Marc, the IRS definition of income is quite broad, and as others say, this is not a gray area or even a judgment call. Trying to claim it is a gift is foolish and will accepted by the IRS. Of course, if they don't audit you, it may never be discovered. Even if they audit you, it may never be discovered. If your 1040 income is below 100k, you are probably not at much risk for an audit. Still, it's one less thing to worry about if you just report it.
my only comment would be:
bonus money is not equivalent to cash. It requires a rollover, which inherently reduces its value. You could make an argument that the "bonus" is the same as reduced juice, or a coupon at the supermarket. It is worthless unless used in the process of a purchase (in this case a bet, really multiple bets).
With that said, I am far from a tax expert, and I would definitely consult one if you think this is a big deal. However, I imagine the best way to look at gambling income is to just look at the simple difference between your buy in and your take out, and ignore if it is a bonus, cashback rebate, or winnings.
bonus money is not equivalent to cash. It requires a rollover, which inherently reduces its value. You could make an argument that the "bonus" is the same as reduced juice, or a coupon at the supermarket. It is worthless unless used in the process of a purchase (in this case a bet, really multiple bets).
With that said, I am far from a tax expert, and I would definitely consult one if you think this is a big deal. However, I imagine the best way to look at gambling income is to just look at the simple difference between your buy in and your take out, and ignore if it is a bonus, cashback rebate, or winnings.
I can't believe how much discussion this is getting. It really is simple:
($$$ withdrawn + $$$ in current balances) - $$$ deposited = Earned Income.
That's, it. Now, from that you can write off tickets to games, DTV packages, your computer, magazine subscriptions, etc. But as far as bonuses go just forget about them and use this simple forumla.
($$$ withdrawn + $$$ in current balances) - $$$ deposited = Earned Income.
That's, it. Now, from that you can write off tickets to games, DTV packages, your computer, magazine subscriptions, etc. But as far as bonuses go just forget about them and use this simple forumla.
Nick,
I think the formula should be money withdrawn - money deposited.
My current account balances I value at zero since I don't know if the books will actually pay me. Over the course of time it should be a wash. But it saves you in the evnt you are doing well in football only to get stiffed after the superbowl.
Using your system, if you did really well thru dec 03 and then got stiffed at the Pats won, you would show a large gambling win in 2003 and then a large loss in 04. Using my method you wouldn't show much of a win in 2003 and wouldn't report the loss in 04.
I may be doing it wrong, but in my mind you hvaen't won until you've been piad.
I think the formula should be money withdrawn - money deposited.
My current account balances I value at zero since I don't know if the books will actually pay me. Over the course of time it should be a wash. But it saves you in the evnt you are doing well in football only to get stiffed after the superbowl.
Using your system, if you did really well thru dec 03 and then got stiffed at the Pats won, you would show a large gambling win in 2003 and then a large loss in 04. Using my method you wouldn't show much of a win in 2003 and wouldn't report the loss in 04.
I may be doing it wrong, but in my mind you hvaen't won until you've been piad.
Personally I don't report any winnings I've had, for a number of reasons....
So if I make money this year and then lose money next year, are they going to allow me to deduct my losses next year? No.
All the illegality behind offshore betting doesn't make me want to open up to some pinheaded-by-the-book government agent...why would I come clean about something that in all likelihood would bring the shadow of the law on me?
This government that we live under pisses away way too much money for me to actually feel that I need to give them more tax revenue to flush away....when they start spending responsibly maybe I'll think it's worth it to pay taxes on winnings, provided I can deduct on years that I lose money....
All this sneaking around with transactions, and banking laws and such....why should I freely give of myself when they make using the offshore system such a subversive, covert and clandestine operation? I'm supposed to sneak around to earn this money and then freely give them some....???? Absurd.
If they were serious about getting paid thier share of tax dollars they'd spend the majority of the time going after all the big business money that goes into all these tax shelters that are being dreamed up by accounting firms.....we're talking about BILLIONS OF DOLLARS HERE.....not just a few $$$ from some small time gambler....purely hypocritical not to clean up all the tax shelter money first.....get the big fish and then go after the minnows....make better use of that investigating money....
When all those conditions are met, maybe I'll think about paying taxes on winnings......easy to say I will have a long wait.....
So if I make money this year and then lose money next year, are they going to allow me to deduct my losses next year? No.
All the illegality behind offshore betting doesn't make me want to open up to some pinheaded-by-the-book government agent...why would I come clean about something that in all likelihood would bring the shadow of the law on me?
This government that we live under pisses away way too much money for me to actually feel that I need to give them more tax revenue to flush away....when they start spending responsibly maybe I'll think it's worth it to pay taxes on winnings, provided I can deduct on years that I lose money....
All this sneaking around with transactions, and banking laws and such....why should I freely give of myself when they make using the offshore system such a subversive, covert and clandestine operation? I'm supposed to sneak around to earn this money and then freely give them some....???? Absurd.
If they were serious about getting paid thier share of tax dollars they'd spend the majority of the time going after all the big business money that goes into all these tax shelters that are being dreamed up by accounting firms.....we're talking about BILLIONS OF DOLLARS HERE.....not just a few $$$ from some small time gambler....purely hypocritical not to clean up all the tax shelter money first.....get the big fish and then go after the minnows....make better use of that investigating money....
When all those conditions are met, maybe I'll think about paying taxes on winnings......easy to say I will have a long wait.....
People can make whatever excuse they want for cheating my beloved Unites States of America out of the money they are rightfully owed. I am just telling you how it is supposed to be reported. If you choose to report it your own way or not report it at all, do so at your own risk. All people are dishonest by nature on certain things, especially things they think they can get away with. I guess it just depends on your level of dishonesty.
The best response to Marco is that by being a resident and citizen of this country, you are giving your word via an implied contract to follow its laws. Every time you break a law (a seemingly daily occurance for yours truly) you are breaking that contract and, therefore, your word. Laws aren't written for you to follow "if you agree with them". I'm not trying to act high and mighty because, as I said, I break the law frequently by speeding, gambling, etc. I just find is stupid when people justify their tax cheating by claiming that the tax law is unfair.
The best response to Marco is that by being a resident and citizen of this country, you are giving your word via an implied contract to follow its laws. Every time you break a law (a seemingly daily occurance for yours truly) you are breaking that contract and, therefore, your word. Laws aren't written for you to follow "if you agree with them". I'm not trying to act high and mighty because, as I said, I break the law frequently by speeding, gambling, etc. I just find is stupid when people justify their tax cheating by claiming that the tax law is unfair.
marc,
Almost missed your post. Your account balances count as your money. If you don't want to report them that way that's your business, but I am just telling you the tax law. It is very similar to owning stock and having to pay capital gains tax.
Think about it. If what you wrote was the correct way to report taxes, then nobody would ever have to report a cent. They could just keep their accounts funded with winnings indefinitely.
Almost missed your post. Your account balances count as your money. If you don't want to report them that way that's your business, but I am just telling you the tax law. It is very similar to owning stock and having to pay capital gains tax.
Think about it. If what you wrote was the correct way to report taxes, then nobody would ever have to report a cent. They could just keep their accounts funded with winnings indefinitely.
Nick,
Using my method, you could push your tax burden off for a year or two, but eventually you will want to cash out, and at that point, you will have to pay your taxes.
Using stock as an example. A not uncommon way some will push off thier taxes is by finding astock that pays a hefty dividend and where the record date is in one calendar year but the actual paydate is in the next year. FOr instance you find a stock that pays $1 dividend, and the record date is in december and pays in January. You buy the stock just before the e date. On the ex date the stock drops a dollar and you sell the stock and claim the $1 loss. Than in January you get the $1 but don't have to pay taxes on it for another year.
Using my method, you could push your tax burden off for a year or two, but eventually you will want to cash out, and at that point, you will have to pay your taxes.
Using stock as an example. A not uncommon way some will push off thier taxes is by finding astock that pays a hefty dividend and where the record date is in one calendar year but the actual paydate is in the next year. FOr instance you find a stock that pays $1 dividend, and the record date is in december and pays in January. You buy the stock just before the e date. On the ex date the stock drops a dollar and you sell the stock and claim the $1 loss. Than in January you get the $1 but don't have to pay taxes on it for another year.
marc,
What you are describing is paying an incorrect amount of tax. Now, obviously if you don't get caught (chances are less than minimal) then it doesn't matter to most people. I am just saying that according to the letter of the law the way to pay taxes is to include the balances in your account.
Getting back to the probability of getting caught, it is extremely small. I don't imagine that sportsbooks would cooperate with the IRS if they audited you and requested past balance information. Realistically you are going to be O.K. reporting it in the way you described. It just isn't the right way according to the tax law, that's all.
What you are describing is paying an incorrect amount of tax. Now, obviously if you don't get caught (chances are less than minimal) then it doesn't matter to most people. I am just saying that according to the letter of the law the way to pay taxes is to include the balances in your account.
Getting back to the probability of getting caught, it is extremely small. I don't imagine that sportsbooks would cooperate with the IRS if they audited you and requested past balance information. Realistically you are going to be O.K. reporting it in the way you described. It just isn't the right way according to the tax law, that's all.
Nick....when you said "I just find it stupid when people justify thier tax cheating by claiming that the tax law is unfair".....
If someone feels that the tax law is unfair I don't expect them or anyone else for that matter to just do what the letter of the law states...I expect the individual to do what they feel is right....
If you believe the general numbers that about 95% of gamblers lose in the long run....(I wouldn't declare myself to be in the other 5%).....then why would the IRS allow gamblers to deduct gambling losses in the majority of years that they file taxes, knowing very well that they are going to lose tax revenue year after year from the 95% that claim legitimate losses....
So if I claim my winnings one year and then three or four years in a row claim gambling losses do you think the IRS is going to stand for it?......NO.....
If I PAY taxes on winnings then it is only fair that I be able to DEDUCT LOSSES in losing years....I don't see me being able to do that......
Just because countries have laws doesn't necessarily mean they are right....whether you are a citizen or not....
I only have to think back to a time in Germany.....they had citizens that had a duty to follow the law....a time when Hitler ran the country....one day he decides to invade Poland...then he proceeded to slaughter 6 million jews, and turn most of Europe into a burned out graveyard....German citizens fought for the "fatherland"....they were patriotic towards thier country.....thier laws required able bodied men to fight a war that was unjustly started by some crazed dictator......did that make them right just because they were following the letter of the law? Uh, no.
When the United States government starts taking care of the real issues this country faces, and starts spending it's collected tax dollars on the citizens of the United States, then I may feel inclined to pay more taxes....
We lost over 50,000 men in Korea and about an equal number of men in Vietnam, fighting OTHER countries civil wars....how many Koreans or Vietnamese died at Gettysburg, Bull Run, or other battlefields of OUR civil war....could it be they were minding thier own business and taking care of thier own country?
We piss away a lot of money being the police force and military for the whole goddamn globe....everytime something happens on this planet we have to pick a side and get involved.....When is our government going to get involved with this country?
If someone feels that the tax law is unfair I don't expect them or anyone else for that matter to just do what the letter of the law states...I expect the individual to do what they feel is right....
If you believe the general numbers that about 95% of gamblers lose in the long run....(I wouldn't declare myself to be in the other 5%).....then why would the IRS allow gamblers to deduct gambling losses in the majority of years that they file taxes, knowing very well that they are going to lose tax revenue year after year from the 95% that claim legitimate losses....
So if I claim my winnings one year and then three or four years in a row claim gambling losses do you think the IRS is going to stand for it?......NO.....
If I PAY taxes on winnings then it is only fair that I be able to DEDUCT LOSSES in losing years....I don't see me being able to do that......
Just because countries have laws doesn't necessarily mean they are right....whether you are a citizen or not....
I only have to think back to a time in Germany.....they had citizens that had a duty to follow the law....a time when Hitler ran the country....one day he decides to invade Poland...then he proceeded to slaughter 6 million jews, and turn most of Europe into a burned out graveyard....German citizens fought for the "fatherland"....they were patriotic towards thier country.....thier laws required able bodied men to fight a war that was unjustly started by some crazed dictator......did that make them right just because they were following the letter of the law? Uh, no.
When the United States government starts taking care of the real issues this country faces, and starts spending it's collected tax dollars on the citizens of the United States, then I may feel inclined to pay more taxes....
We lost over 50,000 men in Korea and about an equal number of men in Vietnam, fighting OTHER countries civil wars....how many Koreans or Vietnamese died at Gettysburg, Bull Run, or other battlefields of OUR civil war....could it be they were minding thier own business and taking care of thier own country?
We piss away a lot of money being the police force and military for the whole goddamn globe....everytime something happens on this planet we have to pick a side and get involved.....When is our government going to get involved with this country?
Nick,
I have no doubt that you and most everybody have amuch better understanding of the tax law than I. But there is something I don't understand. When you purchase chips in vegas. Those chips have no monetary value outside the casino. So in theory if you purchase $100 worth of chips, since the chips have no value, you essentially have a $100 loss, until you redeem your chips.
To take this to the extreeme suppose on dec 31st I go mirage and purchase $10,000 worth of chips. And I don't redeem them unitl Jan 1st. Can't I claim that I lost on the 31st and made it back on the 1st. Otherwise you have to say that the casino chips do have monetary value.
And the way I veiw my sportsbooks accounts is that the balances shown are just chips, and until I cash them in, they have no value.
I have no doubt that you and most everybody have amuch better understanding of the tax law than I. But there is something I don't understand. When you purchase chips in vegas. Those chips have no monetary value outside the casino. So in theory if you purchase $100 worth of chips, since the chips have no value, you essentially have a $100 loss, until you redeem your chips.
To take this to the extreeme suppose on dec 31st I go mirage and purchase $10,000 worth of chips. And I don't redeem them unitl Jan 1st. Can't I claim that I lost on the 31st and made it back on the 1st. Otherwise you have to say that the casino chips do have monetary value.
And the way I veiw my sportsbooks accounts is that the balances shown are just chips, and until I cash them in, they have no value.
Marc, that's not the way it works at all. Exchanging cash for chips is not a loss!! They are "money's worth".
Also, under your theory you would be making a gift to the casino since you received something worth 0 in exchange for your money.
The IRS has rules and regulations which are supplemented/interpreted by court cases, etc. Regardless of whether you think it's "right" or "fair", the rules are what they are. Either follow them or not, that's up to you, but be prepared to accept the consequences if your activities ever come to light because these rationalizations will not be accepted.
Also, under your theory you would be making a gift to the casino since you received something worth 0 in exchange for your money.
The IRS has rules and regulations which are supplemented/interpreted by court cases, etc. Regardless of whether you think it's "right" or "fair", the rules are what they are. Either follow them or not, that's up to you, but be prepared to accept the consequences if your activities ever come to light because these rationalizations will not be accepted.
