IRS Considers New Tax Rules

[upthecreek]

http://www.drf.com/news/irs-treasury-department-propose-horseplayer-friendly-tax-rules

[EMD4ME]

http://www.drf.com/news/irs-treasury-department-propose-horseplayer-friendly-tax-rules

I actually like withholding. It covers quarterly estimated taxes and it's a christmas bonus in the 1st quarter of a year.

But overall this is good for the industry so :ThmbUp:

[mabred]

how will this affect the guy that hits a 1.00 tribox for say 1,000.

He bets 6.00 or 24.00 and hits it.Does he run for a 10% er or what???

Seems like this is for the big player trying to hit for over 5k the current

withholding treshold where the irs takes it's chop right there.

mabred

[upthecreek]

how will this affect the guy that hits a 1.00 tribox for say 1,000.

He bets 6.00 or 24.00 and hits it.Does he run for a 10% er or what???

Seems like this is for the big player trying to hit for over 5k the current

withholding treshold where the irs takes it's chop right there.

mabred
Under new proposed rules, a $24 bet would have to pay $$7200 or more to be subject to taxing
(24 cost of wager x 300)

[mabred]

thanks

[biggestal99]

excellent news.

great for the NTRA to FINALLY get something done for the long suffering horseplayers.

This change is long overdue.

Allan

[AltonKelsey]

Not sure about ADW's (would think this would not be a problem, but who knows), but I heard that for on track wagers, a SINGLE ticket is required.

Thus , if you bet (3) $100 tickets, only one is counted as the total wager.

Prob did that to prevent stooping for losing tickets.

[biggestal99]

Here is the official proposed rule:

https://www.federalregister.gov/documents/2016/12/30/2016-31579/withholding-on-payments-of-certain-gambling-winnings

also changing ID requiremnents.

used to need SSN

Now will only need gov't ID and a completed W9.

we are in the 21st century now.

Allan

[AndyC]

Here is the official proposed rule:

https://www.federalregister.gov/documents/2016/12/30/2016-31579/withholding-on-payments-of-certain-gambling-winnings....

Allan

A lot of P-6 players will not be happy with example 13. The A-B-C ticket configurations will not be aggregated because they will be on separate tickets.

Still don't understand the logic of the 300-1 qualifier. It is completely arbitrary. I would think that a net winnings amount for any type of bet should be the decider.

[AltonKelsey]

Already mentioned the aggregation problem.

Scanning that dense and obtuse document, I don't see any reference to ADW or online wagering. Is it there? And is there any hope that the separate ticket scam would be avoided?

[AndyC]

While clearly the new proposed regulations will be a help to many players, I doubt that the coming tax reform bills will do the same. I have seen proposals where the standard deduction will be greatly expanded and where deductions for state and local taxes and real estate taxes will be eliminated as itemized deductions. Not sure how gambling losses will be treated but if they are left as an itemized deduction there will be a lot of taxes paid on phantom income.

Consider a new $30,000 standard deduction for a married couple. Before considering gambling losses they have $10,000 of itemized deductions. If during the year they have $20,000 of reportable winnings and manage to lose all $20,000 for a net zero winnings they will still have to pay tax on $20,000. Unless winnings are allowed to be netted above the line, like a professional gambler on Schedule C, there will be a lot of very unfair results.

[therussmeister]

Already mentioned the aggregation problem.

Scanning that dense and obtuse document, I don't see any reference to ADW or online wagering. Is it there? And is there any hope that the separate ticket scam would be avoided?
Yes, I've read that separate tickets at ADW's will not be a problem, they will be combined.

[Frost king]

It is to your advantage now to make the biggest ticket possible.

[classhandicapper]

This will clearly be a net positive for the handful of horse players that run into bankroll problems during the year because of withholding. It's also more convenient to not have to deal with it as often. But I don't see it as much of a positive for industry handle. Under current law, if you are entitled to get that money back when you do your taxes, it comes back into your bankroll anyway. So just the timing is different. To have a meaningful change in handle you have to bring in new players.

[AndyC]

Yes, I've read that separate tickets at ADW's will not be a problem, they will be combined.

I know they will be combined for the identical wagers rule but who determines whether one P-6 ticket is really part of another P-6 ticket when there might be several races with different horses bet?

[AltonKelsey]

This will clearly be a net positive for the handful of horse players that run into bankroll problems during the year because of withholding. It's also more convenient to not have to deal with it as often. But I don't see it as much of a positive for industry handle. Under current law, if you are entitled to get that money back when you do your taxes, it comes back into your bankroll anyway. So just the timing is different. To have a meaningful change in handle you have to bring in new players.

If you do the math, for a certain style of large bettor, withholding is a MAJOR problem. Spreaders in particular looking to catch large payoffs get hosed. So these new rules keep their money in circulation a lot longer.

Even if they are a small percent of the total player population, they are a significant slice of the handle.

[ronsmac]

Racetracks and horsemen should have lobbied for these type of changes 20 years ago. Better late than never.

[therussmeister]

I know they will be combined for the identical wagers rule but who determines whether one P-6 ticket is really part of another P-6 ticket when there might be several races with different horses bet?
All tickets bet into one pool will be combined based on the article I read, but I could not find anything in the government's document in the link posted in this thread to confirm that.

[AltonKelsey]

I don't think different horses would be an issue. As long as the bet is in the SAME POOL, they are all totaled. As it should be.

Even a single p6 ticket (for instance) is a combination of bets on different horses.

[AndyC]

I don't think different horses would be an issue. As long as the bet is in the SAME POOL, they are all totaled. As it should be.

Even a single p6 ticket (for instance) is a combination of bets on different horses.

The issue I believe is the separate ticket rule. The proposed regulations seem quite clear that separate tickets bet into the same pool will not be combined unless the identical wager rule applies. I didn't see any carve out for ADWs.

I learned long ago that tax regulations and logic don't always go together.

[classhandicapper]

If you do the math, for a certain style of large bettor, withholding is a MAJOR problem. Spreaders in particular looking to catch large payoffs get hosed. So these new rules keep their money in circulation a lot longer.

Even if they are a small percent of the total player population, they are a significant slice of the handle.

I understand the theoretical issue. I question how many people that are that serious are not well financed enough to continue playing at the desired level even if some of their cash is tied up by the government for a few months.

If I was going to play the Pick 6 at that level, the first thing I would do is make sure I had a huge bankroll and/or steady stream of free cash flow from other sources to sustain losing streaks and these tax issues so I could continue playing according to plan. Then when tax time came and I got my refund the bankroll would get replenished. At no time would I leave myself in a position where I didn't have the cash to make a play.

If they aren't thinking in those terms, I question how long they are going to last no matter what. Absolutely nothing would change for me gambling wise other than the timing and flow of my bankroll. It would be more about convenience.

Don't get me wrong. I think this is a very positive development. I just think it's not going to lead to much of an increase in handle. It may change when some of handle gets bet for less serious players. If there used to be a burst of activity after tax refund time, now it might get spread out more.

[AndyC]

I understand the theoretical issue. I question how many people that are that serious are not well financed enough to continue playing at the desired level even if some of their cash is tied up by the government for a few months.

If I was going to play the Pick 6 at that level, the first thing I would do is make sure I had a huge bankroll and/or steady stream of free cash flow from other sources to sustain losing streaks and these tax issues so I could continue playing according to plan. Then when tax time came and I got my refund the bankroll would get replenished. At no time would I leave myself in a position where I didn't have the cash to make a play........

I used to share your view until I had my eyes opened by a successful bettor who was routinely forced to get loans to finance his betting.

For the most part I believe the focus on withholding as a major problem is misguided. Lots of players hit signers but few players hit bets requiring withholding.

[AltonKelsey]

I think you'd easily see the problem of withholding if you took the case of someone playing for rebates and a small but positive roi.

In no time, the starting bankroll would be GONE.

It's actually ludicrous that racetrack winnings are taxed at all. Too bad Trump isn't a horseplayer.

[AskinHaskin]

It still seems that a few people dotted throughout this thread aren't fully clear on the would-be rule changes.

IF you wager with an ADW, then all monies wagered into a single pool (on a single race/day/sequence) will count as the base amount from which IRS signers would have to exceed 300-1 (and winnings OF $600 or more).


IF you wager at the track, with traditional mutuel tickets, only the amount wagered (as designated) on the single (piece of paper) (AND into the same pool) containing the winning combination will count as the base from which 300-1 and $600 of "winnings" will be calculated.

(it doesn't even clarify for sure whether, say, 2 or 3 superfectas which land as separate bets on the same piece of paper will be aggregated to determine the base wager, but it would make sense for that to be the case)


The main benefit of the whole thing is the reduction of a staggering amount of paperwork for racing associations, under the guise of carrying-out tax regulations where in far more than 90% of the cases, no true income will arise from the masses.


It may also have the residual effect of putting many of the famed "ten percenters" to sleep.


Indeed those in the high-volume wagering realm will know considerable cash-flow benefits from the hoped-for and completely sensible changes, but it doesn't make much sense that "handle" itself would see a noticeable impact.

For it is the rare person who hits for $5000 these days, AND lives so close to zero cash flow that he neeeeeeeeds the $1250 they withheld just to be in action 3 or 7 days later. (*of course it happens, but those involved only marginally impact the entire handle by the fact that their $1250 is delayed) (of greater concern is that most of those don't even have any racing-related tax liability in the end of a year, and thus the withholding was pointless)


The hoped-for new rule is very sensible as it applies to the overwhelming majority of those who hit what are today's IRS thresholds and it should eliminate a staggeringly-high percentage of IRS hits.

Not only that, but the little guy will suddenly become eligible for fairer tax regulation in that he will no longer have to amass $7000 or $8000 worth of today's low-threshold IRS hits in a year just to begin to have it make sense to itemize his return in order to offset those (usually erroneously-reported "winnings" ). (the thresholds will suddenly be high enough so that only a select few will reach them. A great burden will be lifted from those many who reach today's levels just to be taxed unfairly for their not having any avenue through which to offset winnings with losses and have it help their cause.)


As it stands, if the little guy hit for $1200 (old/current IRS reporting rules) (reaching IRS thresholds) five times during a year, and he still ends up losing money for the entire tax year, he's still stuck declaring $6000 of income that he didn't even have, because in order to itemize his deductions (the way through which you offset winnings with losses he needed to have itemized totals which topped his automatic standard deduction in order to make it worthwhile.)

And then, even if he hit for $7000 total, it is hardly worth the paperwork, because you get almost no benefit at that level. (if you hit for another $4999 beyond that, you CAN effectively save the would-have-been-income tax on that last $4999 by doing the itemizing... but for the core regulars roaming around most wagering facilities, they just can't expect to attain enough IRS hits in a single year to make itemizing (and declaring losses against winnings) save them anything.


So new thresholds for IRS scores like these will prove quite comfortable for most players:


$2 wager (same $602 return)

$2.40 wager ($722.40 on your dime supers)

$6 wager (1806)

$12 wager (3612)

$24 wager (7272)

$48 wager (14544)


Now of course there will be exceptions for those who nail a good one with precision, but they will be far fewer in numbers.

(When you spend $36 on your pick-4, you'll be able to hit for $10,000 and perhaps run it right through the SAM without seeing that familiar mixed-blessing of a sentence)

[AndyC]

It still seems that a few people dotted throughout this thread aren't fully clear on the would-be rule changes.

IF you wager with an ADW, then all monies wagered into a single pool (on a single race/day/sequence) will count as the base amount from which IRS signers would have to exceed 300-1 (and winnings OF $600 or more).


IF you wager at the track, with traditional mutuel tickets, only the amount wagered (as designated) on the single (piece of paper) (AND into the same pool) containing the winning combination will count as the base from which 300-1 and $600 of "winnings" will be calculated.

(it doesn't even clarify for sure whether, say, 2 or 3 superfectas which land as separate bets on the same piece of paper will be aggregated to determine the base wager, but it would make sense for that to be the case)......


I am certainly not fully clear after reading the proposed regs. Where does it state that bets made through an ADW wouldn't be subject to the single/separate ticket rule? (I could see where administratively that would be easy whereas bets made at the track would be difficult to deal with)

The answer to your above question about aggregation was answered in Example #11. Separate bets on the same ticket will be aggregated.

[Track Phantom]

Administratively, ADW's are easy. The question is for on-track bettors.

1. Can you even bet more than one pick 6 on the same ticket? For people that use the A, B, C ticket structure, they may have 40 different "tickets". Obviously, this can't reside on the same ticket, and I'm not even sure you are allowed to make a "2nd" pick 6 wager land on the same ticket (sheet of paper).

2. Let's say you have 5 superfecta plays (like 4/1,2,3/ALL/ALL and 1,2,3/4/ALL/ALL, etc). Can they put these on the same ticket? Whenever I've wagered at the track, they've ALWAYS spit out a unique ticket for each wager I called out. Can you request they are part of the same ticket?

3. If you can have wagers on the same ticket, is there a limit to how many? What if you have 50 unique supers? You're obviously not going to logistically see them on the same ticket, correct?

If my assumptions above are correct, it would seem those wagering with an ADW would have a massive advantage (regarding this tax legislation) than those at the track.

Anyone know if this is correct?

[coachv30]

I had $103K worth of winnings and $105K worth of wagers for the year. Therefore, finishing behind $2K. I have about 30 w2g's for $600 or more as well as a $6800 winner where taxes were withheld? Should I be ok at tax time?

[EMD4ME]

I had $103K worth of winnings and $105K worth of wagers for the year. Therefore, finishing behind $2K. I have about 30 w2g's for $600 or more as well as a $6800 winner where taxes were withheld? Should I be ok at tax time?

OK, if you file as a recreational gambler, you will show ALL of your winning tickets (not just your W-2G's).

Then you will show your loses as itemized deductions.

You will most likely lose the ability to write off other itemized deductions (help Andy C or otherwise).

If your state is annoying, like mine, NY. Then you can't write off all of your losses and you will pay city and state tax on that amount.

If I have 250,000 in income that I can't write off, I get smacked at about 3,4 or5% from NYS and NYC. :bang:

Your witholder will help a bit (on the federal side) as you should get that all back.

Does that help?

[ReplayRandall]

Administratively, ADW's are easy. The question is for on-track bettors.

1. Can you even bet more than one pick 6 on the same ticket? For people that use the A, B, C ticket structure, they may have 40 different "tickets". Obviously, this can't reside on the same ticket, and I'm not even sure you are allowed to make a "2nd" pick 6 wager land on the same ticket (sheet of paper).

2. Let's say you have 5 superfecta plays (like 4/1,2,3/ALL/ALL and 1,2,3/4/ALL/ALL, etc). Can they put these on the same ticket? Whenever I've wagered at the track, they've ALWAYS spit out a unique ticket for each wager I called out. Can you request they are part of the same ticket?

3. If you can have wagers on the same ticket, is there a limit to how many? What if you have 50 unique supers? You're obviously not going to logistically see them on the same ticket, correct?

If my assumptions above are correct, it would seem those wagering with an ADW would have a massive advantage (regarding this tax legislation) than those at the track.

Anyone know if this is correct?

Rewards/player cards on track should have no problem scanning your card after presenting a winning ticket that would show bet total in race for that specific wager(tri-super-pick 3-4-5-6), combining total wager for verifying signer status of payoff vs total wager ratio.

[coachv30]

OK, if you file as a recreational gambler, you will show ALL of your winning tickets (not just your W-2G's).

Then you will show your loses as itemized deductions.

You will most likely lose the ability to write off other itemized deductions (help Andy C or otherwise).

If your state is annoying, like mine, NY. Then you can't write off all of your losses and you will pay city and state tax on that amount.

If I have 250,000 in income that I can't write off, I get smacked at about 3,4 or5% from NYS and NYC. :bang:

Your witholder will help a bit (on the federal side) as you should get that all back.

Does that help?


Kind of.....I'm lost when it comes to this stuff. I just usually file and keep my fingers crossed. The 103K and 105K is including ALL wagers and not just the W2g's. I am in PA so I don't think it's as bad. I guess what I'm getting at is, "Will the 105K in losses pretty much take care of things?"

[EMD4ME]

Kind of.....I'm lost when it comes to this stuff. I just usually file and keep my fingers crossed. The 103K and 105K is including ALL wagers and not just the W2g's. I am in PA so I don't think it's as bad. I guess what I'm getting at is, "Will the 105K in losses pretty much take care of things?"

Yes, for sure from a Federal perspective. Don't worry.

[coachv30]

Yes, for sure from a Federal perspective. Don't worry.

Thanks EMD...what does the State usually look at?

[EMD4ME]

Thanks EMD...what does the State usually look at?

Complicated formula but basically when you show your winnings made (gross hits-not net), let's say $100,000, in winning wagers, they allow you to right off about 65% of the "itemized losses" in NYS AND NYC. So, $35,000 in money one never actually won (net profit), is taxed at the state and city rate. That's another couple thousand to pay for nothing, per hundred thousand dollars returned in winning wagers.

Every state is different. I don't know about PA.

All this is assuming you file as anything but a professional gambler. If you file as a professional, it's another conversation.

[coachv30]

Complicated formula but basically when you show your winnings made (gross hits-not net), let's say $100,000, in winning wagers, they allow you to right off about 65% of the "itemized losses" in NYS AND NYC. So, $35,000 in money one never actually won (net profit), is taxed at the state and city rate. That's another couple thousand to pay for nothing, per hundred thousand dollars returned in winning wagers.

Every state is different. I don't know about PA.

All this is assuming you file as anything but a professional gambler. If you file as a professional, it's another conversation.

Certainly not professional....thanks for the help.

[AndyC]

I had $103K worth of winnings and $105K worth of wagers for the year. Therefore, finishing behind $2K. I have about 30 w2g's for $600 or more as well as a $6800 winner where taxes were withheld? Should I be ok at tax time?

It doesn't sound like you file a Schedule C as a professional gambler so you might get hurt because your AGI will increase for the winnings without consideration of your losses. The inflated AGI can exclude you from getting various credits, subject social security to taxation, subject itemized deductions to reductions, etc. You will get to deduct your losses but that doesn't stop the above from possibly impacting your tax bottom line.

[coachv30]

It doesn't sound like you file a Schedule C as a professional gambler so you might get hurt because your AGI will increase for the winnings without consideration of your losses. The inflated AGI can exclude you from getting various credits, subject social security to taxation, subject itemized deductions to reductions, etc. You will get to deduct your losses but that doesn't stop the above from possibly impacting your tax bottom line.

What credits?

What if I'm working and not collecting Social security?

Will that 103K all be added to my AGI? If I make 75K a year from my job, will that equate to $178K in income? If so, how much of my 105K in losses are going to help me out? I may quit betting :bang:

[AndyC]

What credits?

What if I'm working and not collecting Social security?

Will that 103K all be added to my AGI? If I make 75K a year from my job, will that equate to $178K in income? If so, how much of my 105K in losses are going to help me out? I may quit betting :bang:

To see the affect on your taxes compute your taxes without any regard to the gambling and then again with all of the gambling entered. Without knowing all of your personal tax info I could only guess as to how much or how little you may be affected. If your taxes are fairly simple pick up a copy of Turbo Tax and plug in the numbers.

[classhandicapper]

I used to share your view until I had my eyes opened by a successful bettor who was routinely forced to get loans to finance his betting.

For the most part I believe the focus on withholding as a major problem is misguided. Lots of players hit signers but few players hit bets requiring withholding.

I'm not sure putting yourself in that position is particularly smart for either the lender or borrower, but even if your first point is true, that wouldn't change my point about the handle. He's still getting his bets down. He's just using a different method of staying in action than I would.

I agree on the second point too.

[therussmeister]

I had $103K worth of winnings and $105K worth of wagers for the year. Therefore, finishing behind $2K. I have about 30 w2g's for $600 or more as well as a $6800 winner where taxes were withheld? Should I be ok at tax time?
A lower income person whose tax return properly reports gambling activity, despite losing for the year, would reduce or eliminate his Earned Income Credit, and reduce or eliminate his ACA subsidy, and increase his penalty owed if he cannot afford health insurance without the subsidy.

A higher income person may find he owes an Alternative Minimum Tax.

There may be other complications. I don't know if it affects someone who files for early Social Security Payments at 62. If all gamblers were somehow compelled to file a proper, by-the-books return, all gambling emporiums would close down tomorrow.

The IRS is not kind to those that dabble at gambling. Go big, or go home, or cheat on your tax returns. Those are your only real options. Just my opinion.

[EasyGoer89]

Did this kick in yet on Jan 1?

I have a pal who hit a mini signer a week ago 24 dollar ticket got him back about 1300 (55/1) should he hold onto it and wait till the rules change?

[AndyC]

Did this kick in yet on Jan 1?

I have a pal who hit a mini signer a week ago 24 dollar ticket got him back about 1300 (55/1) should he hold onto it and wait till the rules change?

Holding the ticket doesn't change the tax period, it would still be 2016. He had constructive receipt of the winnings. There was nothing stopping him from cashing the ticket in 2016.

[AndyC]

A lower income person whose tax return properly reports gambling activity, despite losing for the year, would reduce or eliminate his Earned Income Credit, and reduce or eliminate his ACA subsidy, and increase his penalty owed if he cannot afford health insurance without the subsidy.

A higher income person may find he owes an Alternative Minimum Tax.

There may be other complications. I don't know if it affects someone who files for early Social Security Payments at 62. If all gamblers were somehow compelled to file a proper, by-the-books return, all gambling emporiums would close down tomorrow.

The IRS is not kind to those that dabble at gambling. Go big, or go home, or cheat on your tax returns. Those are your only real options. Just my opinion.

Good points on the EIC and ACA subsidies. The education credit could also be lost. There might also be a Net Investment Income Tax issue.

It would be unlikely that the Alt Min Tax would be triggered because gambling losses are allowed in full for the AMT.

The interplay with social security often happens with low income seniors who suddenly find their SS is taxable because their AGI increased.

[AndyC]

While many bettors will certainly be helped by the new aggregation rules, the logic of the entire law escapes me. Consider that 1099 and W-2G rules were implemented to force people to report income on their tax returns that previously went directly into the pockets without the government getting their "fair share". The law was primarily targeted at sub-contractors who were flying under the tax radar. The IRS thought that the same sort of coercion was necessary for gambling winnings.

So now we will have a law that would allow a bettor to make a $5,000 bet into a P-6 pool, win a $1,000,000 and have no IRS paperwork or withholding. But a player making a $1 straight trifecta bet returning $601 will be given a W-2G. The 300-1 rule is clearly arbitrary and should be eliminated and replaced by a net winnings amount.

[EasyGoer89]

Holding the ticket doesn't change the tax period, it would still be 2016. He had constructive receipt of the winnings. There was nothing stopping him from cashing the ticket in 2016.
I was under the impression that it's when you CASH the ticket that determines the tax year. learn something new every day!

[AskinHaskin]

So now we will have a law that would allow a bettor to make a $5,000 bet into a P-6 pool, win a $1,000,000 and have no IRS paperwork or withholding. But a player making a $1 straight trifecta bet returning $601 will be given a W-2G. The 300-1 rule is clearly arbitrary and should be eliminated and replaced by a net winnings amount.


Of course it is arbitrary - because it has to be somewhere.


But you have the option of putting 4 of your trifecta quick-picks on the same piece of paper from now on. The guy betting $5000 on the pick-6 does not have that same option.

So just do it... and raise your ceiling in the process.


If you only have a dollar left - bet a super and hope you lose...

[AskinHaskin]

And lets be clear.

This law has not yet taken effect.

Nor do we presently know if it will ever take effect.


They were kicking around the hope that it might become effective by the Triple Crown races. But even if it does, any big hits you have in the present will be dealt with just as they have over the past many decades.


If they withhold $1600 from your $6400 win next week, don't expect to get it back in the mail at the moment this new regulation is approved.


It is potentially true that most players already never deal with these (present) IRS regulations, and the main impact of the thing will be that far fewer will reach the IRS thresholds off into the future.

[AndyC]

Of course it is arbitrary - because it has to be somewhere.


But you have the option of putting 4 of your trifecta quick-picks on the same piece of paper from now on. The guy betting $5000 on the pick-6 does not have that same option.

So just do it... and raise your ceiling in the process.


If you only have a dollar left - bet a super and hope you lose...

Arbitrary is one thing but being arbitrary and illogical is another.

Previously you mentioned that all bets made through an ADW into a pool will be aggregated, i.e. a bettor doesn't have to worry about having all of his bets on one ticket. Where did you find that allowance for ADWs in the proposed regulations?

[AskinHaskin]

Arbitrary is one thing but being arbitrary and illogical is another.

Previously you mentioned that all bets made through an ADW into a pool will be aggregated, i.e. a bettor doesn't have to worry about having all of his bets on one ticket. Where did you find that allowance for ADWs in the proposed regulations?


Hey wait a minute... I'm the one being illogical, when speaking of a guy betting his last dollar on a superfecta?? (you probably weren't referencing my example, I know)


Needless to say, the ADW's keep complete track of all of your bets, so their presence related to your records is as air-tight in the case of year-end reporting as it is in the case of tallying just how many dollars you spent on quick-picks for the same trifecta pool. (It will hold up in 'court' if ever it came down to your insisting that you played $9 in that one trifecta pool vs. the $1 on which your online quick-pick netted a $2000 trifecta) (of course, provided the records assure you actually DID just that) (that part will just become part of the fabric of ADW accounts)


Gee, if the bozos who run racing stick to script, they might be able to just about mandate that everyone stay home and play online. (It could be like "Gulfstream West" minus the South Florida simulcast network).

(again sacrificing the future for the present)

[AndyC]

Hey wait a minute... I'm the one being illogical, when speaking of a guy betting his last dollar on a superfecta?? (you probably weren't referencing my example, I know)


Needless to say, the ADW's keep complete track of all of your bets, so their presence related to your records is as air-tight in the case of year-end reporting as it is in the case of tallying just how many dollars you spent on quick-picks for the same trifecta pool. (It will hold up in 'court' if ever it came down to your insisting that you played $9 in that one trifecta pool vs. the $1 on which your online quick-pick netted a $2000 trifecta) (of course, provided the records assure you actually DID just that) (that part will just become part of the fabric of ADW accounts)


Gee, if the bozos who run racing stick to script, they might be able to just about mandate that everyone stay home and play online. (It could be like "Gulfstream West" minus the South Florida simulcast network).

(again sacrificing the future for the present)

My illogical comment was directed at the regulations.

If you read the proposed regulations it doesn't say that tickets are aggregated because they are in the same pool. It simply says that you are allowed to aggregate all bets on one ticket. Proving that tickets were bet into the same pool is irrelevant for aggregation but important for identifying identical wagers. I think you assumed that the regulations would be logical with regard to aggregation, but they aren't. It specifically notes in the regs that the single ticket rule is for administrative purposes.

As for holding up in court, what would the bettor want as an outcome? All winnings are supposed to be declared on tax returns, not just ones shown on W-2Gs. Would the bettor argue that he wasn't allowed to cheat on his taxes because he erroneously received a W-2G for his winnings?

[AndyC]

I spoke with Keith Chamblin, COO of the NTRA this morning to get some clarification on the new proposed regulations for reporting and withholding on winnings.

It is his understanding that, while not explicitly stated in the regs, all wagers made through an ADW into a specific pool will be aggregated and considered a single ticket. That understanding coincides with the understanding expressed by a few members in this thread.

He mentioned that the tote companies have or soon will have the ability to put all bets on one large ticket so that bettors at the track or OTB will not be at a administrative disadvantage to those betting through ADWs.

[AltonKelsey]

Good thing too (that last part about on track). Else there would be every incentive to not place those wagers on track unless you absolutely had to .

[VigorsTheGrey]

Correct me if wrong...isn't the current rule for a 10 cent superfecta wager threshold = $600.10....?

If the rule is changed to 300 to 1....would the 10 cent bet threshold become $30....? After that, taxes....? Or would it still be 300:1 and $600 even for a dime?

[AndyC]

Correct me if wrong...isn't the current rule for a 10 cent superfecta wager threshold = $600.10....?

If the rule is changed to 300 to 1....would the 10 cent bet threshold become $30....? After that, taxes....? Or would it still be 300:1 and $600 even for a dime?

There is an additional requirement that the winnings be at least $600. It is the same requirement for issuing 1099 forms for a business.

[SG4]

OK everyone here's your chance to submit a comment in agreement with the proposed rule change, hopefully there's enough positive feedback to push this through without much hassle.

https://www.ntra.com/comment/

[EMD4ME]

OK everyone here's your chance to submit a comment in agreement with the proposed rule change, hopefully there's enough positive feedback to push this through without much hassle.

https://www.ntra.com/comment/

Thank you SG4! :ThmbUp:

[AndyC]

OK everyone here's your chance to submit a comment in agreement with the proposed rule change, hopefully there's enough positive feedback to push this through without much hassle.

https://www.ntra.com/comment/

While the regulations will greatly reduce IRS sign-ups, they are far from fair. When a person who bets a straight 1$ trifecta has to sign for a $601 ticket and a person betting $1,000 on a P-6 that pays $50,000 doesn't have to do anything, there is something grossly unfair about the rules.

[thaskalos]

While the regulations will greatly reduce IRS sign-ups, they are far from fair. When a person who bets a straight 1$ trifecta has to sign for a $601 ticket and a person betting $1,000 on a P-6 that pays $50,000 doesn't have to do anything, there is something grossly unfair about the rules.

Don't worry...the IRS will think of something to "rectify" this situation. Like...having the bettor sign whenever he collects $10,000 or more on a wager, regardless of investment.

[upthecreek]

http://www.paulickreport.com/news/the-biz/ntra-announces-easy-use-system-support-new-pari-mutuel-regulations/#.WH0PErk8ZSw.twitter

[upthecreek]

To all Thoroughbred horseplayers and racing fans,

The final quarter of Sunday’s incredible Super Bowl has me thinking about how no lead is ever safe and no race is ever over until time runs out or the result goes official. This is worth bearing in mind as we reach the mid-point of the U.S. Treasury’s 90-day public comment period on newly proposed regulations related to withholding and reporting of pari-mutuel winnings. As an industry we’re ahead by open lengths at the sixteenth pole but we must be kept to task.

The NTRA has been advancing this issue within the federal government for years and others in the industry sought these changes before the NTRA even came into existence nearly 20 years ago. We are now on the cusp of Treasury finally enacting the new rules – going official, so to speak. There is too much at stake to not give our all in these final strides.

In 2015, you were kind enough to submit a comment to Treasury urging them to consider modernization of regulations related to reporting and withholding of pari-mutuel gambling winnings. Treasury heard you loud and clear and responded on December 30, 2016 by issuing newly proposed regulations that address our needs. We are in the midst of another 90-day comment period and your support and action is more critical than ever.

We need you to once again let Treasury know you’d like them to enact the newly proposed regulations. Please take 30 seconds to add your name to the thousands that have already shown their support for Thoroughbred racing by visiting www.ntra.com/comment and submitting an e-mail to Treasury. The link does all the work – all you have to do is add your name, address and a valid email.

The proposed rule changes have received widespread industry support, including from horseplayers, horsemen, racetracks, and every major industry group. No less an authority than Steve Crist has called them “a godsend for horseplayers.” Now we need individuals like yourself to raise their voices and help us get this across the goal line. Go to www.ntra.com/comment right now and make it official.

Thank you for helping us to return more winnings to horseplayers and increase purse money for the good of the entire sport!

Best,


Alex Waldrop
President & CEO
National Thoroughbred Racing Association

[mabred]

any update since the comment period is over???

mabred

[SG4]

Last tidbit was that there seemed to be no opposition, but the goal of getting this enacted around triple crown season was a far reach apparently due to lack of manpower at the IRS. Hopefully sometime before the end of 2017 seemed to be the new target from what I could tell.

[lamboguy]

the thing that i don't understand is how can the IRS modify tax rules, i thought it was the congress that presidential signature that did it?


right now this president is putting forth a brand new tax proposal. he wants to cut the tax rate but eliminate the deductions. if you have no deductions like most of the people here, this will work out great. but if you are a fat cat you will wind up paying double and triple what you were paying even with rate drop. at the same time this will be the largest tax cut ever and largest tax increase. my guess is the government will take in lots more money this way.

i am not so sure that the bankers and insurance company's will be so happy about this though. but i never liked them anyway and i think Trump likes them less than i do.

[mabred]

thanks for the update.Hope something gets done!!!

Mabred

[AlsoEligible]

I was recently at an industry meeting on this, and there's a couple things delaying it.

First and foremost, the lack of manpower in the treasury department. This simply isn't a priority for anyone given the lack of resources, especially during and immediately after tax season. There's also a question of whether this is a new regulation, which would then fall under Trump's mandate of "for every new regulation, two old ones must be repealed"....and if so, there may be some very long delays as everyone argues over what to repeal.

Second, the industry isn't quite ready yet either - specifically on the ADW side, where all of your bets into a particular pool count as the "amount wagered" when calculating whether you have a signer. Lot of programming to be done there. As opposed to on-track wagering, where it's just the amount wagered on a single ticket.

I believe the industry is now asking for a 30-45 day window between when the treasury says this is a go, and when it actually takes effect...so that gives everyone enough prep time. I wouldn't expect to see this until August/September at the earliest. Getting it in before Breeder's Cup would be a victory.

[AltonKelsey]

Oh yeah, lots of programming to figure out how much customer A bet into the Superfecta on Race 8 at Track B.

Might have to outsource it to one of those Foreign Programming Genii.

Won't even get into what happens if you use two ADW's on the same race. I kinda doubt they will be sharing info.

[LemonSoupKid]

I accidentally posted in another thread regarding taxes. What is (or will be) the new rule on withholding for big wins like on a pick 6?

No withholding but a form after 5k? 10k?

My example was that of a pick 6 under 10k but over 5k with a 200-300 total ticket amount (a wheeled $2 ticket of course).

Thanks.

[LemonSoupKid]

I was recently at an industry meeting on this, and there's a couple things delaying it.

First and foremost, the lack of manpower in the treasury department. This simply isn't a priority for anyone given the lack of resources, especially during and immediately after tax season. There's also a question of whether this is a new regulation, which would then fall under Trump's mandate of "for every new regulation, two old ones must be repealed"....and if so, there may be some very long delays as everyone argues over what to repeal.

Second, the industry isn't quite ready yet either - specifically on the ADW side, where all of your bets into a particular pool count as the "amount wagered" when calculating whether you have a signer. Lot of programming to be done there. As opposed to on-track wagering, where it's just the amount wagered on a single ticket.

I believe the industry is now asking for a 30-45 day window between when the treasury says this is a go, and when it actually takes effect...so that gives everyone enough prep time. I wouldn't expect to see this until August/September at the earliest. Getting it in before Breeder's Cup would be a victory.

Also, if it gets enacted this year, will it be the law for every bet placed this year, in 2017?

That would be cool.

[AndyC]

the thing that i don't understand is how can the IRS modify tax rules, i thought it was the congress that presidential signature that did it?...

Just saw this question. The IRS is not modifying rules (laws) they are modifying the regulations for enforcing the laws.

A winning bet after the regulations go into effect will cost the same amount of tax as before. The fact that many people won't be getting W2-Gs from winning bets doesn't mean they haven't received taxable income. The regulations will effectively neuter enforcement on those types of bets that will be exempt from reporting.

[AndyC]

Also, if it gets enacted this year, will it be the law for every bet placed this year, in 2017?

That would be cool.

The problem is that winning bets have already been reported. Can't unring that bell.

[spiketoo]

I saw the other thread first and was about to reply-lets have AndyC
weigh in here.

[LemonSoupKid]

But Andy, if they took it you can still report it as improperly withheld (because the new law has passed and is retroactive) and thus have it returned.

A couple more questions:

If the state where you cash is not your home state (IRS home), does your home state honor that they withheld the money in the state of the winning wager as a credit that you paid tax on it (or reciprocal agreement)? Or do they just say, reduce it by that tax taken out and then pay us some more?

The new legislation would be huge for us pick 4 and pick 6 bettors. If you risk hundreds on a pick 4 to win towards a thousand or many thousands, or if you risk thousands to win more thousands on pick 6, it is preposterous not only to have that reported, it's a pain in the ass a lot of times for a bunch of nothing: SS card, time in line, dealing with it on a tax return later for a lot of time nominal amounts, etc.

As if IRS really cares about sub-10k wins, big picture. Give me a break.

[Andy Asaro]

If you are audited and don't have accurate records to claim losses against your winnings and you have assets they will crawl up your *** and destroy you if you don't pay up. Expect to be audited every year, keep accurate records and you won't have a problem.

[AndyC]

But Andy, if they took it you can still report it as improperly withheld (because the new law has passed and is retroactive) and thus have it returned.

A couple more questions:

If the state where you cash is not your home state (IRS home), does your home state honor that they withheld the money in the state of the winning wager as a credit that you paid tax on it (or reciprocal agreement)? Or do they just say, reduce it by that tax taken out and then pay us some more?

The new legislation would be huge for us pick 4 and pick 6 bettors. If you risk hundreds on a pick 4 to win towards a thousand or many thousands, or if you risk thousands to win more thousands on pick 6, it is preposterous not only to have that reported, it's a pain in the ass a lot of times for a bunch of nothing: SS card, time in line, dealing with it on a tax return later for a lot of time nominal amounts, etc.

As if IRS really cares about sub-10k wins, big picture. Give me a break.

The new regulations do not affect the taxability of your winnings meaning your tax return for 2017 shouldn't be different with or without the new regulations. The only issue would be with the withholding. Because withholding is a self-correcting problem I doubt that they will spend a lot of energy trying to correct a problem that filing a tax return will automatically correct.

If you cash a winning bet in another state (not through ADW) you will generally be liable for taxes in the state in which you made your bet. Most home states will allow for a credit against the home state taxes for amounts paid to other states. The credit would apply where both states tax the income.

[LemonSoupKid]

If you are audited and don't have accurate records to claim losses against your winnings and you have assets they will crawl up your *** and destroy you if you don't pay up. Expect to be audited every year, keep accurate records and you won't have a problem.

Thanks to both Andys.

Asaro,

What I understand is that if you have the track program and losing tickets, you can count those against wins if you have any later. For example, I have multirace wager tickets I lost on the triple crown series, then finally cashed a nice one later on. I would wonder how creative one can get in these scenarios regarding counting losses against, because obviously it's not gonna be believable if you try to deduct all your losses or near all.

[Andy Asaro]

Thanks to both Andys.

Asaro,

What I understand is that if you have the track program and losing tickets, you can count those against wins if you have any later. For example, I have multirace wager tickets I lost on the triple crown series, then finally cashed a nice one later on. I would wonder how creative one can get in these scenarios regarding counting losses against, because obviously it's not gonna be believable if you try to deduct all your losses or near all.

About 95% of what I bet is online now. But if you're betting at OTB or on track and lets say you bet 200 across on a horse and the horse runs third. You cash the ticket (hopefully you still made a profit) but since you didn't bet them on separate tickets (one win, one place, and one show) you lose the ticket for the win and place write offs of $400. It can be a pain in the ass to make your bets on separate tickets but it's a more "legit' write off against winnings with the ticket than without IMO

Then there are other gambling losses like Vegas table games. Supposed to keep a diary/record but they don't give you receipts when you lose 5K playing blackjack. I went through an audit from hell a couple years after a big score. Moral of the story is keep accurate records, pay what you legitimately owe so you don't have to sweat it.

And AndyC is the expert not me.

[AndyC]

Thanks to both Andys.

Asaro,

What I understand is that if you have the track program and losing tickets, you can count those against wins if you have any later. For example, I have multirace wager tickets I lost on the triple crown series, then finally cashed a nice one later on. I would wonder how creative one can get in these scenarios regarding counting losses against, because obviously it's not gonna be believable if you try to deduct all your losses or near all.

Correct betting records would show all winning and losing bets. A $20 win bet that returned $96 should be shown on your records. To show up at an audit where you have a $25,000 W2-G and only losing tickets would be a hard sell. You would have to be a great salesman to tell an auditor that you went to the track 100 times last year and only cashed 1 bet the entire time.

[ReplayRandall]

Correct betting records would show all winning and losing bets. A $20 win bet that returned $96 should be shown on your records. To show up at an audit where you have a $25,000 W2-G and only losing tickets would be a hard sell. You would have to be a great salesman to tell an auditor that you went to the track 100 times last year and only cashed 1 bet the entire time.

I disagree......When you have a $25K W2-G, it's either a pick-4,5,6 or a bomb trifecta/superfecta. If it's a pick-6, you can easily justify winning just the one time, while showing just as many losing pick-6 tickets surpassing the win for the whole year. It's the other categories that you may have trouble justifying just the one hit and all other wagers are losers....But if you can show enough overwhelming losing wagers via whatever means legally possible, with a win here and a win there, it's still doable.

[AndyC]

I disagree......When you have a $25K W2-G, it's either a pick-4,5,6 or a bomb trifecta/superfecta. If it's a pick-6, you can easily justify winning just the one time, while showing just as many losing pick-6 tickets surpassing the win for the whole year. It's the other categories that you may have trouble justifying just the one hit and all other wagers are losers....But if you can show enough overwhelming losing wagers via whatever means legally possible, with a win here and a win there, it's still doable.

I agree if your betting is restricted to low probability bets. I should have said, don't show up to an audit with lots of losing win or other higher probability bet tickets.

[zico20]

Correct betting records would show all winning and losing bets. A $20 win bet that returned $96 should be shown on your records. To show up at an audit where you have a $25,000 W2-G and only losing tickets would be a hard sell. You would have to be a great salesman to tell an auditor that you went to the track 100 times last year and only cashed 1 bet the entire time.

I am not so sure about that. Have you ever been to the track and listened to some people's handicapping prowess. You would swear they could not pick a winner in a one horse race. :D

[LemonSoupKid]

I disagree......When you have a $25K W2-G, it's either a pick-4,5,6 or a bomb trifecta/superfecta. If it's a pick-6, you can easily justify winning just the one time, while showing just as many losing pick-6 tickets surpassing the win for the whole year. It's the other categories that you may have trouble justifying just the one hit and all other wagers are losers....But if you can show enough overwhelming losing wagers via whatever means legally possible, with a win here and a win there, it's still doable.

Thanks Randall.

Andy, instead of being just a simpleton rule follower for a corrupt IRS, think a little out of the box. I'm obviously not suggesting someone should do things that are totally out of wack, but let's be real, accountants are hired all the time for their expertise on what you can "get away with." If you think that's shady, you are just a sucker in the IRS game that everyone is aware of but you.

I'm not trying to be mean but acting like you should, or anyone is actually going to, cover every bet win and loss while not being a professional gambler that files as such is just ... stupid.

[LemonSoupKid]

I agree if your betting is restricted to low probability bets. I should have said, don't show up to an audit with lots of losing win or other higher probability bet tickets.

Ok, thank you, if that is your recommendation, that is what I was asking.

[AndyC]

Thanks Randall.

Andy, instead of being just a simpleton rule follower for a corrupt IRS, think a little out of the box. I'm obviously not suggesting someone should do things that are totally out of wack, but let's be real, accountants are hired all the time for their expertise on what you can "get away with." If you think that's shady, you are just a sucker in the IRS game that everyone is aware of but you.

I'm not trying to be mean but acting like you should, or anyone is actually going to, cover every bet win and loss while not being a professional gambler that files as such is just ... stupid.

I am not in a position to pick and choose which laws I want to follow and which ones I don't. There are plenty of ways to legally pay less tax so I see no reason to try and "get away with" anything. There are also numerous gray areas in the laws where aggressive positions can be taken but done so with some reasonable support.

As long as you want to point out stupid, people who do things without an understanding of the consequences or the documentation requirements are in your words stupid. I fully understand that a person who gambles just a few times a year and happens to make a big score would not approach their gambling with any understanding whatsoever. A person who frequently bets the races and maintains inadequate records will get what they deserve.

[SharpCat]

It's the other categories that you may have trouble justifying just the one hit and all other wagers are losers....But if you can show enough overwhelming losing wagers via whatever means legally possible, with a win here and a win there, it's still doable.

If you live close to a simulcast facility and also have a adw you can easily do this would think. Really would not even be a need to show losing wagers. Lets say you bet ice cold exacta's $1000-$2000 at the tracks with big pools. You could easily make bets throughout the year on your ADW. Then other parts of the year just drive to the simulcast facility and make wagers there. Come tax time you just show them your activity report for the year.

[LemonSoupKid]

I am not in a position to pick and choose which laws I want to follow and which ones I don't. There are plenty of ways to legally pay less tax so I see no reason to try and "get away with" anything. There are also numerous gray areas in the laws where aggressive positions can be taken but done so with some reasonable support.

As long as you want to point out stupid, people who do things without an understanding of the consequences or the documentation requirements are in your words stupid. I fully understand that a person who gambles just a few times a year and happens to make a big score would not approach their gambling with any understanding whatsoever. A person who frequently bets the races and maintains inadequate records will get what they deserve.

I'm not suggesting that one should just declare losses without documentation. Let's just say this, and please just look at the big picture --- I'm just calling it a dance that one plays. There are good ways to approach it and bad ways. I'm with you, don't dance poorly. I'm asking, what's the best way to dance smart? Randall seems to understand what I'm getting at.

[AndyC]

I'm not suggesting that one should just declare losses without documentation. Let's just say this, and please just look at the big picture --- I'm just calling it a dance that one plays. There are good ways to approach it and bad ways. I'm with you, don't dance poorly. I'm asking, what's the best way to dance smart? Randall seems to understand what I'm getting at.

If by "dance smart" you mean evading taxes on winnings, I am not a dance instructor. The best thing to do is keep good records or bet everything through an ADW and have them keep the records for you.

The method for taxing gambling winnings is absurd but unlikely to be changed anytime soon. Any effort to give tax relief to gamblers when our country is running huge deficits will not play well with voters.

[Andy Asaro]

I'm not suggesting that one should just declare losses without documentation. Let's just say this, and please just look at the big picture --- I'm just calling it a dance that one plays. There are good ways to approach it and bad ways. I'm with you, don't dance poorly. I'm asking, what's the best way to dance smart? Randall seems to understand what I'm getting at.

And if you're unlucky enough to get audited and they find something and then they go back 7 years and find the same things guess what happens? With fines, penalities, and interest, any assets you have will be taken.

[garyscpa]

If by "dance smart" you mean evading taxes on winnings, I am not a dance instructor. The best thing to do is keep good records or bet everything through an ADW and have them keep the records for you.

The method for taxing gambling winnings is absurd but unlikely to be changed anytime soon. Any effort to give tax relief to gamblers when our country is running huge deficits will not play well with voters.

This is the truth. If you get audited for gambling winnings and loses you are at the mercy of the auditor. Luckily they don't seem to be making this a priority anymore. But the risk still exists. Telling the auditor to look at the big picture won't work, because there are multiple levels of review.

[Track Collector]

What credits?

What if I'm working and not collecting Social security?

Will that 103K all be added to my AGI? If I make 75K a year from my job, will that equate to $178K in income? If so, how much of my 105K in losses are going to help me out? I may quit betting :bang:

Sorry for a late response, but I finally took time to read the entire thread and digest all the posts/responses.

Bottom line --> Anyone who does not report their wagering activities on Schedule C of their Federal return is considered a "hobbyist", and a hobbyist is at significant risk of being shafted because of how the current tax laws are written, and the level of shafting increases the higher one's yearly wagering handle goes. And, as indicated by others, the potential new tax laws will only impact what is withheld. Your final tax liability is going to be unchanged. To give you an idea of what I am talking about, if one wagered $1 Million in a year and received back in winnings $1 Million (thus breaking exactly even), one could still have a tax liability in the tens of thousands of dollars. This is of course completely unfair and ridiculous, but as I believe mentioned by AndyC, it is the way it is. I believe the reason for the unfairness is that those using Schedule C can report their NET WINNINGS on page one while hobbyists/others have to report their GROSS WINNINGS ($1 Million in the example I used above, or $103K in your case), and is messes up a whole slew of things with the likely result that you will incur a significant tax liability.

In your specific case I highly recommend you at least explore the possibility of reporting your wagering activity using a schedule C. I can provide you with additional info if you want to send me a private message. I can also tell you that while it presents more challenges, it is possible to qualify to use Schedule C even if you also have other income and/or have a 40 hour per week job. (I successfully survived such an audit over 10 years ago.). It may be surprising to folks, but to my knowledge, the loosely knit criteria to qualify for using a Schedule C does not include a "minimum" yearly wagering requirement.

When using schedule C your tax rate will go up, but you will then have the benefit of deducting expenses that hobbyists can not, such as racing forms, data subscription plans, mileage to drive to the track/otb, etc. which have the potential to off-set or even exceed the higher tax incurred.

Short, to-the-point answer: IMO as a non-tax professional, you currently fit under the "hobbyist" category, and as such, if you report in the legal/proper way (i.e. your $103K winnings are included in your AGI), you are going to end up with significant, albeit "unfair" tax liability.

[Track Collector]

Andy, instead of being just a simpleton rule follower for a corrupt IRS, think a little out of the box. I'm obviously not suggesting someone should do things that are totally out of wack, but let's be real, accountants are hired all the time for their expertise on what you can "get away with." If you think that's shady, you are just a sucker in the IRS game that everyone is aware of but you.

I'm not trying to be mean but acting like you should, or anyone is actually going to, cover every bet win and loss while not being a professional gambler that files as such is just ... stupid.

AndyC is spot on here.

Accountants can suggest alternatives in areas where the tax law(s) are gray and/or fuzzy, but in this case, the laws are very explicit and clear:

-- Report all your winnings, whether they are easily traceable or not.
-- Show and document your losses so that you have some/all of the winnings off-set.

Regardless of whether you think specific laws are unfair and/or impractical to follow, the more one attempts to conform to the law, the less likely one is to be audited and/or found guilty of non-compliance. To do so otherwise, would be as you say, "stupid".

[Track Collector]

I disagree......When you have a $25K W2-G, it's either a pick-4,5,6 or a bomb trifecta/superfecta. If it's a pick-6, you can easily justify winning just the one time, while showing just as many losing pick-6 tickets surpassing the win for the whole year. It's the other categories that you may have troublejustifying just the one hit and all other wagers are losers....But if you can show enough overwhelming losing wagers via whatever means legally possible, with a win here and a win there, it's still doable.

What AndyC is trying to convey is that the IRS has little to no understanding on what it is like to wager on the horses. They do not know/care that the risk level (i.e. the chance of having a winning ticket) is significantly different on a WIN wager vs. a Pick-6 wager. They simply see it as winnings and losings, and because of such, things that would be obvious to a regular horseplayer (like knowing that hitting a pick-6 is extremely hard and any winning ticket will likely have endured many loosing tickets along the way) would be foreign to them. As such, it is possible that during an audit they reject reasonable proof/arguments in deciding the legitimacy of any loses. One can always go the appeals route, but one would always want the audit to be settled in one's favor the first time rather than spend more money in the appeals process in an attempt to be shown right.

That said, one can never be sure how reasonable/unreasonable the IRS is going to be.

[Track Collector]

If you live close to a simulcast facility and also have a adw you can easily do this would think. Really would not even be a need to show losing wagers. Lets say you bet ice cold exacta's $1000-$2000 at the tracks with big pools. You could easily make bets throughout the year on your ADW. Then other parts of the year just drive to the simulcast facility and make wagers there. Come tax time you just show them your activity report for the year.

The key here is PROOF of all the wagering activities.

No problem at all with ADW, but the wagers made on track and at the simulcast facility could be. One would have to have some type of Membership / Player Card with which to "record" all your wagering activity, and then those places would have to provide you with a means of securing subject reports.

Also, one still has those nasty "hobbyist" issues mentioned previously if that is the category one is in. (P.S. This is not to demean those who are in that category, but to simply point out the potential tax risks.).

[SharpCat]

The key here is PROOF of all the wagering activities.

No problem at all with ADW, but the wagers made on track and at the simulcast facility could be. One would have to have some type of Membership / Player Card with which to "record" all your wagering activity, and then those places would have to provide you with a means of securing subject reports.

Also, one still has those nasty "hobbyist" issues mentioned previously if that is the category one is in. (P.S. This is not to demean those who are in that category, but to simply point out the potential tax risks.).

Just giving an example of how someone could avoid paying taxes by splitting wagering activity's. Easily could split wagering between the Track/OTB and ADW. Only report the winnings from the ADW. Come tax time just give your yearly activity report.

I mean probably 99% percent of people don't pay taxes on money won at the Track/OTB unless they hit a signer.

[Andy Asaro]

You guys know the IRS is probably reading this thread right? :pound:

Maybe P.A. will delete the thread to help some of you guys out. :popcorn:

[LemonSoupKid]

If by "dance smart" you mean evading taxes on winnings, I am not a dance instructor. The best thing to do is keep good records or bet everything through an ADW and have them keep the records for you.

The method for taxing gambling winnings is absurd but unlikely to be changed anytime soon. Any effort to give tax relief to gamblers when our country is running huge deficits will not play well with voters.

I understand your take, I agree, keep records.

And we agree on the absurdity, but you think people know or think twice about horse racing/gambling legislation? Hardly. Just like every other special interest cause the crony capitalists in Washington champion. Acting like the deficits matter, or the debt for that matter, for piddly stuff like we're talking about when SSA and CMS are near 70% of the 20 trillion debt we have is crazy. Anyone talking about, or upset about gambling writeoffs for something like this when the real issue has to do with those two huge albatrosses, is not rational. But again, I don't think they know, which is also why they don't know the stats I just said to make a rational statement or argument.

[AndyC]

Just giving an example of how someone could avoid paying taxes by splitting wagering activity's. Easily could split wagering between the Track/OTB and ADW. Only report the winnings from the ADW. Come tax time just give your yearly activity report.

I mean probably 99% percent of people don't pay taxes on money won at the Track/OTB unless they hit a signer.

So what happens when you hit a big signer at the track or vice versa?

[Track Collector]

Just giving an example of how someone could avoid paying taxes by cheating by splitting wagering activity's. Easily could split wagering between the Track/OTB and ADW. Only report the winnings from the ADW. Come tax time just give your yearly activity report.

FTFY.

I'm not here to pass judgement on what others do.........just pointing out the realities of your example. ;)

[SharpCat]

So what happens when you hit a big signer at the track or vice versa?

In my example I was talking about someone who plays exactas for big money. Your never going to hit a big signer playing exactas. If you play other wagers that could potentially be signers just bet them on the ADW.

[SharpCat]

FTFY.

I'm not here to pass judgement on what others do.........just pointing out the realities of your example. ;)

I'm not saying I do that. Just pointing out how easy it would be to do it. Obviously 99% of those who play the horses are cheating because they never pay taxes on money won at the track.

[AndyC]

In my example I was talking about someone who plays exactas for big money. Your never going to hit a big signer playing exactas. If you play other wagers that could potentially be signers just bet them on the ADW.

Gotcha. The assumption being that the player is a winning exacta player.

[LemonSoupKid]

I'm not saying I do that. Just pointing out how easy it would be to do it. Obviously 99% of those who play the horses are cheating because they never pay taxes on money won at the track.

This has been the crux of my point the whole time. Let's say you played big multi-race wagers for years, never cashed, and finally you hit. You gotta hit one of these every year to be able to write off any losses? That point proves it all, just how silly it is. No carryover for losses, no ability to write anything off, track take, state tax, surcharges, now fed income ... someone could letter of the law "cheat on taxes" after hitting a 50k bet one year, having lost 50k the previous 10 years betting those bomb multirace wagers. Is that "cheating"? No, it's a stupid system that, under these rules, no one respects because it doesn't deserve any, and it's never going to earn it unless it works to make things reasonable for the player. Notice I'm not saying even to make it "good" --- just make it reasonable!

That's just the reality.

[SharpCat]

This has been the crux of my point the whole time. Let's say you played big multi-race wagers for years, never cashed, and finally you hit. You gotta hit one of these every year to be able to write off any losses? That point proves it all, just how silly it is. No carryover for losses, no ability to write anything off, track take, state tax, surcharges, now fed income ... someone could letter of the law "cheat on taxes" after hitting a 50k bet one year, having lost 50k the previous 10 years betting those bomb multirace wagers. Is that "cheating"? No, it's a stupid system that, under these rules, no one respects because it doesn't deserve any, and it's never going to earn it unless it works to make things reasonable for the player. Notice I'm not saying even to make it "good" --- just make it reasonable!

That's just the reality.

Yeah agree 100% it's a stupid system. They really love to stick it to gamblers any way they can. I wish we had a system like Canada.

[PaceAdvantage]

Thanks Randall.

Andy, instead of being just a simpleton rule follower for a corrupt IRS, think a little out of the box. I'm obviously not suggesting someone should do things that are totally out of wack, but let's be real, accountants are hired all the time for their expertise on what you can "get away with." If you think that's shady, you are just a sucker in the IRS game that everyone is aware of but you.

I'm not trying to be mean but acting like you should, or anyone is actually going to, cover every bet win and loss while not being a professional gambler that files as such is just ... stupid.Andy knows what he's talking about. He's already said on here he is a CPA.

And if you've been paying attention through the years, you'd know who Andy actually is in terms of the horse racing handicapping world. Anyone from the old Prodigy board knows who he is.

I believe Andy Beyer has talked about him more than a few times as well if I remember correctly...

I don't know why people give him shit every now and then...:lol:

We're lucky to have someone like him hanging around here...

[AlsoEligible]

https://www.ntra.com/wedidit/

The U.S. Treasury Department and the Internal Revenue Service (IRS) today announced that they will formally adopt modernized regulations regarding the withholding and reporting of pari-mutuel proceeds. The National Thoroughbred Racing Association (NTRA) has long pressed for these updated regulations that will allow horseplayers to keep more of their winnings, thereby increasing the amount wagered on U.S. pari-mutuel racing by as much as 10 percent annually, or upwards of $1 billion, according to independent estimates.

The new rules were posted late Monday afternoon as a Public Inspection Document. They are scheduled to be officially published in Wednesday’s edition of the Federal Register and will go into full effect by no later than Nov. 14, giving racing associations, totalisator companies, and advance deposit wagering (ADW) operators up to 45 days to implement these important changes; however, some may elect to start as soon as Thursday.

[ReplayRandall]

https://www.ntra.com/wedidit/
The U.S. Treasury Department and the Internal Revenue Service (IRS) today announced that they will formally adopt modernized regulations regarding the withholding and reporting of pari-mutuel proceeds. The National Thoroughbred Racing Association (NTRA) has long pressed for these updated regulations that will allow horseplayers to keep more of their winnings, thereby increasing the amount wagered on U.S. pari-mutuel racing by as much as 10 percent annually, or upwards of $1 billion, according to independent estimates.

The new rules were posted late Monday afternoon as a Public Inspection Document. They are scheduled to be officially published in Wednesday’s edition of the Federal Register and will go into full effect by no later than Nov. 14, giving racing associations, totalisator companies, and advance deposit wagering (ADW) operators up to 45 days to implement these important changes; however, some may elect to start as soon as Thursday.

It will be interesting to see which tracks start immediately on Thursday, and those who drag their feet and wait until Nov. 14th to implement this most important change for the bettors.......I'll be watching, taking down notes and names of those who test my patience.

[AlsoEligible]

To be fair, even though most of the industry has known that these changes were coming and have been preparing for them, today's notice has caught just about everyone I've talked to off guard. So a three day turnaround is going to be tough. Software changes, re-training clerks, etc will take a little time to fully implement. On the other hand, they should not take until November 14th.

I'd be content with tracks and ADWs having this in place by mid-October. Seems like the goal was to have it ready before Breeder's Cup, and I think that's very achievable.

[showonly]

The end result of this maybe a win for all involved.

[ReplayRandall]

The U.S. Treasury Department and the Internal Revenue Service (IRS) today announced that they will formally adopt modernized regulations regarding the withholding and reporting of pari-mutuel proceeds. The National Thoroughbred Racing Association (NTRA) has long pressed for these updated regulations that will allow horseplayers to keep more of their winnings, thereby increasing the amount wagered on U.S. pari-mutuel racing by as much as 10 percent annually, or upwards of $1 billion, according to independent estimates.

The new rules were posted late Monday afternoon as a Public Inspection Document. They are scheduled to be officially published in Wednesday’s edition of the Federal Register and will go into full effect by no later than Nov. 14, giving racing associations, totalisator companies, and advance deposit wagering (ADW) operators up to 45 days to implement these important changes; however, some may elect to start as soon as Thursday.

TwinSpires will be the first ADW to implement new tax rule starting THURSDAY...:ThmbUp:

[Track Collector]

I received notices that ADWs Xpressbet and AmWest would also be in compliance with the new regulations beginning Thursday, 09/28.

[LemonSoupKid]

Got r' dun

MAGA