Online Casinos, Gambling, Poker and Sports Betting Magazine

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Turn Your Tax Returns Into A Bonus

Winning wagers of $3000 or more with legal Sportsbooks and at racetracks are subject to a 28% withholding tax. The only way to get this tax back is to include details of any losses on your tax return. Schedule A, if you have a job, or Schedule C if you have registered yourself as a business. You can give yourself a cash-flow advantage and avoid suffering deductions at source by striking several smaller stakes bets rather than one single bet if you’re trying to win over $3000 in total on straight win bets apart from pick-sixes and long-priced parlays.

If you’ve consistently made your gambling pay, it’s a smart move to put you’re gambling on a professional footing and keep records of all your winnings and losses. If you are confident of making considerable long-term profits you might want to give up your day job and try to earn a your living as a full-time gambler. If so, take time out to register yourself as a professional with the IRS.

The advantage of registering as a professional gambler lies in the ability to deduct legitimate expenses like travel and entry fees from winning profits. Registration fees vary from state to state, but all your profits will be taxable at self-employed rates.

The IRS’ Schedule A 1040 form, line 27 allows for gamblers, to make an entry of their losses. Any losses claimed on this line need to be backed up with a simple itemized schedule giving comprehensive details of bets struck. It is essential to keep files of all losing tickets and cross-reference them to the record. Your betting record should include all bets whether or not they are supported by a W-2G form for bets winning over $3000.

Both professionals, registered as entities, and employed gamblers can be subjected to IRS audit. It is difficult to maintain creditably and avoid being further penalised, especially without proof of stakes, the event or game bet on, where, when and how much was won or lost. Remember that allowable losses are restricted to a maximum of the amount of winnings in a single tax year, irrespective of your declaration.

Gambling, and accounting, demand you keep your head clear and stay free of time consuming and stressful problems, so be smart and ensure your money management records don’t just meet your needs, but also the IRS’, to whom you’ll submit your tax returns. The stress of dealing with problems will impair your judgement and can put you on tilt, turning you into a big-time loser.

In California several professional gamblers have been subjected to investigations, some of which have resulted in jail sentences for tax fraud. The IRS is wise to the trick of being presented with other player’s discarded losing tickets collected at racetracks and subjects suspect itemization records to extensive audit tests. Try to keep your bets at a consistent level of staking. This not only means that you get the full benefit of winning long shots, but will minimise a tax auditor’s attention on any single wager and portray your accounts in a more positive light. Online players should keep highlighted bank and credit card statements supporting gambling transactions.

Keeping records clean and avoiding the temptation to falsify losses makes sense. Potentially, your records could save you professional fees for specialist attorneys and a potential jail sentence. One former California based professional gambler described his tax problems as “A living nightmare that triggered a whole heap of trouble that cost me a life-time’s hard work”. On reflection he believes a meticulous approach to record keeping, using a tax specialist and not ignoring good advice might have saved him several years worth of worry and a divorce.
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