Another Tax Question

Forum: General Discussion
Author: [General Discussion] Topic: Another Tax Question
canovsp PM canovsp
Joined: Dec 2009
Posts: 5720
 
canovsp
Participation Meter
Captain
Posted: 3/9/2012 4:40:03 PM
Which of you think gamblers should have to pay taxes on their winnings? And if you do, what percentage do you think should be paid?
canovsp PM canovsp
Joined: Dec 2009
Posts: 5720
 
canovsp
Participation Meter
Captain
Posted: 3/9/2012 4:42:05 PM
The reason I ask this is because I started another thread in the Political Forum yesterday and wanted to know what the people in the GD Forum thought?
thirdperson PM thirdperson
Joined: Feb 2005
Posts: 1640
 
thirdperson
Participation Meter
Veteran
Posted: 3/9/2012 5:42:06 PM
Answers depend on where you live.  In countries where gambling is legal, the same tax rules apply for business or self employment.  To qualify, taxable income must be high enough. 
Skipbone PM Skipbone
Joined: Nov 2009
Posts: 6254
 
Skipbone
Participation Meter
Captain
Posted: 3/10/2012 9:20:40 AM
already do...except it's called juice.
canovsp PM canovsp
Joined: Dec 2009
Posts: 5720
 
canovsp
Participation Meter
Captain
Posted: 3/10/2012 5:42:11 PM
QUOTE Originally Posted by Skipbone:

already do...except it's called juice.

I would rather pay juice to a bookie or casino then to Washington.
howzuck PM howzuck
Joined: Jul 2005
Posts: 3997
 
howzuck
Participation Meter
Veteran
Posted: 3/12/2012 12:50:34 PM
I am a CPA (and a math teacher as well) - in my opinion gambling should not be taxed simply because in the long run more than 90% of gamblers lose.  By forcing you to pay taxes on modest amounts you win in a tax year ($600 at the track if greater 299-1, $1,500 on slot machine jackpots, and $5,000 on poker winnings), it forces gamblers to go through hoops to put together the paperwork to deduct losses against them.  U.S. also doesn't allow carryback or carryforward of losses to prior or subsequent years, unlike most everything else (investment losses, charitable contributions, net operating losses, etc.)  If they must do it, how about a $10,000 threshold, or someone suggest some other way to tax?
vanzack PM vanzack
Joined: Nov 2001
Posts: 52545
 
vanzack
Participation Meter
Legend
Posted: 3/12/2012 1:04:42 PM

They problem with taxes - and believe me, I know just about everything there is to know about taxes and gambling in the US - is 2 things:

1.  The variability from calendar year to calendar year.  The arbitrary time frame of a calendar year is not ideal for gamblers.  Most businesses dont lose the same amount as they win from year to year - and this is terrible for overall tax liability.  This is reduced if you are a professional gambler and file a schedule C, but as a rec gambler - you get killed on this.

2.  The ridiculous notion of a "session".  The IRS expects you to list all of your winning sessions, and all of your losing sessions.  This is almost impossible.  What is a session?  A day?  A game?  A season?  It is vague and unreasonable.

I dont mind paying taxes.  I just wish they were more fair - and when I say fair - I just mean less arbitrary.

vanzack PM vanzack
Joined: Nov 2001
Posts: 52545
 
vanzack
Participation Meter
Legend
Posted: 3/12/2012 1:08:32 PM

Let me continue that thought....

If the average rec gambler filed the way the US govt requires you to, the following scenario is VERY likely:

1.  You break even for the year gambling.
2.  You win 250K, and you lose 250K.
3.  You get a W2 from your job for 60K.

The IRS expects you to list the 250K in winnings on line 21 (other income) on your 1040, and then deduct the 250K in losings on your itemized deductions.  The problem with this is that it is gives you an artificially ginormous AGI, and eliminates all of your standard deductions and other credits.  Essentially, it makes the guy above with an income of 60K increase his tax liability about 30%.

It is not written well, it is arbitrary.  Thats why IMO the IRS doesnt even try to enforce this.

howzuck PM howzuck
Joined: Jul 2005
Posts: 3997
 
howzuck
Participation Meter
Veteran
Posted: 3/13/2012 10:27:29 AM
Excellent answer, vanzack, there are other situations too, as a CPA, I have seen it enough. People less affluent who finally hit lottery or slot machines for 10K or 15K late in the year, don't have losing tickets or can't itemize deductions giving away thousands of dollars in taxes to federal, state and local governments.  We all know they are losers for years playing these games.  Also, you can't deduct expenses relating to gambling winnings (travel, etc.) unless you can show you are a professional gambler (this is EXTREMELY difficult).  I can go on and on.  How is this fair?
wvu06 PM wvu06
Joined: Apr 2009
Posts: 238
 
wvu06
Participation Meter
Prospect
Posted: 3/13/2012 11:05:33 AM
Thanks a lot for the responses vanzack and howzuck, very enlightening and helpful discussion here.
slamspurs PM slamspurs
Joined: Dec 2004
Posts: 4655
 
slamspurs
Participation Meter
Veteran
Posted: 3/13/2012 10:37:02 PM

It's bullshit. One of the reasons I'll likely quit gambling if they make it legal in the United States.

It's fucked up how you have to pay taxes on your winnings, but if you lose, you can't deduct anything. You can only deduct off winnings.

If you HAD to pay taxes on gambling winnings it so wouldn't be worth it. Would they tax it at a rate similar to short term capital gains like 25%.

So you've already gotta fight the 10% vig, then pay 25% of those winnings to the government.

So basically your $100 bet would yield $65. Not a winning proposition IMO.

It's only fair to tax if you can write off losses like in the stock market. Too bad that would be a lot of write-offs that the government wouldn't want, so it would never happen.

People would have to keep all their scratch lottery tickets for the year and all that, unreasonable.

howzuck PM howzuck
Joined: Jul 2005
Posts: 3997
 
howzuck
Participation Meter
Veteran
Posted: 3/14/2012 8:38:46 AM
You don't have to quit, slamspurs, I sometimes bet horse races with online books (esp during triple crown races), no taxes from offshore books, just make sure you don't deposit large payouts where IRS could see it. It may actually may online books look more appealing rather than less. But your points are valid. Maybe government will get it and tax only amounts over something like 10K or more and be more liberal in deducting losses and expenses. Current theory is if you win it's taxable income, if you lose it's (personal) entertainment expense, politicians just don't get it, probably because most of them don't gamble....
Forum: General Discussion
You have entered the forum as a GUEST. 
You must login/register to post or reply.