According to the Wall Street Journal, under the Obama health care plan there will be a new 3.8 % tax, on AGI ( investment Income ) over $200,000. Does anybody know if Gambling Winnings are considered by the IRS to be Investment Income ?
regards...Tom
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tomflush wrote:
According to the Wall Street Journal, under the Obama health care
plan there will be a new 3.8 % tax, on AGI ( investment Income ) over
$200,000. Does anybody know if Gambling Winnings are considered by
the IRS to be Investment Income ?
regards...Tom
Having given this just a snap look, I can answer "No. However, Gambling Winnings could cause Investment Income to attract this tax in some cases where it otherwise would be exempt."
The deal on the tax, from a quick read, is that modified AGI in excess of $200K ($250K joint) is taxed, but only to the extend of reported investment income.
For example, if an individual files with mAGI $230K and Investment Income is $10K, then $10K is taxed. for mAGI $230K, Investment Income $50K, then $30K is taxed.
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So, consider the special case where someone's mAGI is > $200K, but the portion greater than $200K is less than reported investment income, then the investment income would not be fully taxed.
Take this person and add gaming activity such that reported gross winnings gooe up AGI (even if there's no net gaming winnings) and more of their investment income will attract tax as a consequence.
So, bottom line, gaming activity is unlikely to increase this tax, but in the unique case of someone who marginally exceeds the AGI threshold for the tax, there is added exposure. (Note there's the equivalent exposure for someone who's AGI is below the threshold before gross winnings, who is bumped over by reported winnings and as a consequence now faces tax on investment income.)
I have been searching for an answer to this question with no results. The additional 3.8% tax will be a killer for vp players who collect a lot of W2G forms. For those of us over 65 and live in State that does not allow loss decuctions for gambling losses I think we need to reevaluate our vp play.
Illinois will probably raise the tax rate to 4 or 4.5%. Each $4,000 W2G would cost $8o to $100 in tax.
Medicare doubles the deduction for insurance if the AGI due to gambling losses exceeds a certain amount.
I lost my tax credit for buying a car in 2009 due to W2G totals.
The new tax law (s) appera to have many tax penalties for gamblers who collect a lot of W2G forms.
I think in 2011 I will be lookling for $.25 games with no jackpot over $1,200.
Mike
To: vpFREE@yahoogroups.com
From: tomflush@nyc.rr.com
Date: Sat, 18 Sep 2010 11:23:19 -0400
Subject: [vpFREE] xvp- question about new taxAccording to the Wall Street Journal, under the Obama health care plan there will be a new 3.8 % tax, on AGI ( investment Income ) over $200,000. Does anybody know if Gambling Winnings are considered by the IRS to be Investment Income ?
regards...Tom[Non-text portions of this message have been removed]
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The 3.8% tax begins in the 2013 tax year.
Cogno
-----Original Message-----
From: vpFREE@yahoogroups.com [mailto:vpF…@…com] On Behalf Of
MIKE LOONEY
Sent: Monday, September 20, 2010 10:18 AM
To: vpfree@yahoogroups.com
Subject: RE: [vpFREE] xvp- question about new tax
I have been searching for an answer to this question with no results. The
additional 3.8% tax will be a killer for vp players who collect a lot of W2G
forms. For those of us over 65 and live in State that does not allow loss
decuctions for gambling losses I think we need to reevaluate our vp play.
Illinois will probably raise the tax rate to 4 or 4.5%. Each $4,000 W2G
would cost $8o to $100 in tax.
Medicare doubles the deduction for insurance if the AGI due to gambling
losses exceeds a certain amount.
I lost my tax credit for buying a car in 2009 due to W2G totals.
The new tax law (s) appera to have many tax penalties for gamblers who
collect a lot of W2G forms.
I think in 2011 I will be lookling for $.25 games with no jackpot over
$1,200.
Mike
To: vpFREE@yahoogroups.com
From: tomflush@nyc.rr.com
Date: Sat, 18 Sep 2010 11:23:19 -0400
Subject: [vpFREE] xvp- question about new taxAccording to the Wall Street Journal, under the Obama health care plan
there will be a new 3.8 % tax, on AGI ( investment Income ) over $200,000.
Does anybody know if Gambling Winnings are considered by the IRS to be
Investment Income ?
regards...Tom
[Non-text portions of this message have been removed]
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vpFREE Links: http://members.cox.net/vpfree/Links.htm
Yahoo! Groups Links
[Non-text portions of this message have been removed]
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vpFREE Links: http://members.cox.net/vpfree/Links.htm
Yahoo! Groups Links
MIKE LOONEY wrote:
I have been searching for an answer to this question with no
results. The additional 3.8% tax will be a killer for vp players
who collect a lot of W2G forms. For those of us over 65 and live
in State that does not allow loss decuctions for gambling losses I
think we need to reevaluate our vp play.
Just to be clear, most likely have little (if any) added exposure to this tax as a consequence of W-2G reporting.
The tax is on investment income, and applies only to those with mAGI > $200K.
The added tax exposure as a consequence of W-2G reporting primarily occurs when your mAGI ** before reported wins **
is under $200K, but reported wins take you above, exposing investment income to the tax when otherwise it would have escaped. mAGI in excess of $200K attracts this tax, but only to the extent of reported investment income.
So, for example:
Your have mAGI (before reported wins) of $180K, $40K in w-2G's, and $12K in investment income. $12K would be taxed under the new tax as a consequence of the win reporting.
mAGI of $190K, $14K in w-2G's, and $10K in investment income. $4K would be taxed under the new tax as a consequence of the win reporting.
Again, only those whose mAGI before reported wins is under $200K face added exposure from reported wins, and only to the extent that those wins increase mAGI above $200K. Further, the tax is against reported investment income, not the reported wins.
Thanks - had me worried!
To: vpFREE@yahoogroups.com
From: harry.porter@verizon.net
Date: Mon, 20 Sep 2010 18:58:31 +0000
Subject: [vpFREE] Re: xvp- question about new taxMIKE LOONEY wrote:
> I have been searching for an answer to this question with no
> results. The additional 3.8% tax will be a killer for vp players
> who collect a lot of W2G forms. For those of us over 65 and live
> in State that does not allow loss decuctions for gambling losses I
> think we need to reevaluate our vp play.Just to be clear, most likely have little (if any) added exposure to this tax as a consequence of W-2G reporting.
The tax is on investment income, and applies only to those with mAGI > $200K.
The added tax exposure as a consequence of W-2G reporting primarily occurs when your mAGI ** before reported wins **
is under $200K, but reported wins take you above, exposing investment income to the tax when otherwise it would have escaped. mAGI in excess of $200K attracts this tax, but only to the extent of reported investment income.So, for example:
Your have mAGI (before reported wins) of $180K, $40K in w-2G's, and $12K in investment income. $12K would be taxed under the new tax as a consequence of the win reporting.
mAGI of $190K, $14K in w-2G's, and $10K in investment income. $4K would be taxed under the new tax as a consequence of the win reporting.
Again, only those whose mAGI before reported wins is under $200K face added exposure from reported wins, and only to the extent that those wins increase mAGI above $200K. Further, the tax is against reported investment income, not the reported wins.
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