ADW signer etiquette

[elhelmete]

If I've got a group of people betting with me through my ADW and we catch a signer with withholding involved, what's proper? I'm 99.99% a solo gambler, and don't like group bets, but it's going to be unavoidable for the KD party I'm having.

Hypothetical: 4 guys, equal shares in the wager. We catch a $10,000 win, 28% is held back on me, net is now $7200. We all get $1800?

[cj]

Originally Posted by elhelmete

If I've got a group of people betting with me through my ADW and we catch a signer with withholding involved, what's proper? I'm 99.99% a solo gambler, and don't like group bets, but it's going to be unavoidable for the KD party I'm having.

Hypothetical: 4 guys, equal shares in the wager. We catch a $10,000 win, 28% is held back on me, net is now $7200. We all get $1800?

Are you going to get the 28% back later after taxes? If so, that is quite a cut you are taking.

[elhelmete]

Originally Posted by cj

Are you going to get the 28% back later after taxes? If so, that is quite a cut you are taking.

Almost certain I'd NOT get it back, that's why I'm asking what others have done on a practical level. Plus I'm not sure how I would determine if I'd be "getting it back" 10 months later when I'd do my taxes and that $ was commingled with my day job money.

[wiffleball whizz]

This is a problem I hope I have 14 times a week!!!

[cj]

Originally Posted by elhelmete

Almost certain I'd NOT get it back, that's why I'm asking what others have done on a practical level. Plus I'm not sure how I would determine if I'd be "getting it back" 10 months later when I'd do my taxes and that $ was commingled with my day job money.

Racing is treated separately, you pay tax on winnings. If you are a net winner for the year, it will count against your income and any liability should be shared equally. Deduct the $10,000 from your reported winnings (not in real life, just as a test) and see how it affects your taxes. If it causes your tax liability to drop by $2,000 each person should be responsible for $500. You'd owe them all $200.

But, if you are a net loser on the year, you "get it back" whether you get a tax refund or not. The amount you paid is just applied against your tax liability for the year. If you don't pay your friends back, you are just using their money to pay your tax bill. In this case, each person would be entitled to an extra $700 come tax time. That is what is fair, at least in my opinion.

Now, whether you deduct a convenience fee is up to you!

[iceknight]

Originally Posted by cj

Racing is treated separately, you pay tax on winnings. If you are a net winner for the year, it will count against your income and any liability should be shared equally. Deduct the $10,000 from your reported winnings (not in real life, just as a test) and see how it affects your taxes. If it causes your tax liability to drop by $2,000 each person should be responsible for $500. You'd owe them all $200.

But, if you are a net loser on the year, you "get it back" whether you get a tax refund or not. The amount you paid is just applied against your tax liability for the year. If you don't pay your friends back, you are just using their money to pay your tax bill. In this case, each person would be entitled to an extra $700 come tax time. That is what is fair, at least in my opinion.

Now, whether you deduct a convenience fee is up to you!

This is a nice explanation, Thanks. I have had this question too. Although I have not playes in groups of 4, it is something I had been curious about!

[elhelmete]

Originally Posted by cj

Racing is treated separately, you pay tax on winnings. If you are a net winner for the year, it will count against your income and any liability should be shared equally. Deduct the $10,000 from your reported winnings (not in real life, just as a test) and see how it affects your taxes. If it causes your tax liability to drop by $2,000 each person should be responsible for $500. You'd owe them all $200.

But, if you are a net loser on the year, you "get it back" whether you get a tax refund or not. The amount you paid is just applied against your tax liability for the year. If you don't pay your friends back, you are just using their money to pay your tax bill. In this case, each person would be entitled to an extra $700 come tax time. That is what is fair, at least in my opinion.

Now, whether you deduct a convenience fee is up to you!

None of us claim any wins/losses on our taxes, we're recreational players. Any signer I personally get is just going to get lumped into my total for the year.

Also safe to say all of us are in the 28% bracket so to speak, so nobody would be in a different tax boat.

Given all this, safe to assume I would be eating all of the 28% skim come tax time since it would be reported only on my W2?

But are you saying that some allowance should be made amongst the group to lessen the skim I take from them?

Again, I'm certainly not looking to profit on anyone else's back, I've never had this happen before and I'm hoping I have the pleasure of having such a problem. Unless it's a big hit I'm fine eating the tax skim (like if we hit a modest super or something).

Thanks in advance, this is helpful.

[ryarter]

Originally Posted by elhelmete

None of us claim any wins/losses on our taxes, we're recreational players. Any signer I personally get is just going to get lumped into my total for the year.

Also safe to say all of us are in the 28% bracket so to speak, so nobody would be in a different tax boat.

Given all this, safe to assume I would be eating all of the 28% skim come tax time since it would be reported only on my W2?

But are you saying that some allowance should be made amongst the group to lessen the skim I take from them?

Again, I'm certainly not looking to profit on anyone else's back, I've never had this happen before and I'm hoping I have the pleasure of having such a problem. Unless it's a big hit I'm fine eating the tax skim (like if we hit a modest super or something).

Thanks in advance, this is helpful.

you should write as much off as you can and pay your friends ,unless your just out to rob them?

[elhelmete]

Originally Posted by ryarter

you should write as much off as you can and pay your friends ,unless your just out to rob them?

Yes, I'm just out to rob them.

[DJofSD]

Just asking: does it make any sense to establish a new and different account with the ADW service?

Yes, I understand this is just one bet for the KY Derby party, however, for whomever owns the account, etc., etc., it might make things a bit better down the road when it comes to taxes.

[OverlayHunter]

Not only do the Feds have to be considered but different states have different tax laws regarding gambling. Some don't permit losses to be used to offset winnings.

Also, unless your friends are saints, remember that no good deed goes unpunished.

[cj]

Originally Posted by elhelmete

None of us claim any wins/losses on our taxes, we're recreational players. Any signer I personally get is just going to get lumped into my total for the year.

Also safe to say all of us are in the 28% bracket so to speak, so nobody would be in a different tax boat.

Given all this, safe to assume I would be eating all of the 28% skim come tax time since it would be reported only on my W2?

But are you saying that some allowance should be made amongst the group to lessen the skim I take from them?

Again, I'm certainly not looking to profit on anyone else's back, I've never had this happen before and I'm hoping I have the pleasure of having such a problem. Unless it's a big hit I'm fine eating the tax skim (like if we hit a modest super or something).

Thanks in advance, this is helpful.

I just don't see why anyone would not offset the winnings with losses whether a winner or loser on the year. If you are playing online, you already have all the proof you'll need. It really isn't hard and that is a lot of money to add to your income unnecessarily.

[cj]

Originally Posted by OverlayHunter

Not only do the Feds have to be considered but different states have different tax laws regarding gambling. Some don't permit losses to be used to offset winnings.

Also, unless your friends are saints, remember that no good deed goes unpunished.

There are states where you could have signers totaling 50k, show you lost 100k via the same ADW, and you have to claim the 50k as profit? I find that very hard to believe. Am I misunderstanding?

[elhelmete]

Originally Posted by cj

There are states where you could have signers totaling 50k, show you lost 100k via the same ADW, and you have to claim the 50k as profit? I find that very hard to believe. Am I misunderstanding?

I believe Massachusetts for one does exactly that.

[cj]

Originally Posted by elhelmete

I believe Massachusetts for one does exactly that.

I know they passed some non-friendly to horseplayers legislation, but I don't think it went that far. If that were true, anyone would be an idiot to make a bet that might be a signer.