If I go to Las Vegas next week and immediately hit a slot machine jackpot and win $100,000, I have to pay income tax on that $100,000. But suppose I then step over to a craps table and lose the $100,000. Do I still have to pay taxes on it?
Generally, no. Gambling losses are deductible to the extent of gambling winnings.
So:
Win $100,000 and lose $100,00 = net 0.
Win $100,000 and lose $200,00 = net 0 (not a -$100,000).
Win $200,000 and lose $100,00 = net $100,000.
Bricker is correct but the way that it would work is as follows. You’d hit the $100k jackpot but you’d only get a check for around $65k with the rest going to the IRS. You would get a 1099 from the casino at the beginning of the next year to use for your taxes. Any gambling losses could be written off against the $100k when you filed your taxes and you would get some of what was taken away as a refund. You’d better be able to back up those losses if you get audited so keep your receipts.
How do you get a receipt at a craps table?
A good way to go about this is to get a player’s card from the casino, and give it to the dealer when you buy in. In addition to ensuring that your play is rated for comps (free stuff), the casino will also keep track of your money bet, won, and lost, and will provide you with a record of this upon request if you chance upon a reportable win (in Las Vegas, $1,200 or more).
Jesus.
In the UK there is no tax on any winnings from any form of gambling I know of. The Inland Revenue has always run shy of this policy because if it taxed winnings it would have to allow losses.
Losses always exceed profits. This keeps casinos and bookmakers in business.
Naturally, as business enterprises, said casinos and bookmakers pay tax on their profits in the normal way.
Note that in Vegas, if you had won that $100K at the craps table, it would be tax-free.
How so? It’s income. It’s taxed.
I suppose it might not have tax withheld from it – the IRS only takes its cut with a big payoff, so if you won $1000 ten times at craps, then you’d have $100,000 in cash. But you still owe taxes on it.
Rephrase: You don’t have to report it at all. Taxable it is, but since you don’t have to report table winnings, most people don’t.
Yep, the only time I’ve seen them confiscate part of a player’s winnings was on a slot jackpot. The reason is, you might have started with $100,000 at the crap table, or already be down $100,000, they don’t keep track of it. On a slot, they know how much it took to win the jackpot.
Yes, but as has been said, you can’t write off any losses in excess of the winnings.
Well, legally you do have to report it but since the IRS has no way to find out you probably won’t get caught.
You couldn’t be more wrong.
“All gambling winnings must be reported irrespective as to whether any portion thereof is subject to withholding.”
“Where there is no cop, there is no speed limit.” If the casino doesn’t make me fill out a form at the table, then what the IRS desires is irrelevant. They can’t prove I finished the session ahead, so screw them.
Ever been through an audit?
That doesn’t change the fact that you’re giving factually incorrect answers in GQ.
No, the theory is that the winnings are taxable. The fact is that the IRS doesn’t even try to collect on table winnings. There is a large difference between what the law says and what really happens.
I don’t care to debate what you think is practical or not. You said:
Which is wrong on two counts. It is taxable income and the law does not exempt Las Vegas. Then you say:
In which you admit one of your errors and then twice throw in the same erroneous information. The IRS says you have to report it. Whether you do or not is irrelevant to the OP and clearly not what you said in either post.
They pay you with a check, right? So how do you account for that extra $100,000 sitting around when you get audited? Unless you get it in cash and leave it in a sock drawer, it’s pretty much findable in an audit, isn’t it?
Sorry, I somehow missed Bricker’s earlier comment.
I now see the financial advantage for the IRS.