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#1
03-23-2006, 09:34 PM
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WTF is this AMT nonsense? (taxes)
I went to go see a tax professional today. At first, he added up my profits for the year 2005 and got a total of about $30K. He told me I'd have to pay approximately $2400 in taxes. That sounded nice, but I told him that that was the wrong way to do it.
He then did it the right way, adding up my wins ($60K, Form 1040 - Other Income) and deducting my losses ($30K, Line 22 of Schedule A, NOT Line 27 as some of the threads here have indicated). Well, it ended up that I'd have to pay about $5400. WTF, $3K MORE? He said the difference was in the AMT (Alternative Minimum Tax), which ended up to be about $2k. WTF? Is this right? Not only that, we haven't even gotten to state taxes. I read in an old thread that my entire winnings of $60K (without taking deductions) is going to be taxed. If that is true, I'm going to owe another $3700, meaning I'm paying $9K on $30K winnings. Seriously.... if all this is right, I find little reason to even play poker at all. 
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#4
03-23-2006, 09:49 PM
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Re: WTF is this AMT nonsense? (taxes)
I talked to my CPA and was told the AMT only applied if you were doing some tax sheltered type of investments or similar things the IRS deems as 'shady.' I'm claiming a net of $72K from poker (so my total winning sessions are much higher) but I'm not required to pay it.
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#6
03-23-2006, 10:01 PM
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Re: WTF is this AMT nonsense? (taxes)
[ QUOTE ]
I talked to my CPA and was told the AMT only applied if you were doing some tax sheltered type of investments or similar things the IRS deems as 'shady.' I'm claiming a net of $72K from poker (so my total winning sessions are much higher) but I'm not required to pay it. [/ QUOTE ] You're filing as a professional? Does anyone know how much I'll be paying if I file as a pro? Can I file as a pro if I'm a student?
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#8
03-23-2006, 10:37 PM
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Re: WTF is this AMT nonsense? (taxes)
Funny, I just learned about this in school, from my lecture notes:
AMT (Alternative Minimum Tax) 2nd tax code. Less generous/few deductions. Originally designed to “catch” roughly 150 people who earned very high income but paid no taxes. 2005: 4 million people are covered by the AMT. 2006: 19 million people will file under the AMT! NOT INDEXED FOR INFLATION !!!!
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#9
03-23-2006, 10:38 PM
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Re: WTF is this AMT nonsense? (taxes)
The person did your tax return wrong. Gambling losses are not miscellaneous itemized deductions that are subject to the 2% limitation. Line 27 is the correct location for gambling losses. You can instruct him to look at the instuctions for Schedule A. Gambling losses are specifically listed as one of the items for line 27.
The reason that you are getting hit with AMT is that line 22 is not allowed for AMT purposes, but line 27 is allowed. It makes a big difference when you live in a high tax state, such as NY. NY allows your gamling losses as a state itemized deduction. Your losses are large enough that you will not have a problem itemizing for NY. I really hope that you weren't paying much to this guy to have your tax return prepared because his knowledge seems to be a little light on taxes in general.
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#10
03-23-2006, 11:39 PM
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Re: WTF is this AMT nonsense? (taxes)
[ QUOTE ]
I went to go see a tax professional today. ... but I told him that that was the wrong way to do it. [/ QUOTE ] 1) The fact that you have to tell him, that would make me nervous. I then asked a accountant who works for a high powered NYC area firm – “the tax seems high. . . .but is there other income . .. and the amt doesn't make sense if the total income is the 60,000 the amt doesn't make sense if the total income is the 60,000 and there has to be other items affecting the amt. unless it is calculating self employment tax on the winnings - - - ??? ” I know this does not help. But it is what I got back.
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