactly where, perhaps as misc income) OR
disregard it if I were dishonest and simply pay the tax on the
amount of my W2G's rather than pay MORE tax than they are expecting
me to.

I'm not sure if this is right or not but I don't think it will raise
any eyebrows of the IRS like it does entering a number that's less
than your total W2G's.

#12

than you do - and many have advised their clients to use
their "sessions" total win on Line 21. If that amount is less than the
W2G amount, they advise that you attach a list of the W2G amounts and
explain they are incorporated into your session wins and losses.

That may have been true in the past but IRS has become a number
matching organization. W-2's,1098's,1099's,k-1's,and w2-g's are all
matched by IRS computers and if they don't match you will get a letter.
You send in your return by mail, some one key-punches the return totals
line by line and then it is reviewed by their computers. If you e-file,
your return is sent by your accountant directly to IRS computer. Either
way if the totals don't match what is in IRS computer it will be kicked
out and letter generated to taxpayer. At that time you get to explain
your record keeping. Get & keep win-loss statements from casinos for
unquestioned proof.
Check with your accountant, I believe he will agree.

···

--- In vpFREE@yahoogroups.com, "queenofcomps" <queenofcomps@...> wrote:

I believe many professional tax preparers interpret this differently

#13

<<You say they are trying to enter their total session wins not their net.
Isn't someones session totals their actual net? I would think it is. >>

No. Total of winning sessions on line 21. Total of losing sessions on Sch.
A.

<<Honestly though, who
in their right mind would claim gambling wins if there isn't a paper
trail of W2G's??? No one I know that has had a winning year and no
W2G's ever claimed any of their wins.>>

What are you doing with the money, keeping it under your mattress? If you
deposit, invest, or spend it there's generally a paper trail. Still, I hear
Federal prisons are pretty nice.

Cogno

#14

<<Makes me angry often ... as I end up paying taxes on a lot of money
that I don't take home.

Do any other states have anything like this?>>

There is a state tax chart in "Tax Help for the Frugal Gambler." You will find there far too many states where this is the case.

···

________________________________________
Jean $¢ott - "FRUGAL VIDEO POKER"
This new book (autographed) and other
   frugal products are now available at my
   new Web site, http://queenofcomps.com/.
   E-mail address is queenofcomps@cox.net.

[Non-text portions of this message have been removed]

#15

--- In vpFREE@yahoogroups.com, "Cogno Scienti" <cognoscienti@...>
wrote:

<<You say they are trying to enter their total session wins not

their net.

Isn't someones session totals their actual net? I would think it

is. >>

No. Total of winning sessions on line 21. Total of losing sessions

on Sch.

A.

OK, point taken. That's the way it should be. However would you
concur that line 21 should never be less than your total amount of
W2G's?? That it should be W2G's plus winning sessions. Schedule A
should be total of losing sessions (up to the amount of your wins)?

<<Honestly though, who
in their right mind would claim gambling wins if there isn't a

paper

trail of W2G's??? No one I know that has had a winning year and no
W2G's ever claimed any of their wins.>>

What are you doing with the money, keeping it under your mattress?

If you

deposit, invest, or spend it there's generally a paper trail.

Still, I hear

Federal prisons are pretty nice.

Cogno

You're kidding right? How much money does a VP player make at the
quarter/nickel level and get's no W2G's actually making? A few
thousand at best? Spending, depositing, and investing the amount
isn't going to turn anyone's head, especially if they work a regular
job and have income.

Put it this way, 40 million people visit Vegas each year. Most
recreational gamlers. Of those the small percentage that wins how
many of them do you think are claiming the wins on thier taxes if
they go no W2G's? I'd venture a guess and say the number is very
close to zero.

Federal Prison? I highly doubt anyone is going to Federal Prison
over a few thousand in income not claimed. If caught, penalties and
interest sure, but federal prison?

#16

<<You're kidding right? How much money does a VP player make at the
quarter/nickel level and get's no W2G's actually making? A few thousand at
best? Spending, depositing, and investing the amount isn't going to turn
anyone's head, especially if they work a regular job and have income.

Put it this way, 40 million people visit Vegas each year. Most recreational
gamlers. Of those the small percentage that wins how many of them do you
think are claiming the wins on thier taxes if they go no W2G's? I'd venture
a guess and say the number is very close to zero.

Federal Prison? I highly doubt anyone is going to Federal Prison over a few
thousand in income not claimed. If caught, penalties and interest sure, but
federal prison? >>

Yeah, if you want to cheat your neighbors out of the taxes on a few thousand
you probably won't go to prison. I personally pay all my taxes, but I make a
lot more than that.

Cogno

#17

OK! This is (also) my "take" on the IRS thing.

1. Line 21 has your "winnings" (i.e., sum of W2-G's plus all other "wins")
2. Schedule A is the total of losing sessions (up to amount of "wins")

But, but, but....

In another posting here a couple of days ago, it was said that the IRS now checks and
matches line 21 with the sum of your W2-G's. If these two things do not agree, your
return is automaticaly "flagged" and you get a letter audit notice.

Does this then mean that we are all going to get "letters" because line 21 will always be
greater than the sum of our W2-G's?

.....bl

···

--- In vpFREE@yahoogroups.com, "stungazed" <stungazed@...> wrote:

OK, point taken. That's the way it should be. However would you
concur that line 21 should never be less than your total amount of
W2G's?? That it should be W2G's plus winning sessions. Schedule A
should be total of losing sessions (up to the amount of your wins)?

#18

Oh yes. No "federal excess itemized deductions" allowed. The sad part
is, in Louisiana we (not me, but the voting population) actually voted
this into the tax law. It was sold as a tax REDUCTION plan, and many
of the sheeple who voted for this change did not really understand what
they were getting. After the change, these same people were calling
the state revenue department to ask where they could find the place to
list itemized deductions on the state tax form.

EE

···

--- In vpFREE@yahoogroups.com, "Lavona Rann" <Lavona@...> wrote:

Do any other states have anything like this?

#19

Get & keep win-loss statements from casinos for

unquestioned proof. Check with your accountant, I believe he will

agree.

I've mentioned this before, but I'll say it one more time even though
I know a lot of people will disagree. Personally, I wouldn't touch a
casino win-loss statement with a 10 foot pole. And I would certainly
never, never, never show one of these to any government agent. I
don't ever ask for these from any casino, but I have received them
(unsolicited) once or twice. The last one I got showed coin in and
coin out totals for the year for losses and wins (in other words,
these huge numbers). On top of that, it was inaccurate. Worst case
scenario is that you show that to the IRS and some yahoo rookie agent
decides that you should be showing "coin out" as your gambling
winnings. After all, that's what the statement lists as your
winnings. And you thought showing W2-G totals was bad... :slight_smile:

EE

···

--- In vpFREE@yahoogroups.com, "bobveit" <bobveit@...> wrote:

#20

Is that really true? That the casino report labels "coin out" as "winnings"? I have never
seen one. If that is truly the case, that could really open a "can of worms".

SHEESH!

Maybe I should go back to dominoes.....LOL

Beware of the "curse" of the W2-G!

.....bl

···

--- In vpFREE@yahoogroups.com, "eecounter" <eecounter@...> wrote:

Worst case
scenario is that you show that to the IRS and some yahoo rookie agent
decides that you should be showing "coin out" as your gambling
winnings. After all, that's what the statement lists as your
winnings.

EE