2 questions:
if I bet $2k (= to 1000 $2 bets) on a horse, and he pays $10 per bet, do I have to pay tax on the full 10 grand won, or on just the profit of 8k?
If I bet $2k “across the board” on a horse, placing all 3 bets on one ticket (win/place/show X $2k per bet=total $6k bet) and the horse comes in third and pays $5.00 (meaning I win 5k), would I have to pay tax on that 5grand? That sounds like a scary proposition if you ask me: come out a grand behind and still have to pay tax on it.
This site pretty much explains the process:
http://www.bankrate.com/brm/itax/tips/20010131a.asp
So, yeah, you can end up paying taxes even though in the “long run” you lost money. I had a big winner and didn’t have enough deductions at the end of the year to make itemizing feasible. So I ended up paying taxes on my winner but couldn’t write off my losses against it. Aren’t the tax laws wonderful? In short, Uncle Sam doesn’t want anyone to get rich quickly, if you get a windfall be prepared to give a large chuck of it to the IRS.
One time winners of large prizes get bit hard.
If you spend a lot of money gambling, then you should record all your bets, and keep your tickets. If you don’t, then even when you loose over the long run, you have to pay taxes on your winnings, even though you were a looser by the end of the year!
The total amount of your losses for all types of legal gambling can be deducted from the total amount of income from gambling, and you can also deduct admissions, fees, and meals (if you can only buy from the place you are betting). Travel and such are only deductible if your gambling is professional, as opposed to recreational.
Tris
Even if you do keep track of your losses, they need to be reported on Schedule A of your 1040. Now, if you don’t have enough TOTAL deductions on Schedule A to make your TOTAL Schedule A deductions larger than your Standard deduction, then you get screwed. In that case, your loses fall through the cracks and you can’t deduct them against your winnings, that’s what happened to me. Don’t even THINK about declaring yourself as a professional gambler, the restrictions and qualifications are so tedious I can’t think of anyone who would qualify. And even it you did qualify as a profession gambler, they would require rigorous record keeping (and a gob more IRS forms).
Parimutuel bets (the kind you make in the USA if you’re betting at a track or betprovider)incur NO tax if the bet doesn’t pay 300 for 1 or better-whether you bet 2 or a zillion.
Only those tickets that returned that odds bet or more (usually a pk 6 or trifecta) for 2 dollars and returned over 5k will be taxed,Between 600 and that 5k,you must sign a 1099? (forget the number) and that’s reported to the IRS as income.
To get around this most tri players,or other bets that take the $1 minimum, play $1 bets that can all be recorded on 1 ticket,a lot of times.If that $2 price was $600 your $1 ticket is only worth $300,ergo,no need to sign.
IOW,up to a $1199 return for 2 will go unreported if played as $1 tickets.
One note for the higher rollers.There’s also a form you must sign when wagering over 10k.In Vegas dealers or tellers are supposed to note multiple tickets that add up to that 10k number and ask for id when you hit that number.And they don’t routinely keep track of the ticket to see if it won,but if the IRS shows up they can bring up the result of it from back days reports.
SUPPOSED to.This doesn’t mean it always happens,but they’ll incur the rath of the gaming commision and the IRS if they’re lax in their procedures.More than one casino has been fined for that unreported item.
waitaminutewaitaminutewaitaminutewaitaminute.
I need clarification here.
(please keep in mind that at this time I am not yet old enough to legally gamble. I’ve never even been to a track. I’ve got 3 months yet, so I’m preparing.)
Does this mean that if I bet 2 grand and get 6 grand back the track doesn’t make me fill out a tax slip? I get to make 4 grand basically tax free? This doesn’t sound right. Are you sure?
If the fact is that they DON’T take taxes out on the spot, but they DO issue you a 1099, then at the end of the year you will have to declare that 1099 money as income and pay taxes then. I remember I hit a Trifecta once and won about $2K and they gave me some kind of IRS form, I can’t remember if they took taxes out on the spot or not. But at the end of the year I did have to claim that winnings as income because I had to signed the IRS form when I won it.
Hayduke-that’s what I’m saying.Your bet didn’t reach that 300 for 1 threshold.In CCs Case it did (2k for $2),but as he noted he didn’t pay tax on the spot (if that ticket was bet in the last abt.10yrs.when they changed the tax takeout structure).
Again over $600 on that ODDS bet you’ll sign,and over 5k they’ll rake the 28% (was don’t think that’s changed).
If they made you sign a form anytime your return was over $5k on a $200 ticket,eg,they’d need to hire extra help just to process those tickets.Not to mention the uproar from the bettors.Many bettors wager that and more in the WPS hole,areas where you’ll only in rare cases get that 300 for 1 return.
Think of this.In racing circles there’s bettors called “bridgejumpers” that wager 50 to 100k or more on "sure things"to show,knowing the track must pay a minmum of 5%.Only a fool would wager that much if his 52.5 or 105k ticket were taxed at 28%,or any amount.
Come to think of it only a fool wagers on “sure things” 