vpFREE2 Forums

Tax Consequences was FSP strategy ideas

#1

Probably the most common effects are the loss of medical deductions and
casualty losses on Schedule A due to rise in AGI and the eligibility losses
on things like the Roth IRA because your AGI rose too high -- compared to a
normal work situation where, given the same net income, you would qualify
for the Roth without penalty because you don't have a bunch of W2s that kick
you over the limit.

As for younger people, the W2gs/1099s are an issue in that most of them are
taking the standard deduction. In order to claim losses they need to file
a schedule A which negates some/most of the benefits of the standard
deduction. If they don't get a lot of W2Gs, it might be better to just eat them &
stay with the standard deduction. In a way this is also a caution for the
occasional gambler using the standard deduction -- YOU COULD LOSE or BE A
SMALL WINNER & NOT BE ABLE TO CLAIM ANY LOSSES because losing the standard
deduction could be worse than not claiming the losses.

In a message dated 1/24/2012 7:24:21 A.M. Pacific Standard Time,
vpFREE@yahoogroups.com writes:

_Re: FSP strategy ideas _
(http://groups.yahoo.com/group/vpFREE/message/119024;_ylc=X3oDMTJzNm9nM25yBF9TAzk3MzU5NzE1BGdycElkAzQ2NDEwMTcEZ3Jwc3BJZAMxNzA1
MDY1NzMyBG1zZ0lkAzExOTAyNARzZWMDZG1zZwRzbGsDdm1zZwRzdGltZQMxMzI3NDE4NjU2)
Posted by: "vp_wiz" _harry.porter@verizon.net _
(mailto:harry.por…@…net?Subject= Re:%20FSP%20strategy%20ideas) _vp_wiz _
(http://profiles.yahoo.com/vp_wiz)
Mon Jan 23, 2012 10:17 am (PST)

the7thwarrior wrote:

When those w-2g's start effecting your Social Security income they no

longer represent real profit. If your AGI is too high you start losing
benefits. This is usually only the case for those collecting those benefits.
Otherwise it only effects your deductions on Schedule A.

Sure you get to write off gambling losses against winnings, so for
the younger crowd it is not an issue.

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

#2

In Tax Help for Gamblers I have a long list of items that can be affected negatively when W-2Gs inflate your AGI. In the 1st edition that list is on pages 45-46. A newly-updated edition is coming out next month, both in eBook and hard copy form, but I don’t know the exact page # that will have that information. But it will be in the same chapter, “Filing Your Return,” which discusses at length this problem for many recreational gamblers.

···

--------------------------------
Jean $¢ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://jscott.lvablog.com/
.

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

#3

I find it a little strange that Rob Singer has no idea of the tax consequences of W-2s. Of course, you can avoid the AGI problem if you file a Sched C as a professional gambler, but this is not allowed by the IRS for everyone who plays negative games and even for most APs.

Harry and Jean are both correct and indicate there is a long list of negative tax issues. I want to mention that W-2s do not reduce your Social Security benefits, but they can increase the taxes you may need to pay on your SS benefits. Only half of your SS benefits are taxable but only if you exceed a rather low income threshold.

If you are paying a Medicare premium you may end up paying a much higher premium if your AGI goes over $85,000. This negative consequence is not well known because it does not affect your taxes.

If you live in a state that does not allow you to itemize your losses you can really get whacked with a huge state tax. One high roller on this board found out the hard way.

If you intend to play a lot at higher denom you really must be aware of the tax and Medicare issues.

Chris

···

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

In Tax Help for Gamblers I have a long list of items that can be affected negatively when W-2Gs inflate your AGI. In the 1st edition that list is on pages 45-46. A newly-updated edition is coming out next month, both in eBook and hard copy form, but I don’t know the exact page # that will have that information. But it will be in the same chapter, “Filing Your Return,” which discusses at length this problem for many recreational gamblers.

--------------------------------
Jean $¢ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://jscott.lvablog.com/
.

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