filing as a pro gambler for tax purposes

[joker122]

i'm trying to decide whether it's better to file as a pro this year or not. here are the main factors i'm considering:

1. self employment tax: a filing pro will be assesed this tax, but i believe 1/2 of this is deductable.

2. offsetting wins with losses: allowable for those filing as a pro, rather than reporting net wins and then deducting losses.

3. SE deductions: computer needs, travel expenses etc...question about this one: is this only applicable to those that file as a pro?

4. a letter from the IRS: if reporting as "other income," the chances of the IRS sending a letter suggesting a change in your return (namely, the suggestion to switch to professional status) is much greater (based on searching this forum). this is a minor concern but i'd really rather not deal with the irs on a personal basis.


what am i forgetting?

[Zele]

1. Half is indeed deductible, so you're probably paying 12-13% rather than 15% net.

3. Yes.

[joker122]

"you're probably paying 12-13% rather than 15% net."

i don't quite understand where you got these numbers. would you mind elaborating a bit?

[Zele]

Say your tax bracket it 25%. Half (7.5%) of your SE tax is deductible, so your savings off your income tax is (7.5%)*(25%) = 1.9%. So it's like you paid 13% rather than 15% in SE tax.

[Fishhead24]

The IRS would rather one pay as a NON-professional.

Filing as a PROFESSIONAL opens the door for more audits......but that shouldn't be a concern with anyone if they are honest and keep good records/diarys.

-FH-

[joker122]

"Filing as a PROFESSIONAL opens the door for more audits......"

on what are you basing this statement?

after alot of searching, the few instances where 2+2ers have been contacted about their return was when they filed as a non-pro, and the IRS wanted them to file as a pro.

[mj2]

[ QUOTE ]
The IRS would rather one pay as a NON-professional.

-FH-

[/ QUOTE ]

I just sent a letter yesterday trying to dispute the IRS's decision that I MUST file as a professional. I remember seeing others post this as well.

[Fishhead24]

If you file as a PRO..........take as many DEDUCTIONS as you see fit that you can prove...........

-FH-

[lala]

[ QUOTE ]
[ QUOTE ]
The IRS would rather one pay as a NON-professional.

-FH-

[/ QUOTE ]

I just sent a letter yesterday trying to dispute the IRS's decision that I MUST file as a professional. I remember seeing others post this as well.

[/ QUOTE ]


definitely true I haven't heard of a case on 2+2 yet where IRS forced people to file as non-pro but they have forced many to file as pro.