IRS Considers New Tax Rules

[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is a new regulation, which would then fall under Trump's mandate of "for every new regulation, two old ones must be repealed"....and if so, there may be some very long delays as everyone argues over what to repeal.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]

Originally Posted by 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.

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]

Originally Posted by 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?...

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]

Originally Posted by LemonSoupKid

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]

Originally Posted by 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.

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]

Originally Posted by 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.

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]

Originally Posted by LemonSoupKid

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.