Say you’re on a TV show quiz game show like Millionaire. You get to a certain level of winnings and you get to keep it if you leave the show. You choose to gamble and continue. You loose. If you hadn’t gambled you would have kept the higher dollar amount. How does the IRS look at this?
Different view;
You’re in Vegas. You win a several thousand playing black-jack or on the slots.
You then gamble that money away and have nothing to show for it. You, technically, were in posession of a higher dollar amount at some point in time.
How are these scenarios different than if you had kept the higher earnings and then, say, got robbed shortly afterwards. Or invested in stocks just before a big crash.
At what point in your play do you have to claim the money? Or, how long do you have to posses money before it’s considered earnings?
The IRS is interested in the amount you are actually paid. Technically, they are not winnings until you collect them. And if you refuse to accept a prize you have won, it is not reported as income.
At the end of the year, you can balance losses and wins. (Following to some rather complicated rules.) However, if you hit the million dollar slot machine, or win a Corvette on Wheel of Fortune, the gal from the IRS will meet you backstage to explain that they want a piece of it right away.
I know a couple of guys who were part of a big Lotto pool win, and every year they get a Lotto check for $1500. Both these guys gather losing tickets from lottery dealers’ trash so they can document losses to balance that yearly check. Not exactly ethical, but it works.
This applies to the value of a non-monetary prize, as well.
I won a vacation on a game show as a second place consolation prize, and had to pay both federal and California state tax on the value of the trip, which was set at about $5000.
It still meant I spent a week on the beach in Puerto Rico, with my wife, at a five star resort, for very little money.
This applies to the value of a non-monetary prize, as well.
I won a vacation on a game show as a second place consolation prize, and had to pay both federal and California state tax on the value of the trip, which was set at about $5000.
It still meant I spent a week on the beach in Puerto Rico, with my wife, at a five star resort, for very little money.
It may not work every time. If you try to submit a sackful of losing tickets, the IRS is likely to say “Great - but where are the winning tickets?” If you try to explain that you managed to buy 2000 losers with no small winners, they will tell you that the chances of this are so low that they are not interested in your story.
Ethics may or may not enter into the “gathering losing tickets” scenario; in plain fact it’s illegal. They are representing that they spent x dollars on losing lottery tickets and they did not. That is called fraud.
That said, I doubt the IRS would ask them to show winning tickets because they would have turned in winning tickets for the cash prize.
Not neccesarily, all you need are tickets from high stakes, low probability games like the megabucks or other big state lotteries. I don’t know where you would get that many losing tickets for those types of games but that would work easily. Chances are, a person is not going to win one of those games with 2000 or 100,000 tickets.
It wouldn’t work well for scatch off tickets because they do pay out a large number of small amounts.
Dunno about 500 but here in CT, at Foxwoods, they have “beat the taxes” night at Bingo, where the jackpot for a standard game is $1199.00, 1200 being the threshhold after which you have to report your earnings.
The $1200 threshold applies in Vegas, too. The wife and I had a very good weekend this summer, but made sure to cash in our chips seperately, cuz otherwise we would have had to fill out paperwork.
How do the casinos keep track of what you win? You change $2000 for chips, win $10, and cash out, do you get flagged? You change $10 for chips, win $2000, so how do they know the difference? Note, I’m assuming you go from table to table and machine to machine.
Right; the most typical time that you’ll get pegged is when you win it all in one shot - payouts over a certain amount generally require an attendant to fill out a form of some sort that you take to the cashier, which lets them know when you’ve won a taxable jackpot.
