Paying Taxes on Gambling Winnings in Washington State

[MrFeelNothin]

Anyone planning on filing in Washington?


Anyone think it is a BAD IDEA?

[FabledHero]

hmm i'm not sure, I would probabaly just say it's from live play.

[adenosine]

I don't see how Washington will care, because there is no state income tax. Why would the IRS be giving Washington info about what you claim?

[DoGGz]

Bad idea NOT to file. Washington State has not gone after any players for playing online. They can't even use your tax info to charge you with a crime, anyway.

[MrFeelNothin]

[ QUOTE ]
Bad idea NOT to file. Washington State has not gone after any players for playing online. They can't even use your tax info to charge you with a crime, anyway.

[/ QUOTE ]

Thats what I was thinking, other people said differently.


To clarify, I wasn't thinking about not filing. I could file in Minnesota instead, but I would prefer not to pay their state income tax.

[TheMathProf]

[ QUOTE ]
hmm i'm not sure, I would probabaly just say it's from live play.

[/ QUOTE ]

Since live play is prevalent enough, anything even labelled "Gambling Winnings" (as my TurboTax program reported it in the past) doesn't necessarily allude to the gambling being online.

[Freakin]

how is washington even gonna know? like was stated: there is no state income tax.

the IRS can't hand you over on a silver platter, and they probably don't care to anyways.

the IRS would have to KNOW that it was online play, THEN tell washington state about it, THEN washington would have to actually try to nail you for something

[StellarWind]

First there is no place on your tax return where you have to disclose the nature of your nonprofessional gambling. It's just two numbers (wins and losses) and it could be the lottery for all anyone knows.

Remember that it is not illegal for Washington state residents to gamble online. What is actually illegal is gambling online while you are in Washington which is a very different thing and not so easy to prove in court beyond a reasonable doubt.

[MrFeelNothin]

[ QUOTE ]
First there is no place on your tax return where you have to disclose the nature of your nonprofessional gambling. It's just two numbers (wins and losses) and it could be the lottery for all anyone knows.

Remember that it is not illegal for Washington state residents to gamble online. What is actually illegal is gambling online while you are in Washington which is a very different thing and not so easy to prove in court beyond a reasonable doubt.

[/ QUOTE ]


I'm filing as a professional.

If I was filing non-professional I definitely wouldn't be concerned.


But considering that I am a student and am reporting income that is 25x my previous year's income, I am pretty sure that I am going to get AUDITED. And when I do I will have to provide proof of my session by session wins/losses, some of which were incurred while in school in Tacoma, Washington from Sept.-Dec.


I know Washington has no state income tax, which is why I want to file there, but if I am AUDITED, is there still 0% chance someone in the state will be notified?

[farmslicer7]

Mr.FeelNothing,

The odds of getting audited are about .93%, (130.6 million individual returns of which only 1,007,874 were audited in 2005)so I wouldn't necessarily worry about that. And as a student, (like you?), i file as a professional, and went from 0 income to 6 figures in one year. Just pay your taxes, and you'll be fine. If you are worried hire a CPA and he'll sign off on your taxes.

[StellarWind]

There is a difference between being audited and being specifically forced to provide session-by-session results. Most audits are done by mail and most audits are limited to specific subjects that interest the I.R.S. The likely purpose of an audit will be to challenge your professional status or attack deductions the government doesn't like.

Even if they do want to discuss session-by-session results, my records are organized by online site, not geographic location. Why would an I.R.S. agent even ask about what state you were in for a specific session?

If he actually does ask then my reaction would be to politely suggest that the information is not relevant to my Federal tax liability because it isn't. You don't have to incriminate yourself.

You do need to think about deductions for home office and internet service. Those could create a problem. Maybe you should invest a few dollars by not claiming things you don't want to discuss or document.