Filing taxes as a "losing" professional gambler

[longtime1stime]

(apologies in advance if this is board clutter).

1) Combining my sportsbetting and poker wagers/sessions, etc. My net wins and losses is in excess of 1million on each side. The final net is roughly -5k. In addition to this I have borrowed approximately 25k in "personal loans" from friends and family(Yes, i am lucky to have people bail me out). During 2006 I paid back roughly 5k. I have paid back the remainder so far in 2007.

2) Being a "losing" professional(ironic) gambler means I don't have a ton of money to hire a cpa. Thus, with the abundant # of tournaments, sngs's, sportsbets I have wagered, and the subsequent mounting wins/loses this year, do you think there is any way I could prepare my taxes myself(i.e. turbo tax)? Or should i just send over my records to a cpa?

3) since i am a losing player, and filing as a "professional", as i have no other income sources this year, should I expect to shell out some dough to the IRS?

4) Is it even possible to file as a professional if you are a losing player? I have no other income. Would I have to file as unemployed?

I would greatly appreciate any help. I understand that i am up against it, however, I want to make sure my "losing ways" arent compounded by screwing up my taxes and owing uncle sam interest and penalty payments down the road.

TIA

[FatalError]

a CPA is going to run you less than 1k (tax deductable) to prepare your taxes

screwing up and getting auditted for what is obviously going to be a potentially red flagged return will cost you a lot more than that

[emptyshell]

From my understanding, there's no reason you can't file as a losing professional and you shouldn't owe anything. I would let the personal loans slide under the table as long as it didn't affect the friends and family members taxes.

As a practical matter, I would look at your bank statements and other records to see what would be a red flag, just to be aware of it. Although your description sounds like it would flag interest, that's not necessarily the case if the records don't show it.

I've never tried to fill out the forms as a loser, though. Hopefully some more knowledgable person could advise.

I wouldn't hire a CPA, though. A CPA doesn't keep you from being audited, and it would be ridiculous for the IRS to expect you to do so given your financial situation. Just do your honest best to fill out the forms properly. In the unlikely case you get audited, worry about it then. I did my own (I was a large winning player), and my guess is that I'm more capable than most of the people that I could pay to do it for me (from the advice that others have received from their supposed experts).

[Poker CPA]

You would need to understand fully the Statute of Limitations issues. Do some research, this can be nasty either way you go.

[pokerstudAA]

Definately file sch. C as a professional.

Your situation would suck to file on a 1040. You would claim 1 mil in income and then take 1.05 mil as itemized losses. BUT - your itemized deductions would be significantly reduced because of your high level of income. You would wind up paying a crap load of taxes on money you didn't really earn.

Definately go with the schedule C. With negative net income you also wont pay the self employment taxes.

[longtime1stime]

If I do taxes on my own, what program can I use to file sch. C?

Turbo tax? That's what i always used in the past when I worked.

[LotteryOrPoker]

[ QUOTE ]
You would need to understand fully the Statute of Limitations issues. Do some research, this can be nasty either way you go.

[/ QUOTE ]

You crazy little crack monkey! Are you going to over simplify the law as well?! Are you going to claim to be a tax attorney now?! What do the statute of limitations have to do with his question?! If you debate this I will give an entire list of reasons why the statute of limitations do not apply to him!

O.P. The better your records are, the cheaper it will be for an accountant to prepare your taxes. I have a friend who owns an accounting firm. He has a small business owner for a client who keeps absolutely horrible records. After the first year he had this guy for a client he gave him garbage bags. He told him to throw every receipt, bank statement, credit card statement, invoice (any financial record) for a year into the garbage bags. At tax time every year the accountant goes through the bags and sorts all of his records. It is expensive to do this, but the guy is incapable of keeping decent records so it is what he has to do.

Here is the irony of your question. Most accounts will probably charge you anywhere from $120 to a few hundred to do your taxes (depending on how complete your records are). You have gambled with over a million dollars in the last year, but you are unwilling to pay an accountant a few hundred to make sure your taxes are done right? This should not even be a question.

Furthermore, if you have had any money withheld at casinos, paid in quarterly, etc. and ended up negative you may very well have money coming back. If Congress passes some kind of tax relief/rebate you may end up with a several hundred dollar check if you file. The cost of using an accountant may very well pay for itself.

One of the ironic things in this forum are all of the people who ask what they can do to lower their chances of being audited. There are more than 21,000 IRS agents who audit people (these are full time jobs). They do several million audits a year, over a million RANDOM audits. Keep your records in tact and accurate because over the course of a life time you stand a VERY good chance of being audited. If you screw the IRS and you get caught, you can face severe penalties and people who cheat on taxes do go to prison.

[Poker CPA]

It applies, lets debate

[LotteryOrPoker]

If his income did not exceed $8,450 he does not need to file! He has zero tax liability, therefore he has no obligation to file at all! If he is married that amount goes up to $16,900. Since he breaks no laws if he doesn't even bother to file why does a statute of limitation apply?

The advantages of filing:

[ QUOTE ]
• Earned Income Tax Credit. The Earned Income Tax Credit is a federal income tax credit for eligible low-income workers. The credit reduces the amount of tax an individual owes, and may be returned in the form of a refund.

• Telephone Tax Refund. The telephone tax refund is a one-time payment available on your 2006 federal income tax return, designed to refund previously collected long-distance federal excise taxes. It is available to anyone who paid long-distance taxes on landline, cell phone or Voice over Internet Protocol (VoIP) service.

• Additional Child Tax Credit. This credit may be available to you if you have three or more qualifying children or if you have one or two qualifying children and earned income that exceeds $11,300. The Additional Child Tax Credit may give you a refund even if you do not owe any tax.

• Health Coverage Tax Credit. Limited to certain individuals who are receiving certain Trade Adjustment Assistance, Alternative Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation.

[/ QUOTE ]

You will be able to pass Accounting I by the time I am done with you crack monkey!

[Poker CPA]

whats the purpose of the law?