vpFREE2 Forums

Tax consequences of w2gs

#1

We have had some discussion here of the possible new Medicare taxes on unearned income which might but hopefully won't impact gambling income (listed on the 1040 schedule as miscellaneous income).

Another thought comes to mind as I watch the Presidential Debate -- if Romney is elected and puts some sort of cap on itemized deductions (he's mentioned $17000 and $25000 and who knows what next) to make up for cutting tax rates, this could probably include capping deductions such as gambling losses, since things like charitable deductions, mortgage interest, etc., are being mentioned.

Let's say you earn $100000 in w2gs (it may sound like a lot, but even nonprofessional gamblers like myself have earned this and more because we play $1 and $5 machines). ... And list this as Misc. Income. Now you lose $110,000 in a year. Currently if you itemize you can deduct $100000, because you can only deduct up to the amount you win.

Let's hypothesize a $25000 cap on itemized deductions. Even if you have no mortgage income or other deductions, you'd end up with $75000 in income that would be taxed, despite actually losing money.

This phantom income, could well be taxed at 15%, or a lot more, depending on your tax rate.

argh!!

Another reason to consider avoiding w2gs (and maybe not voting for Mr. Romney, if you are so inclined.... )

#2

Reads like a political post to me...

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________________________________
From: Misscraps <misscraps@aol.com>
To: vpFREE@yahoogroups.com
Sent: Wednesday, October 17, 2012 9:47 PM
Subject: [vpFREE] Tax consequences of w2gs

Another reason to consider avoiding w2gs (and maybe not voting for Mr. Romney, if you are so inclined.... )

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

#3

well, please dispute (with facts please....)

Wow , sounds like we in w-2g trouble with either guy winning......

Al

Reads like a political post to me...

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-----Original Message-----
From: Sellers Phil <pwsellers01@yahoo.com>
To: vpFREE <vpFREE@yahoogroups.com>
Sent: Wed, Oct 17, 2012 7:54 pm
Subject: Re: [vpFREE] Tax consequences of w2gs

Reads like a political post to me...

________________________________
From: Misscraps <misscraps@aol.com>
To: vpFREE@yahoogroups.com
Sent: Wednesday, October 17, 2012 9:47 PM
Subject: [vpFREE] Tax consequences of w2gs

Another reason to consider avoiding w2gs (and maybe not voting for Mr. Romney, if you are so inclined.... )

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

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

#4

"Another reason to consider avoiding w2gs"

Or perhaps another reason to consider quitting gambling altogether.

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--- In vpFREE@yahoogroups.com, Misscraps <misscraps@...> wrote:

We have had some discussion here of the possible new Medicare taxes on unearned income which might but hopefully won't impact gambling income (listed on the 1040 schedule as miscellaneous income).

Another thought comes to mind as I watch the Presidential Debate -- if Romney is elected and puts some sort of cap on itemized deductions (he's mentioned $17000 and $25000 and who knows what next) to make up for cutting tax rates, this could probably include capping deductions such as gambling losses, since things like charitable deductions, mortgage interest, etc., are being mentioned.

Let's say you earn $100000 in w2gs (it may sound like a lot, but even nonprofessional gamblers like myself have earned this and more because we play $1 and $5 machines). ... And list this as Misc. Income. Now you lose $110,000 in a year. Currently if you itemize you can deduct $100000, because you can only deduct up to the amount you win.

Let's hypothesize a $25000 cap on itemized deductions. Even if you have no mortgage income or other deductions, you'd end up with $75000 in income that would be taxed, despite actually losing money.

This phantom income, could well be taxed at 15%, or a lot more, depending on your tax rate.

argh!!

Another reason to consider avoiding w2gs (and maybe not voting for Mr. Romney, if you are so inclined.... )

#5

Misscraps,

While it is a long process from vague proposal by an unelected candidate to actual implementation as tax law, your concerns are well founded. If such a deduction cap were ever put in place, one would hope that Congress would write in an exception for gambling losses (or take the long overdue corrective action of letting people net out wins and losses on the front page of the 1040 form), but I wouldn't count on it. One would also hope that the casino industry would see the tax implications for their best players (i.e. biggest losers), and pressure Congress to fix the problem before a cap is put in place, but I wouldn't count on that happening either.

If such a cap on itemized deductions were ever actually put in place without any sort of exception for gambling losses, I believe it would kill off medium and high stakes video poker advantage play except for those players who are allowed by the IRS agents to file Schedule C. It would also kill off a fair amount of non-advantage high stakes machine play.

Of course, if you still wanted to make some money from the casinos, there's always blackjack (card counting) and live poker. You don't get W2-Gs from blackjack, and they are very rare in poker unless you play tournaments. Now that I think about it, such a tax rule might kill off tournament poker also.

BUT - you might ask - even without W2-Gs aren't you supposed to still declare your winning sessions as income and list your losses as itemized deductions? Yes. So a low cap on itemized deductions would put *all* casino players who play for any decent stakes in the uncomfortable position of either intentionally cheating on their taxes, or voluntarily ruining their savings account.

EE

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--- In vpFREE@yahoogroups.com, Misscraps <misscraps@...> wrote:

Another thought comes to mind as I watch the Presidential Debate -- if Romney is elected and puts some sort of cap on itemized deductions (he's mentioned $17000 and $25000 and who knows what next) to make up for cutting tax rates, this could probably include capping deductions such as gambling losses, since things like charitable deductions, mortgage interest, etc., are being mentioned.

#6

...One would also hope that the casino industry would see the tax implications for their best players (i.e. biggest losers), and pressure Congress to fix the problem before a cap is put in place, but I wouldn't count on that happening either...

I bet the casino industry will give it their best efforts! When casinos look at the potential threats to their business I'm sure tax policy is right up there on the first page.

In fact, it wouldn't surprise me at all if Sheldon Adelson has already mentioned this to Romney, Ryan, and others who may have a say in policy decisions.

Mac
www.CasinoCamper.com

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

#7

The optimist in me hopes there will be sensible tax policies for gambling some day, but I am a little worried that only the high rollers will be able to hire the tax specialists who can set up a blocker corporation in the Cayman islands to offset wins and losses.

I know the high rollers will be taken care of!

Chris

···

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

--- In vpFREE@yahoogroups.com, "eecounter" <eecounter@> wrote:
>
...One would also hope that the casino industry would see the tax implications for their best players (i.e. biggest losers), and pressure Congress to fix the problem before a cap is put in place, but I wouldn't count on that happening either...

I bet the casino industry will give it their best efforts! When casinos look at the potential threats to their business I'm sure tax policy is right up there on the first page.

In fact, it wouldn't surprise me at all if Sheldon Adelson has already mentioned this to Romney, Ryan, and others who may have a say in policy decisions.

Mac
www.CasinoCamper.com

#8

This is true, but the gaming lobby will have to work at this when the actual tax laws are defined. What is also tough here, is that $100k is added to your adjusted gross income for medicare payment purposes. You will pay much higher premiums for income that most likely you did not experience.

···

----- Original Message -----
  From: Misscraps
  To: vpFREE@yahoogroups.com
  Sent: Wednesday, October 17, 2012 10:47 PM
  Subject: [vpFREE] Tax consequences of w2gs

  We have had some discussion here of the possible new Medicare taxes on unearned income which might but hopefully won't impact gambling income (listed on the 1040 schedule as miscellaneous income).

  Another thought comes to mind as I watch the Presidential Debate -- if Romney is elected and puts some sort of cap on itemized deductions (he's mentioned $17000 and $25000 and who knows what next) to make up for cutting tax rates, this could probably include capping deductions such as gambling losses, since things like charitable deductions, mortgage interest, etc., are being mentioned.

  Let's say you earn $100000 in w2gs (it may sound like a lot, but even nonprofessional gamblers like myself have earned this and more because we play $1 and $5 machines). ... And list this as Misc. Income. Now you lose $110,000 in a year. Currently if you itemize you can deduct $100000, because you can only deduct up to the amount you win.

  Let's hypothesize a $25000 cap on itemized deductions. Even if you have no mortgage income or other deductions, you'd end up with $75000 in income that would be taxed, despite actually losing money.

  This phantom income, could well be taxed at 15%, or a lot more, depending on your tax rate.

  argh!!

  Another reason to consider avoiding w2gs (and maybe not voting for Mr. Romney, if you are so inclined.... )

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