10 percenter

[precocity]

DAM good read
http://crimeblog.dallasnews.com/2012/12/feds-say-regular-at-lone-star-park-ran-scam-that-allowed-gamblers-to-dodge-irs.html/


:lol:

[Robert Goren]

When he signs for the ticket he becomes libel for taxes on the ticket. Most 10% I have ran across were on SS and a couple of tickets wasn't going to effect their tax status, But if they cashed enough of them , they have to pay taxes. This guy must have had something going to off set the value tickets for tax purposes.

[thaskalos]

The only tax-fraud committed at the racetrack is the one perpetrated against the gamblers by the IRS itself...through their law of considering the winning ticket to be a $1 bet -- regardless of how much money the ticket actually cost to purchase.

The bettor invests $300 in a pick-5 ticket...and wins $602. Only the government could come up with a way to consider this to be a 600-1 payoff...and enforce it for 40 years. :ThmbDown:

[HPFridays]

The only tax-fraud committed at the racetrack is the one perpetrated against the gamblers by the IRS itself...through their law of considering the winning ticket to be a $1 bet -- regardless of how much money the ticket actually cost to purchase.

The bettor invests $300 in a pick-5 ticket...and wins $602. Only the government could come up with a way to consider this to be a 600-1 payoff. :ThmbDown:

Exactly. Byk and a caller were talking about this subject yesterday; how raising the 600-1 threshold would increase churn and legitimate cashing of tickets.

[tbwinner]

Only used a ten percenter once and have had between 8 and 10 signers in my gambling life (all under $5k). Always stayed away because I was and still am worried about the risk and didn't see the point. Only used one once because my racetracker friend was running "low on cash" so I signed through him as a "favor" (lol).

Aren't some of the new tote systems now tracking SS#s and also cross-checking IRS liens (NYRA has that I think and the cameras where you must stand and look into where someone in a control room examines you --had this happen at the Spa this past summer)?

[thaskalos]

Exactly. Byk and a caller were talking about this subject yesterday; how raising the 600-1 threshold would increase churn and legitimate cashing of tickets.

I say forget about raising the 600-1 threshold. The right thing to do is to consider the entire cost of the ticket as the wagered amount...and calculate accordingly.

To call it a $1 wager when the player bet hundreds of dollars is downright criminal.

[precocity]

The only tax-fraud committed at the racetrack is the one perpetrated against the gamblers by the IRS itself...through their law of considering the winning ticket to be a $1 bet -- regardless of how much money the ticket actually cost to purchase.

The bettor invests $300 in a pick-5 ticket...and wins $602. Only the government could come up with a way to consider this to be a 600-1 payoff...and enforce it for 40 years. :ThmbDown:

totaly agree but what about the real guys on the feds case that has there front and last initials on the case? wonder if they got charged? back in the day when I used to go to lone star there was 15 guys waiting to get that 10 percent.. :rolleyes:

[usedtolovetvg]

I've never been able to understand how the feds have been able to justify the double taxation on gambling winnings. Federal tax is already deducted when you make the bet. I do know in Canada there is no tax on gambling winnings. If you hit a lottery with a $100 million jackpot. They give you a check for $100 million right then and there. I know lots of people who use 10%ers all the time. As far as I know they've never been caught.

[HPFridays]

Agree with you, Thaskalos, that it should be the total wagered amount that's used for taxation(if they feel the need to double tax). While it could easily be done via an ADW, what about a player that has three physical tickets for the same winning pool but only one of those tickets is a winner? How would the teller be able to determine for certain the bets were all made by the same player?

[ronsmac]

There should be exactly zero taxes on winnings period.

[Robert Goren]

There should be exactly zero taxes on winnings period.Why?

[wisconsin]

Why?

The money wagered has ALREADY been taxed 99% of the time as someone's income. Duh-uh.

[usedtolovetvg]

Why?

Didn't you pay federal and state tax when you bought the ticket?

[Robert Goren]

Didn't you pay federal and state tax when you bought the ticket. .No to Federal taxes and the state taxes are generally less than 1.5% of every dollar wagered as part the takeout. Where did you get the idea that there was federal tax as part of the takeout?

[Robert Goren]

The money wagered has ALREADY been taxed 99% of the time as someone's income. Duh-uh.So is the money you used to buy anything, but seller has to pay taxes on his profits.

[wisconsin]

So is the money you used to buy anything, but seller has to pay taxes on his profits.

Do you really believe this is the same? Scary.

The seller does pay tax on his income. The money stays with him. I sell cars. Should the factory rebate be treated as income for tax purposes? Should you pay tax on the $3 rebate through the mail?

How would feel about being taxed on EVERY payoff, even your skimpy ticket $5.40 winner for $2? I think you would quit the game at once.

[Robert Goren]

Do you really believe this is the same? Scary.

The seller does pay tax on his income. The money stays with him. I sell cars. Should the factory rebate be treated as income for tax purposes? Should you pay tax on the $3 rebate through the mail?

How would feel about being taxed on EVERY payoff, even your skimpy ticket $5.40 winner for $2? I think you would quit the game at once.How is gambling equivalent to a rebate. A rebate just a fancy way of lowering the price. Gambling is equivalent to buy and selling stocks. That is taxable as I know all too well.

[thaskalos]

Agree with you, Thaskalos, that it should be the total wagered amount that's used for taxation(if they feel the need to double tax). While it could easily be done via an ADW, what about a player that has three physical tickets for the same winning pool but only one of those tickets is a winner? How would the teller be able to determine for certain the bets were all made by the same player?
The winning physical ticket costs a price, and that price is plastered right on the face of it...in large, clear numbers.

Let's say a bettor bet $48 on a pick-4...and hit on a $602 payoff. He takes the ticket to the IRS window, where the teller fills out a form...listing the winning wagered amount as $1...making the ROI on the bet 601-1.

Why one dollar? The man wagered $48 for this winning ticket, and his return wasn't 601-1...it was less than 12-1!

[usedtolovetvg]

In Canada, the feds do get a small % of every bet. I assumed that was the same in the U.S.

The sad reality is, I believe, in the U.S. ALL gambling winnings are taxable but rarely enforced. The feds only had a record when they forced you to declare at 300-1 or higher at the windows. With the advent of i'net gambling, the feds could have an accounting of everyone's plus or minus and could tax the winners. Since Big Brother is watching, I guess that could happen in the future. Since I'm just a dumb canuck someone please correct me if I'm wrong.

[Robert Goren]

In Canada, the feds do get a small % of every bet. I assumed that was the same in the U.S.

The sad reality is, I believe, in the U.S. ALL gambling winnings are taxable but rarely enforced. The feds only had a record when they forced you to declare at 300-1 or higher at the windows. With the advent of i'net gambling, the feds could have an accounting of everyone's plus or minus and could tax the winners. Since Big Brother is watching, I guess that could happen in the future. Since I'm just a dumb canuck someone please correct me if I'm wrong.The 299-1 rule applies to racing. Other forms of gambling have their own rules. As in all forms of income, the US IRS depends for most part on self reporting with certain exceptions as in the 299-1 rule. As for big brother watching, they would need to hire a lot more federal agents to do that. Only the profits from gambling are taxable, but you do have to document your loses in the manner the IRS proscribes.

[usedtolovetvg]

As for big brother watching, they would need to hire a lot more federal agents to do that.

As a leading conspiracy theorist, I think that in the not to distant future, it wouldn't be too difficult to create an IRS program that recorded all online bets and delivered an alert to Uncle Sam as to who owed what. Of course, that would be another infringement on our personal freedom but since when has the government ever cared about that.

[iwearpurple]

The money wagered has ALREADY been taxed 99% of the time as someone's income. Duh-uh.

So has the money I put in my savings account. Yet, the interest on that is taxable.

Over 50% of people in the US pay no income tax. Should those be taxed on their winnings at the track, but not those who are using earned income to wager?

You are not making any sense.

[JustRalph]

As a leading conspiracy theorist, I think that in the not to distant future, it wouldn't be too difficult to create an IRS program that recorded all online bets and delivered an alert to Uncle Sam as to who owed what. Of course, that would be another infringement on our personal freedom but since when has the government ever cared about that.

That's what they do already. Twinspires reported an error in my winnings a couple of years ago and I played he'll getting it corrected.

[Track Phantom]

The winning physical ticket costs a price, and that price is plastered right on the face of it...in large, clear numbers.

Let's say a bettor bet $48 on a pick-4...and hit on a $602 payoff. He takes the ticket to the IRS window, where the teller fills out a form...listing the winning wagered amount as $1...making the ROI on the bet 601-1.

Why one dollar? The man wagered $48 for this winning ticket, and his return wasn't 601-1...it was less than 12-1!

Technically, this is not true. For simplicity purposes, you combined your selections to one ticket. Again, technicially, you have 48 $1 tickets. So, if the law is 600-1, it would apply.

Having said all of that, I think the tax laws are absurd. I'm on your side, I just think the argument here is not "technically" accurate.

[thaskalos]

Technically, this is not true. For simplicity purposes, you combined your selections to one ticket. Again, technicially, you have 48 $1 tickets. So, if the law is 600-1, it would apply.

Having said all of that, I think the tax laws are absurd. I'm on your side, I just think the argument here is not "technically" accurate.

Yes...technically, I have 48 $1 tickets.

But if it wasn't for the 47 losers...would I have the one winning one?

Is it right to view a $48 dollar investment as if it were a $1 stab?

[racingfan378]

Yes...I have 48 $1 tickets.

But if it wasn't for the 47 losers...would I have the one winning one?

Is it right to view a $48 dollar investment as if it were a $1 bet?

in the eyes of a horse player, you are spot on... in the eyes of what you bet, there is nothing techincal about it. according to what you played & the mutuel ticket you have in your hand, you have 48 bets.
You purchased a $1 ticket x 48 combinations = $48 instead of 48 seperate tickets to save time.

is that correct? yes. is it fair? hell no!

but if we toss $30 to win on a horse the ticket reads one bet and not 15 bets

go figure!:mad:

P.S. example win ticket attached

[depalma113]

The winning physical ticket costs a price, and that price is plastered right on the face of it...in large, clear numbers.

Let's say a bettor bet $48 on a pick-4...and hit on a $602 payoff. He takes the ticket to the IRS window, where the teller fills out a form...listing the winning wagered amount as $1...making the ROI on the bet 601-1.

Why one dollar? The man wagered $48 for this winning ticket, and his return wasn't 601-1...it was less than 12-1!

The man bought 48 $1 tickets. You don't get to factor convience into your odds.

[thaskalos]

The man bought 48 $1 tickets. You don't get to factor convience into your odds.

Ridiculous.

The man did not buy 48 $1 tickets; he bought a $48 ticket COMBINATION.

To say that the winning wagered amount is $1 instead of $48 is just self-serving government bullshit.

[depalma113]

Combinations are nothing more than time savers. Saving time does not give you any right to change the base.

Looking at it another way. When you spend $48 and your payout is $30. Are you only writing off $18 in losses against your winnings, or $47?

[thaskalos]

Combinations are nothing more than time savers. Saving time does not give you any right to change the base.

Looking at it another way. When you spend $48 and your payout is $30. Are you only writing off $18 in losses against your winnings, or $47?

I am confused...

Are you implying that the horse wagering tax laws are not terribly unfair...and in dire need of reform?

[precocity]

well I know alot of the PA posters been to the track and been around alot longer then I have. but has anyone ever seen a story of a 10 percenter indicted and the story is in the paper and Internet in there home citys or state?

[Robert Goren]

This is the first time I have heard of it. I heard that a guy got kick off the track for doing it many years ago.

[wisconsin]

So has the money I put in my savings account. Yet, the interest on that is taxable.

Over 50% of people in the US pay no income tax. Should those be taxed on their winnings at the track, but not those who are using earned income to wager?

You are not making any sense.


Good one. You put $100 in your savings account and get $1.00 of interest. The $1 is taxable.

You bet $528 into a P6 and collect $768. The whole thing is taxable, as opposed to the actual profit of $240. Kind of like getting taxed on $101 in your bank account.

Why 300-1 as a threshold? Why not every single ticket you play. Tote could just deduct taxes on every ticket cashed. As easy as an OTB surcharge.

[usedtolovetvg]

I think this is a pretty good debate. I also believe that it would be almost impossible to get by the courts. Even though the ticket cost $48, ya gotta believe that that would be looked upon as 48 different bets. There is no way that the courts would ever look upon that as one bet. They are wrong but they do not have a gambler's mentality. The only saving grace is you can declare the other $47 of your ticket as losers. I don't know any self-respected gambler that hasn't been able to offset his wins with losses, unless they have hit a life-changer.

[racingfan378]

I think the only fair way is to add up all the bets you made at the end of the year, say $45,000. You won $53,500. $8,500 is the profit and THAT should be taxed amount, not a single score of $602+. Especially during the $53,500 in bets won, $20k of that was a pick 6, NO taxes should be taken out on ANY bet b/c of the winning and losing we all do during the course of a year

Now the $1 million dollar question, unless you are betting online, how will the IRS keep legit track of that?

This is a very good debate, no wrong thoughts on this topic

[therussmeister]

Good one. You put $100 in your savings account and get $1.00 of interest. The $1 is taxable.

You bet $528 into a P6 and collect $768. The whole thing is taxable, as opposed to the actual profit of $240. Kind of like getting taxed on $101 in your bank account.

Why 300-1 as a threshold? Why not every single ticket you play. Tote could just deduct taxes on every ticket cashed. As easy as an OTB surcharge.
But of course you are only taxed on the $240 profit, the $528 is written off.

[therussmeister]

I think the only fair way is to add up all the bets you made at the end of the year, say $45,000. You won $53,500. $8,500 is the profit and THAT should be taxed amount, not a single score of $602+. Even if during the of $53,500 in bets won, $20k of that was a pick 6, NO taxes should be taken out on ANY bet b/c of the winning and losing we all do during the course of a year

Now the $1 million dollar question, unless you are betting online, how will the IRS keep legit track of that?

This is a very good debate, no real wrong thoughts on this topic

That is precisely the reason why they don't do it your way. They know if they don't get anything when you cash, they will never see a penny of it.

[1st time lasix]

The going rate at the two seperate simulcast outlets i visit is 5%...not 10% Despite warnings and well meant articles i have read I have never once heard of a ticket casher ever getting in any kind of trouble at all. That is a twenty plus year period. My guess here is that the abuse was massive $$$ or the arrested signer pissed someone off. **** Because the usual guys in my handicapping group all seek exotic overlays.....not a single Friday or Saturday goes by where one doesn't have a signer. Not one of them ever signs themselvelves. Once in a while there is a 5 k ticket. That too is generally taken care of by the fringe ticket cashers who lurk around us. There is more math involved....and it requires some upfront payout so the signer gets all the witholding when he files. In my opinion....the entire process is ludicrus. The IRS double taxation does not apply in casinos when someone rolls hot dice.... or gets a run at blackjack. I am 100% behind the guys who evade on this one and I NEVER cheat on my income taxes!

[iwearpurple]

Good one. You put $100 in your savings account and get $1.00 of interest. The $1 is taxable.

You bet $528 into a P6 and collect $768. The whole thing is taxable, as opposed to the actual profit of $240. Kind of like getting taxed on $101 in your bank account.

Why 300-1 as a threshold? Why not every single ticket you play. Tote could just deduct taxes on every ticket cashed. As easy as an OTB surcharge.

Again, you are proving that you know nothing about the United States tax laws.

Yes, in your example it is only $1.00. But, if you get more than $10.00 in interest, you will get a 1099 showing your interest income. Whether or not you get a 1099, all interest income is taxable. You would be up in arms if the race track gave you a 1099 or W-2G for winnings larger than $10.00.

Assuming that you itemize deductions, the $528 cost is deductible, and only the profit of $240.00 is taxed. Also, any other losses would be deductible up to the amount of winnings. Now, whether or not that is fair is up for debate. My opinion is that you should be able to treat this like a business (in some rare cases, you can) and deduct losses if they exceed income against your other income.

Secondly, if you hit a winner for $5.40, that is taxable. Obviously, you don't sign for this but it is taxable.

In reality 99.99999% of horseplayers in the United States "cheat" when they file there tax returns. All winnings are taxable and you can then deduct the costs if you itemize.

[wisconsin]

But of course you are only taxed on the $240 profit, the $528 is written off.


Yes, it is, if you have losing tickets to write off. Now suppose you went just once that year. You really can't write off the $528 now because you don't have that ticket in your hand anymore.

I am simply against this form of taxation.

[iwearpurple]

Yes, it is, if you have losing tickets to write off. Now suppose you went just once that year. You really can't write off the $528 now because you don't have that ticket in your hand anymore.

I am simply against this form of taxation.

I am certain the track would gladly make a copy of the ticket for you. If not, take it home, make a copy, return another day to cash it.

[Striker]

But of course you are only taxed on the $240 profit, the $528 is written off.
That is only the case if you itemize your deductions. You take the standard deduction and whatever you cashed for, regardless of how much the ticket was, is added to your total yearly income.

[tbwinner]

That is only the case if you itemize your deductions. You take the standard deduction and whatever you cashed for, regardless of how much the ticket was, is added to your total yearly income.

Thus the reason a lot of people use 10-percenters.

[Valuist]

Very easy solution. Adopt a VAT and eliminate all personal income taxes. If you consume a lot, you will pay more in tax. In good economic times, you bring in more revenue. In bad times, as MOST of us know, you do not raise taxes. But I digress.....

[raybo]

I think this is a pretty good debate. I also believe that it would be almost impossible to get by the courts. Even though the ticket cost $48, ya gotta believe that that would be looked upon as 48 different bets. There is no way that the courts would ever look upon that as one bet. They are wrong but they do not have a gambler's mentality. The only saving grace is you can declare the other $47 of your ticket as losers. I don't know any self-respected gambler that hasn't been able to offset his wins with losses, unless they have hit a life-changer.

I agree, in exotic ticket, containing many combinations of betting interests, and only 1 of those combinations hits, is actually many separate bets with only 1 of those bets producing profit. All the other bets/combinations are losing ones and, via a halfway smart attorney could be written off as losses.

[Striker]

I am confused...

Are you implying that the horse wagering tax laws are not terribly unfair...and in dire need of reform?
I completely agree with what you have said in this thread thask. One of the biggest problems with the tax law on winnings of the horseplayer is that the rule of 600-1 was put in place when the game consisted mainly of WPS bets or least that is what most of the betting pools popularity consisted of. The betting options and involvement in the tris, supers and multi-race wagers have significantly changed the number of "signers" at the track because of that 600-1 rule . You would think that rule would change with evolving of the new wagers but it never did. But you sure can go win a slot jackpot(on even 1 cent or nickel machines) in a casino and not have to fill out IRS forms unless your jackpot winnings are more than $1200 or $1400, almost double what the horseplayer has to declare.

[Track Collector]

The tax laws regarding horse racing are in fact quite unfair. It is particularly so if you if you are classified as a professional.

Hypothetical (greatly simplified) Example:

You wager with the following net (pre-expense) results:
Year 2006 --> + $10,000
Year 2007 --> + $2,000
Year 2008 --> - $15,000
Year 2009 --> +$8,000
Year 2010 --> - $3,000

As a professional handicapper, you would have been taxed at an approximate level of 45% (Federal + State + Local + Self-employment tax) for years 2006, 2007, and 2009. The approximate taxes would have been $4,500 + $900 + $3,600 = $9,000. For years 2008 and 2010 you would have been required to simply eat the losses, with no carry over credit.

I could be wrong with this, but I believe that if the same results above were from generally accepted business like a thrift store, all of the loss years can be used to off-set income from other profitable years, so the approximate tax liability would have been $10,000 + $2000 - $15,000 + $8,000 - $3,000 = $2000 * 45% = $900.

So the professional player who has any significant losing years gets scr**ed because the IRS treats a Professional Gambling business a lot differently than they do a socially accepted business. Now he/she is allowed to deduct expenses, but that would be the case regardless of the whether or not the year in question was profitable.

As a general case, once the Government gets its hands on a revenue source, even if it is very unfair, it is extremely unlikely they will ever give it up. Without any high-visibility, wealthy racing interest group to challenge the existing laws, don't expect any changes.

Even so, the more familiar you are with the tax laws, the better your chances are to take advantage of every legal benefit. Those with lesser understanding are prone to paying more than they are required to.

[thaskalos]

I completely agree with what you have said in this thread thask. One of the biggest problems with the tax law on winnings of the horseplayer is that the rule of 600-1 was put in place when the game consisted mainly of WPS bets or least that is what most of the betting pools popularity consisted of. The betting options and involvement in the tris, supers and multi-race wagers have significantly changed the number of "signers" at the track because of that 600-1 rule . You would think that rule would change with evolving of the new wagers but it never did. But you sure can go win a slot jackpot(on even 1 cent or nickel machines) in a casino and not have to fill out IRS forms unless your jackpot winnings are more than $1200 or $1400, almost double what the horseplayer has to declare.

Exactly! :ThmbUp:

Because of my gambling, I get audited with regularity.

Whenever I go to the IRS office, I complain about the unfairness of the existing tax laws...as they apply to horseplayers.

I am always told that these laws were formed in 1976 -- before the super-exotics explosion -- and have not been modified since.

It shows in what regard the horseplayers are held...by the lawmakers of this country.

[iceknight]

That is only the case if you itemize your deductions. You take the standard deduction and whatever you cashed for, regardless of how much the ticket was, is added to your total yearly income.
Now why do you feel entitled to a "standard deduction". Maybe they make the standard deduction zero and make every person document every expense of living life.. (impossible to do).

or on the other hand, make VAT/Universal sales tax and reduce actual income tax to close to zero. Tax debates are never going to end though, but government waste spending of tax revenues is something that can be improved upon.

[Striker]

Now why do you feel entitled to a "standard deduction". Maybe they make the standard deduction zero and make every person document every expense of living life.. (impossible to do).

or on the other hand, make VAT/Universal sales tax and reduce actual income tax to close to zero. Tax debates are never going to end though, but government waste spending of tax revenues is something that can be improved upon.
Where do I say I'm entitled to anything? Aren't those the current tax laws. You claim the standard deduction or you itemize your deductions. Your points have nothing to do with claiming your winnings at the track on your taxes but nice pick at Aqueduct in the 8th race today.

[affirmedny]

Exactly! :ThmbUp:

Because of my gambling, I get audited with regularity.

Whenever I go to the IRS office, I complain about the unfairness of the existing tax laws...as they apply to horseplayers.

I am always told that these laws were formed in 1976 -- before the super-exotics explosion -- and have not been modified since.

It shows in what regard the horseplayers are held...by the lawmakers of this country.

That's incorrect, they have been modified since then. The withholding threshold used to be much lower than $5,000. $1,000 I think.

[therussmeister]

Yes, it is, if you have losing tickets to write off. Now suppose you went just once that year. You really can't write off the $528 now because you don't have that ticket in your hand anymore.

I am simply against this form of taxation.

I would always make a copy before cashing, in fact with the advent of smart phones, I make a copy of all my tickets.

[davew]

When he signs for the ticket he becomes libel for taxes on the ticket. Most 10% I have ran across were on SS and a couple of tickets wasn't going to effect their tax status, But if they cashed enough of them , they have to pay taxes. This guy must have had something going to off set the value tickets for tax purposes.

Maybe he went around collecting losing tickets looking for winners, and just kept them all as part of his 'handle', to off-set his $1.5 million in signers.

I think part of the track takeout goes to the state that licenses and oversees the operation. In Minnesota, there is a 6% tax on excess of $12 million yearly handle (not sure where the money comes from to pay for the Minnesota Racing Commission and all the blood/urine testing they do - as well as all the licensing of trainers/owners/backstretch workers....)

[Robert Goren]

Maybe he went around collecting losing tickets looking for winners, and just kept them all as part of his 'handle', to off-set his $1.5 million in signers.

I think part of the track takeout goes to the state that licenses and oversees the operation. In Minnesota, there is a 6% tax on excess of $12 million yearly handle (not sure where the money comes from to pay for the Minnesota Racing Commission and all the blood/urine testing they do - as well as all the licensing of trainers/owners/backstretch workers....)That is unlikely to work. If you go in with a bag full of losing tickets and nothing else, they will reject them. The IRS has a very specific way they want you document your loses. I know the way they wanted it 10 years ago. My sister-in-law was an auditor for the IRS, but she retired in 2005. The increased use of ADWs probably has changes things some. Perhaps thaskalos can explain what they want these days since he deals with them yearly.

[Ocala Mike]

Here's an excellent article on all aspects of this; see Recordkeeping Basics especially. Believe me, as an ex-tax auditor, the last thing you should bring to an audit is shoe boxes full of losing tickets (or anything, for that matter).

http://www.smartmoney.com/taxes/income/gambling-and-your-taxes/

[Robert Goren]

Here's an excellent article on all aspects of this; see Recordkeeping Basics especially. Believe me, as an ex-tax auditor, the last thing you should bring to an audit is shoe boxes full of losing tickets (or anything, for that matter).

http://www.smartmoney.com/taxes/income/gambling-and-your-taxes/ My sister-in-law would tell the gambler when he bought in a box of losing tickets to go home and sort them by time and date. Footprints on a ticket lead to trouble. So does claiming only signers.
A guy I knew wrote down his bets in his program and stapled his losing tickets to it. He had a ledger that he record everything in. He gets audited every year and he says he never has any trouble after the first audit when he didn't have every thing he needed. He only bets at the track and its simulcast center. I know with ADWs things get a bit more complicated with rebates and all.

[mannyberrios]

With ADW it is easier for them, because your yearly statement has all your winnings, and losers. I think that rebates are non taxable

[thaskalos]

That is unlikely to work. If you go in with a bag full of losing tickets and nothing else, they will reject them. The IRS has a very specific way they want you document your loses. I know the way they wanted it 10 years ago. My sister-in-law was an auditor for the IRS, but she retired in 2005. The increased use of ADWs probably has changes things some. Perhaps thaskalos can explain what they want these days since he deals with them yearly.

Anyone who thinks that they can walk in there with stacks of losing tickets, along with a simple ledger listing only day-to-day results...is in for a big surprise.

They actually want comprehensive records detailing all the bets that were made -- like WHERE you placed them...what TRACK...what RACE...what TYPE of bet...along with the corresponding result.

If you claim to be at an actual OTB almost every day...they may even ask for written proof from an OTB employee that you gamble as often as you claim.

Every time I have gone to them with what they consider to be "inadequate" documentation...they have refused to accept my claimed losses in their entirety -- and I have had to make a deal with them, whereby I was allowed to write off most, but not all the losses that I had listed.

[Track Collector]

Here's an excellent article on all aspects of this; see Recordkeeping Basics especially. Believe me, as an ex-tax auditor, the last thing you should bring to an audit is shoe boxes full of losing tickets (or anything, for that matter).

http://www.smartmoney.com/taxes/income/gambling-and-your-taxes/

Nice, concise article with lots of good points. :ThmbUp:

They mention that sometimes it would be better to file as a non-professional in some cases. If you wager a significant amount of money (and the term significant is open for interpretation), filing as a non-professional and using schedule A over schedule C can cause you a higher unexpected tax liability by maxing out on other allowable deductions (i.e. charity and medical). When in doubt, you will almost always save yourself money by consulting with a knowledgeable (gambling) tax professional.

I recall an example where a person wagered $1,000,000 in a year and received likewise back in winning payoffs. In other words, they broke even. Because they were not classified as a professional and used schedule A, the net result from their wagering activity alone was something like a $40,000 tax liability. Some "fairness" for breaking even, but that is the way the current tax laws are. :mad: This also supports the concept that the less your know, the more you pay.

I also recall that when using schedule A, some states (like Massachusetts?) , do not even allow losses to be deducted. :faint:

Irregardless of what you think of the morality or legality aspect, IMO, the use of an intermediary to cash one's winning tickets a waste of money and unnecessary for most race attendees.

[Robert Goren]

Anyone who thinks that they can walk in there with stacks of losing tickets, along with a simple ledger listing only day-to-day results...is in for a big surprise.

They actually want comprehensive records detailing all the bets that were made -- like WHERE you placed them...what TRACK...what RACE...what TYPE of bet...along with the corresponding result.

If you claim to be at an actual OTB almost every day...they may even ask for written proof from an OTB employee that you gamble as often as you claim.

Every time I have gone to them with what they consider to be "inadequate" documentation...they have refused to accept my claimed losses in their entirety -- and I have had to make a deal with them, whereby I was allowed to write off most, but not all the losses that I had listed. That is what he had in his ledger. I never heard of some body having to provide proof from OTB employee. Around here that would be impossible. The track and Simulcast center turn over employees faster than the horses I bet on.
The IRS is not a trusting lot when it comes gamblers. I think we all know why.

[ronsmac]

Why?
I'm going to assume you're being facetious. Why, because 95 or more percent of people betting lose money. Winnings can be taxed but loses can't be used as tax deductions , except to cover winnings , which is illogical. Based on your logic ,every winning ticket should be taxed, even if your horse pays 2.10 to show.

[Robert Goren]

I'm going to assume you're being facetious. Why, because 95 or more percent of people betting lose money. Winnings can be taxed but loses can't be used as tax deductions , except to cover winnings , which is illogical. Based on your logic ,every winning ticket should be taxed, even if your horse pays 2.10 to show. No, I never said that. Only profits should taxed. For most people, betting the horses is a hobby, not a business whether they admit to themselves or not. When you lose money on a hobby, you don't get to deduct it. On the years you make money on you on your hobby, you pay taxes on your profits. Bettors are no different than stamp collectors in a lot of ways and have many of the same tax problems. The major difference is stamp collectors are not fooling themselves into thinking they are a business.
By the way, I think 99+% of horse bettors lose money over a two year period. It is hard to find someone who won for a year, but it is next to impossible to find someone who won for two years in row. Go down to your local OTB/track and look over bettors, then try to find one that you think showed a profit over the last two years. Even most of the posters here lose money betting the horses most years. Perhaps 8-10 like me make a few hundred most years. There might be another 15-20 who make living at it. The rest are losers, but are trying to figure out a way to become winners year in and year out.

[baconswitchfarm]

If more than 99% of people lose at gambling the answer is simple. Not one minute of irs employee time should be spent looking into gambling. This would be a net plus in revenue for the government, as this statistically is clearly a waste of time at great taxpayer expense.

[lamboguy]

about 40 years ago there was a .25% federal gambling tax on all bets at point of origin. sportsbooks , racebooks, race tracks, lottery's and casino's all paid it back then. they got that rule over hauled and and the treasury came up with w-2g rules to replace the revenue lost and place the tax burden on the gambler instead of the house.

if they went back to the old way of taxing gambling and get rid of all taxes on gamblers, the net result would increase revenues for the government.

[raybo]

If more than 99% of people lose at gambling the answer is simple. Not one minute of irs employee time should be spent looking into gambling. This would be a net plus in revenue for the government, as this statistically is clearly a waste of time at great taxpayer expense.

I agree, no more profitable horse players than there are, is a waste of time and money, taxpayers' money.

[Robert Goren]

Who said the IRS spends a lot of time on horse race bettors. My sister-in-law says she had a case come before her about once in four or five years. She was an IRS auditor for over 25 year and had about a half dozen cases come before her. She said a lot of her cases were involved small time lawyers. Shock! Shock! Almost none of the cases involved people who drew a paycheck. A lot involved small businessmen with failing businesses who withheld payroll taxes from their employees, but did not pay all or part of it to government. Those employees do not get refunds, their ss accounts credit etc until the employers pay up.
Horse race bettors are merely a blimp on their radar. Man up and pay what you owe like most Americans and stop bitching. The people who really get screwed are the people who have a part time job on side. Try do doing that for a while and then come back and bitch about paying a little tax on a horse race bet. Then you will have some street creds.

[raybo]

Who said the IRS spends a lot of time on horse race bettors. My sister-in-law says she had a case come before her about once in four or five years. She was an IRS auditor for over 25 year and had about a half dozen cases come before her. She said a lot of her cases were involved small time lawyers. Shock! Shock! Almost none of the cases involved people who drew a paycheck. A lot involved small businessmen with failing businesses who withheld payroll taxes from their employees, but did not pay all or part of it to government. Those employees do not get refunds, their ss accounts credit etc until the employers pay up.
Horse race bettors are merely a blimp on their radar. Man up and pay what you owe like most Americans and stop bitching. The people who really get screwed are the people who have a part time job on side. Try do doing that for a while and then come back and bitch about paying a little tax on a horse race bet. Then you will have some street creds.

Well, the laws had to be written and discussed, over and over, and finally passed. Then the enforcement procedures had to be accomplished and the tax code changed, etc., etc., etc., so even though individual auditors may not spend a lot of time on it, there has surely been much time and taxpayer dollars spent.

[Robert Goren]

Well, the laws had to be written and discussed, over and over, and finally passed. Then the enforcement procedures had to be accomplished and the tax code changed, etc., etc., etc., so even though individual auditors may not spend a lot of time on it, there has surely been much time and taxpayer dollars spent.From what I can tell it has been a long time since anything has really been changed . We are probably taking at least the 1950s here. That might be part of the problem that some people are having.. The only thing I know that has change since I started betting is when they start actually withholding part of your pay off. In the 1960s it started at $600. I know because I lucked into a couple DD just over $ 600 in 1967 or 1968, I forget exactly when but I know I was in college. They withheld 20% of the entire payoff. Of course I got it all back when I filed. It was the only taxable income I had that year. I am not sure what it is now or when it changed, just that it did sometime.

[iceknight]

Where do I say I'm entitled to anything? Aren't those the current tax laws. You claim the standard deduction or you itemize your deductions. Your points have nothing to do with claiming your winnings at the track on your taxes but nice pick at Aqueduct in the 8th race today. Not you in particular. But yes, standard deduction is per current laws. thanks for noting the pick. hope to get back more into racing again as the year draws to a close.

[ronsmac]

[QUOTE=Robert Goren]No, I never said that. Only profits should taxed. For most people, betting the horses is a hobby, not a business whether they admit to themselves or not. When you lose money on a hobby, you don't get to deduct it. On the years you make money on you on your hobby, you pay taxes on your profits. Bettors are no different than stamp collectors in a lot of ways and have many of the same tax problems. The major difference is stamp collectors are not fooling themselves into thinking they are a business.
By the way, I think 99+% of horse bettors lose money over a two year period. It is hard to find someone who won for a year, but it is next to impossible to find someone who won for two years in row. Go down to your local OTB/track and look over bettors, then try to find one that you think showed a profit over the last two years. Even most of the posters here lose money betting the horses most years. Perhaps 8-10 like me make a few hundred most years. There might be another 15-20 who make living at it. The rest are losers, but are trying to figure out a way to become winners year in and year out.[/QUOTE Exactly why race track winnings shouldn't be taxed. 99% are losers , then it's a total waste of irs and horesplayer time to tax the few times someone does win. Duh

[Robert Goren]

[QUOTE=Robert Goren]No, I never said that. Only profits should taxed. For most people, betting the horses is a hobby, not a business whether they admit to themselves or not. When you lose money on a hobby, you don't get to deduct it. On the years you make money on you on your hobby, you pay taxes on your profits. Bettors are no different than stamp collectors in a lot of ways and have many of the same tax problems. The major difference is stamp collectors are not fooling themselves into thinking they are a business.
By the way, I think 99+% of horse bettors lose money over a two year period. It is hard to find someone who won for a year, but it is next to impossible to find someone who won for two years in row. Go down to your local OTB/track and look over bettors, then try to find one that you think showed a profit over the last two years. Even most of the posters here lose money betting the horses most years. Perhaps 8-10 like me make a few hundred most years. There might be another 15-20 who make living at it. The rest are losers, but are trying to figure out a way to become winners year in and year out.[/QUOTE Exactly why race track winnings shouldn't be taxed. 99% are losers , then it's a total waste of irs and horesplayer time to tax the few times someone does win. DuhVery close to all mom and pop business fail too.It has to be well over 90%. Does that mean the ones don't shouldn't have too pay taxes? I thought the idea that only the very rich should pay taxes was a liberal idea.:rolleyes: Actually you are making a very strong case that it should be banned entirely. If it isn't profitable enough to be taxed, then it isn't worth being legal espicially since it causes so much harm to society. There isn't gamblers anonymous for nothing.

[raybo]

Maybe the gov just wants to punish all us degenerate gamblers/sinners!!