question about filing as pro gambler...

[superfecta]

Does anyone have suggestions on when to do this?My father has won substantial money on Bingo and Keno this year,and he is getting to the point where it is more than some people earn in a year.He is semi retired,and I mentioned that he might want to file next year as a part time gambler.At what point does it make sense to do this?If at all?Thanks in advance.

[kenwoodall]

The IRS would love it if he filed! If the casino or whoever gives anyone a 1099 form then IRS knows about that win. A reciept file and reciepts for any bets lost at bingo, keno, or the horses all year is needed. It is hard to cheat- a lot of losing horseracing slips found on the floor may be the day as his bingoing!!

[Lefty]

There's others that know more about this than I, but I don't think he should file as pro gambler. Just add winnings to any other income or SS. Don't think picking losers off floor cuts it anymore. In future he should keep a daily journal of any wins or losses and all losing betting slips of any kind. Above all seek services of good acct.

[hurrikane]

Well, he should probably talk to an accountant. And not just any accountant but one who deals with pro gamblers.
The IRS says you can write off your gambling losses up to the amount of you winnings only. But it doesn't mean you can't write off all other business expenses involved in the business. Just like any business there are expenses.
You don't have to show a profit..one out of 5 yrs. All you have to prove is that you are persuing this intending to be a professional gambler.
Same rules apply to golf and I have been writting both expenses off for 4 yrs now.

Again, talk to an accountant that does this kind of work. Not some friggin H&R block clone.

[Mr. Blonde]

www.rbstaxes.com

[MikeH]

I'm a CPA with some tax background, so I'll chime in here. The advice already given is good.

He needs to be very careful about declaring himself a professional gambler this year, because the IRS will expect him to do so in the future.

The big advantage to being a professional gambler is that he can write off his losses and other expenses without itemizing. For a racing handicapper, the expenses can be high. The TRADE-OFF is that he will pay "Self-employment" tax (Social security) at 15% of his NET profits, in addition to whatever income tax bracket he falls into.

Hurricane's response about talking to an accountant with gaming experience is on the mark... I have little experience with it and can see some of the potential problems, but I don't know the answers. Mr. Blonde's reference to rbstaxes is good... these guys seem to have experience. They are "Enrolled Agents" which, although they have different requirements to obtain their license, Enrolled Agents tend to be very strong in taxes. Also, to get a rough idea, you might buy their book "The tax guide for gamblers". Its available from the Gamblers Book Store in Las Vegas. Do a search here @ PA for rbstaxes; this has been discussed before.