Ed Miller's Tax Article

[tipperdog]

Congratulations on your strong results.

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1. Where would one find a "Pitbull" CPA well versed with gambling tax law? (I live in a small community)

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You don't say how much you play. If it's not much, and you're not filing as a professional, I'd just do the work yourself. To find an accountant, while it's desirable to find one in your area, it's not essential. I'd rather work with a 1st rate Vegas-based accountant well-versed in gaming rules than a local H&R Block....but again, I'd question whether you need it if your situation is relatively simple.

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2. Gambling is illegal in my locality. Am I potentially implicating myself?


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Not really. All you report is "gambling winnings" -- the IRS won't know if you won it on trips to vegas, AC or whatever. You only need to produce your gambling log if audited (again, assuming you're not filing as a pro).

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3. Say I take bi-weekly withdrawals from Neteller. Can't I just claim 26 winning sessions for simplicity's sake? Is it really necessary to keep track of the 50,183(slight exaageration) tables I played that year?


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YOU CANNOT DO THIS!!!!! No no no. You must keep track by session. It's an unsettled point (hasn't been subject to a ruling), but I'd feel comfortable defining a single multitabling session as one session rather than four (if 4-tabling).

P.S. Hoegarten with a nice slice of lemon...mmmm.

[grandgnu]

I can't believe no one opted to file as a:

[aargh57]

Yesterday I called my CPA and asked him about gambling winnings and got very confused by his response. He asked me how much I won and I told him and then he asked how much I had to bet to win that much. He said that every dollar I bet could be deducted from my winnings. That didn't make sense to me as I'm sure that I wagered more than I eventually won. For example, say you were playing BJ and you bet $100 and won a hand. You won $100 but (according to the way I understand my CPA) you could deduct $100 because you wagered that much to win it so at the end of the day you'd end up deducting as much as you lost. Now I know that poker could be a little different as you aren't always winning one for one but considering the amount of times that you lose it's got to be close. Also, how could I have been keeping track of this? I do have PT for most (but not all) of my sessions but so I guess I could just get the numbers from there.

Also, after searching here I was hoping to get some clarification but now I feel more lost than before. I've only been keeping track of my daily wins/losses and not sessions. Anyway, is my CPA right on this business of deducting my wagers?

[grandgnu]

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Now I know that poker could be a little different as you aren't always winning one for one but considering the amount of times that you lose it's got to be close.

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You can lose playing poker? Coulda fooled me!

[LittleOldLady]

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Yesterday I called my CPA and asked him about gambling winnings and got very confused by his response. He asked me how much I won and I told him and then he asked how much I had to bet to win that much. He said that every dollar I bet could be deducted from my winnings. That didn't make sense to me as I'm sure that I wagered more than I eventually won. For example, say you were playing BJ and you bet $100 and won a hand. You won $100 but (according to the way I understand my CPA) you could deduct $100 because you wagered that much to win it so at the end of the day you'd end up deducting as much as you lost. Now I know that poker could be a little different as you aren't always winning one for one but considering the amount of times that you lose it's got to be close. Also, how could I have been keeping track of this? I do have PT for most (but not all) of my sessions but so I guess I could just get the numbers from there.

Also, after searching here I was hoping to get some clarification but now I feel more lost than before. I've only been keeping track of my daily wins/losses and not sessions. Anyway, is my CPA right on this business of deducting my wagers?

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You have to declare your total (not net) winnings as income. If you itemize, and only if you itemize, you can deduct your losses from your winnings up to the amount of your winnings (you cannot offset non-gambling income with gambling losses). There is more to it than that, but that is the basic principle. If you qualify as a poker pro and file schedule C, things are very different.

[broiler]

I really don't like the answer from your CPA because , at best, his answer confused you or, at worst, was flat out wrong. I will give him the benefit of the doubt and say that you do get to deduct your wager, but only if you consider the gross amount won. This would mean that you received $200 back for your hand of BJ, but you wagered $100, therefore your win was $100. The $100 wagered is not a gambling loss, it is merely a reduction from your gross winnings.

My thought is that your CPA was thinking that you got a W-2g for gambling winnings and that was a gross figure that did not include what you paid to win the figure that you told him. For a normal poker player, you have already deducted the amount bet when you record your session win or loss.

[Nomad84]

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You have to declare your total (not net) winnings as income. If you itemize, and only if you itemize, you can deduct your losses from your winnings up to the amount of your winnings (you cannot offset non-gambling income with gambling losses). There is more to it than that, but that is the basic principle. If you qualify as a poker pro and file schedule C, things are very different.

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Just to clarify, she means gross session winnings and gross session losses, not per hand gross winnings and losses, or anything like that. Basically, add up all winning sessions and declare that. Then add up all losing sessions and deduct that if you itemize, up to the amount of your wins.

[aargh57]

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You have to declare your total (not net) winnings as income. If you itemize, and only if you itemize, you can deduct your losses from your winnings up to the amount of your winnings (you cannot offset non-gambling income with gambling losses). There is more to it than that, but that is the basic principle. If you qualify as a poker pro and file schedule C, things are very different.

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Just to clarify, she means gross session winnings and gross session losses, not per hand gross winnings and losses, or anything like that. Basically, add up all winning sessions and declare that. Then add up all losing sessions and deduct that if you itemize, up to the amount of your wins.

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OK, thanks for the responses. This particular CPA's expertise(sp?) isn't in gambling but I want to use him because he specializes in my line of work. So basically if I just give him my total winning sessions' amount and total losing sessions' amount that should suffice? For example, If I just said that I had 25 winning sessions totaling $10000 and 10 losing sessions totaling $3000 that should be good? Or should I just tell him to put $7000 down as other income?

[LittleOldLady]

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You have to declare your total (not net) winnings as income. If you itemize, and only if you itemize, you can deduct your losses from your winnings up to the amount of your winnings (you cannot offset non-gambling income with gambling losses). There is more to it than that, but that is the basic principle. If you qualify as a poker pro and file schedule C, things are very different.

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Just to clarify, she means gross session winnings and gross session losses, not per hand gross winnings and losses, or anything like that. Basically, add up all winning sessions and declare that. Then add up all losing sessions and deduct that if you itemize, up to the amount of your wins.

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OK, thanks for the responses. This particular CPA's expertise(sp?) isn't in gambling but I want to use him because he specializes in my line of work. So basically if I just give him my total winning sessions' amount and total losing sessions' amount that should suffice? For example, If I just said that I had 25 winning sessions totaling $10000 and 10 losing sessions totaling $3000 that should be good? Or should I just tell him to put $7000 down as other income?

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As I understand it, putting down $7000 as other income is exactly what you cannot do. You have to put down the gross winnings. If you don't itemize, that's the end of the story--you pay taxes on your gross winnings, period, without regard to your losses. If you do itemize you can deduct the gross losses from the gross winnings up to the amount of the gross winnings. Excess losses cannot be used to offset any other kind of income. And, yes, this is calculated by adding up gross winnings and losses per session. There is a question as to what constitutes a session--it's easy to figure what constitutes a session if you are playing brick and mortar. Online what constitutes a session is open to debate (I don't think there's been a ruling on that, but I could well be wrong).

[aargh57]

I don't see what the difference is between adding up the gross winnings and losses per session and just putting down the net total as other income. It seems like I'm going to come up with a net of $7000 in net income either way I slice it. Sorry if I'm dense on this.