WTF is she talking about? Tax q

[damaniac]

So for my taxes last year, I gave my poker info to the CPA my family uses, along with everything else. For whatever reason he wound up not using the poker data. Not sure why, maybe he thought it just wasn't that much money?

Anyway, I decide that I really do need to be square on this, so I call them to see about amending my return. Someone from the office tells me the following (more or less, she woke me up when she called back, so I was kind of out of it):

Since you didn't itemize and since you took the standard deduction of 7500 (or whatever it is when no one claims you as a dependent), you don't need to claim it. Also because you didn't receive a 1099 (or is it 1090?) form.

WTF does she mean?

[4_2_it]

You haven't posted a lot of info, but it sounds like your advisor is 'telling' you not to worry about it.

If you want to square up, then either sit down face to face with your current advisor and let him/her know that based on your understanding of the tax code, you may owe some back taxes on your poker income.

Or find another accountant.

[RoundGuy]

Let me translate:

"We've never seen this before and have no clue what the rules are. So, rather than taking the time in a diligent effort to understand tax laws regarding gambling, we're going to ignore it and hope you don't get audited. If you do, we will just say it was a mistake and blame it on you -- since it's ultimately your ass anyway...."
ENJOY!

[damaniac]

Thanks, that's kind of what I figured. And I was hoping I was in the clear (although I knew I wasn't).

[I_C_ALL]

I am not a tax professional nor am I up to date on recent tax changes, but from the readings I've done on this, it sounds like the CPA is getting confused with the issue.

As a non-professional, your gross winnings go into income while your losses go into deductions. These deductions are known as itemized deductions. You can either itemize your deductions(the deductions from your gross income the IRS allows - subject to certain minimums(medical) and percentages(meals)). Or you can take the "standard" deduction which is basically the amount the IRS allows us to deduct without having to "prove" anything. If your itemized deduction is greater than your standard deduction, you should obviously itemize. Most of the time itemizing is beneficial when you own a house with a mortgage because generally the interest is tax deductible. In your case, you probably used the standard deduction because you didn't have significant itemized deductions. THIS IS INCORRECT because your itemized deduction would be your gambling losses.

EX. If you won $400,000 and lost $399,000, you made $1,000 in gambling income. As a non-professional, you would report 400k on top line and have to "give-up" the standard deduction in order to itemize your gambling losses of $399,000.

Alternatively, you could attempt to file as a professional and then do all these calculations on a schedule A(I think)and still get the standard deduction, but now you're subject to self-employment taxes(both shares of social security, medicare)

Short answer: FIND ANOTHER CPA!

[MrBrightside]

[ QUOTE ]
Let me translate:

"We've never seen this before and have no clue what the rules are. So, rather than taking the time in a diligent effort to understand tax laws regarding gambling, we're going to ignore it and hope you don't get audited. If you do, we will just say it was a mistake and blame it on you -- since it's ultimately your ass anyway...."
ENJOY!

[/ QUOTE ]

reason number 567 to just do your own taxes. It's your ass.