IRS begins an audit on you!!

theswami · Sep 16, 2003

Have any of you guys been subject to an IRS audit? If so, do they investigate a specific item on your return or ALL your records? Is it normal behavior to have them examine every transaction in your bank account?

To the original question, I would probably go the route of the General and say nothing. Where he and I disagree is that I believe that the IRS would consider this income UNLESS YOU CAN PROVE THAT IT IS NOT or you can prove that it is already included as income somewhere else on your return.

I would pay the tax and hope that the IRS didn't report me to the FBI for suspicious activity. That would create all sorts of problems.

oldmantime · Sep 16, 2003

Don't you guys use accountants for doing your taxes? They know the IRS laws.
As for worring about "suspicious activity", just try not reporting your income from gambling and getting caught-- I don't think you any longer will be worring about "suspicious activity". The case will be cut and dried.
Am I wrong -if so explain it.

skirmish · Sep 16, 2003

These clowns are going to be real busy if they intend to look into everyone making numerous offshore transactions .

I would imagine that they will be looking for reasonably large sums and not the average players debits or credits.

Fishhead · Sep 16, 2003

I was audited 16 years ago and the agent will want to know EVERY BANK TRANSACTION you made and how you got that money. I have yet to hear what I consider a good answer.

oldmantime · Sep 16, 2003

Ask the General Strut, But it's not Rocket Science.
You had deposited from Neteller into your checking acct. winnings on Day a,b ,c,d,e,and so forth. You deposit into Neteeller to play so much on Days X Y Z, etc.

Hell if it's more that--ask the Agent to explain. But I would report winning and losses to your accountant. (I see NO CHOICE with a Paper TRAIL and most of us have that.When you report earning from an emplyers--the IRS doesn't call and ask you "Now exactly what were your duties at Company A"?

TheGeneral+ · Sep 16, 2003

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> I was audited 16 years ago and the agent will want to know EVERY BANK TRANSACTION you made and how you got that money. <HR></BLOCKQUOTE>

Use your constitutional right to be quiet and then make them prove to a jury that you are doing something wrong. If neteller rats you out so be it, but if not, then how do they prove you are doing anything illegal?

Is Reportable Income considered/defined any money that hits your bank account?

oldmantime · Sep 16, 2003

Yes--According to Strut's statement of 16 years ago!

oldmantime · Sep 16, 2003

When it says Neteller--The IRS knows it wasn't a gift from Grandpa!

kerry · Sep 16, 2003

Show them withdraws to Neteller for 97k or higher, take the position you are in the trade or business of gambling, and thus the income and losses net on Schedule C to zero. Explain that since it was a loss you were not aware that you still had to complete a Schedule C. Note, if not a trade or business, the income is reported on page one, and the losses are a misc. itemized deduction on Schedule A suject to the 2% of AGI limitation. This is a very harsh result, to say the least!

jwunderdog · Sep 16, 2003

I hate to inform you of this but the burden of proof is no on the IRS. If they see the transactions you have to explan to them why it wasn't reported as income? The IRS is not under the same rules as crimal court"innocent until proven guilty".

On to your question, the IRS has change alttle bit in the last 16 years. Most of the audits today are just line checks. You claim acertain amount of deductions , prove those deductions are real.

But if they find something wrong their, where there is smoke there is FIre. That would be most likely how you would get caught.

Funds coming into your account is not a good idea espically if you are self emplyed.

kerry · Sep 16, 2003

Regarding deposits/income, the IRS takes the position that any deposit is income unless you can prove otherwise! Thus, one should carefully label all deposits made to ones account, as it is difficult to remember 3 years later!

tgoodm1 · Sep 16, 2003

<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by kerry:
Regarding deposits/income, the IRS takes the position that any deposit is income unless you can prove otherwise! Thus, one should carefully label all deposits made to ones account, as it is difficult to remember 3 years later!<HR></BLOCKQUOTE>

So are you saying that the IRS cannot go back more than 3 years in the auditing process?

Buzzsaw · Sep 16, 2003

The last two posters are dead on. Some audits can be much more intense but routine audits just focus on bank deposits.

Every person should check their return vs their bank deposits and make sure they are at least close. You CPA ain't gonna bother. You get audited and he'll make a few easy dimes.

Fishhead · Sep 16, 2003

Getting better responses.

Ok, how about this. Lets assume the person getting these deposits in their checking account via Neteller actually doesnt worry about it because he or she is keeping a gambling dairy and has no problem showing wins and losses on their tax returns. Declaring their total wins from gambling on line 21 of form 1040 and deducting gambling losses on Schedule A up to but not more than on line 21. This is the correct way to do it! But now the question is......will or can the IRS rat you out for gambling offshore, which may or may not be deemed legal??

oldmantime · Sep 16, 2003

I thought that I read where Wild Bill said -No to this question. As a matter of fact I am sure he said "No--the IRS is not the Justice Dept". But then again--as of now there is no federal law--My woory is about some state law somewhere!!!
Comments.

Buzzsaw · Sep 16, 2003

Agencies won't share information or rat you out unless you are already under investigation.

Anyway, gambling is not illegal at all. You should report winnings if they are over $10k.(you really always should but under $10k could be considered an innocent oversight) Because if you are under investigation for whatever reason and you do not report they are going to nail you with a felony and tack another 4 years on...

oldmantime · Sep 16, 2003

Strut--I thought you worked for the Shrink. R U putting this question out here just to get a topic going?? This is the reason we are all hoping The Fereeral Gov. does NOT pass any law which punishes the player!!
My God this is getting old here!

oldmantime · Sep 16, 2003

I just thought of an exception. Underwitholding of Taxes.

Say you have a salary and the gov is taking taxes out regularily on this. Now at the end of the year--you have a large income from Gambling, this could cause you to pay a penalty for under witholding. I'm pretty sure of that but don't know the amounts at all. (my few hundred or even a thousand--won't affect it if that be the case.)