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Can I get some help with online lottery tax info

Topic closed. 74 replies. Last post 7 years ago by tiggs95.

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Jack-C's avatar - us
San Diego, CA
United States
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May 24, 2008
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Posted: October 13, 2009, 5:36 pm - IP Logged

Direct from the IRS:

Topic 419 - Gambling Income and Losses

The following rules only apply to casual gamblers. Gambling winnings are fully taxable and must be reported on your tax return. You must file Form 1040 (PDF) and include all of your winnings. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and also the fair market value of prizes such as cars and trips. For additional information, refer to Publication 525, Taxable and Nontaxable Income.

A payer is required to issue you a Form W-2G (PDF) if you receive certain gambling winnings or if you have any gambling winnings subject to Federal income tax withholding. All gambling winnings must be reported irrespective as to whether any portion thereof is subject to withholding. In addition, you may be required to pay an estimated tax on your gambling winnings. For information on withholding on gambling winnings, refer to Publication 505, Tax Withholding and Estimated Tax.

You may deduct gambling losses only if you itemize deductions. Claim your gambling losses as a miscellaneous deduction on Form 1040, Schedule A (PDF). However, the amount of losses you deduct may not be more than the amount of gambling income you have reported on your return. It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to Publication 529, Miscellaneous Deductions, for more information.

    BobP's avatar - bobp avatar.png
    Dump Water Florida
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    Posted: October 13, 2009, 7:06 pm - IP Logged



    I'm not a lawyur so please don't even think of this as legal advice.

    You have to use some commong sense when dealing with these kind of things.

    "You may deduct gambling losses only if you itemize deductions."

    Here is where the congress critters set out to cheat the taxpayers knowing full well most americans use the short form because they don't have enough deductions to offset the difference between the basic deduction and the itemized deduction minimum.

    So you go into the local slots palace and spend $400 to win $200 and you're supposed to report the $200 and suck it up on the taxes because you can't use the long form to deduct the $200 loss.  Well I've yet to meet anyone that stupid.

    This is why people buy multiple Pick-3 tickets instead of multiple plays on the same number on the same ticket, so they can cash them individually. 

    IMHO most people report what they have to, what's been reported by the prize payer, because they have lost far more then they've won over time. 


    BobP
     



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      Kentucky
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      Posted: October 14, 2009, 7:59 am - IP Logged

      You will have to show me where the IRS says that they don't tax gambling winnings under $600.  They don't require the payor to withhold taxes, but they still require you to claim it on your tax return.  You can then deduct gambling losses (proveable) up to the amount that you won.

      I put $20 into a Quarter slot machine, get 80 credit, and use three credits every spin. If I lose the first four spins, the credits are now 65. On the fifth spin I hit 3 mixed bars, "win" 15 credits ($3.75), now have 80 credits, and cash out the $20. According to you, we're suppose to report the winnings ($3.75), but I have the same amount of money I started with.

      What exactly did I win that needs to be reported?

        tiggs95's avatar - Lottery-036.jpg

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        Posted: October 14, 2009, 8:04 am - IP Logged

        Stack your better off thring to talk to a wall..

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          Kentucky
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          Posted: October 14, 2009, 10:13 am - IP Logged

          Stack your better off thring to talk to a wall..

          I Agree! and try to keep it simple. The tax codes only requires the operators of gambling games to report payoffs over $599 on a $1 bet using tax form W2-G even though it's possible to have thousands of payoffs under $599. From their point of view it doesn't matter if one player collected more than they spent.

          If a lottery retailer in sells $2000 worth of scratch-offs to one player and pays out $1200 for winning tickets, they showed a $800 profit. Some people want us to believe the player should report the $1200 as winnings on their 1040, deduct up to that amount using schedule A, and totally ignoring the fact the player had a net loss of $800.

          It makes no sense for the IRS to expect us to report unreported small winnings when we can also report losses for the same amount; especially when we end up with less money than we spent. Why even report winnings under $599 when the gambling operators are not required by law to report payoffs under $599?

            sunjune6's avatar - Lottery-010.jpg
            Atlanta,GA
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            September 1, 2009
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            Posted: October 16, 2009, 3:57 pm - IP Logged

            You should never have to pay taxes on pick 3..Only way you need to pay taxes is if a 1.00 ticket is more then 600.00..If you say have 100 1.00 pick 3 and it pays 599.00 for each ticket you can cash them all at once and not have to pay taxes..Like I just said if a 1.00 ticket is more then 599.00 then you have to file taxes..Call the lottery outlet and ask them and they will tell you the same thing..

            Look  out. Here come IRS

            If you think you can or if you think you can't you are right!

            Today could be the day!

              tiggs95's avatar - Lottery-036.jpg

              United States
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              Posted: October 16, 2009, 6:45 pm - IP Logged

              I went to Krogers once with 4 1.00 cash 3 tickets worth 400.00 each and they cashed all three at once and gave me 1,200.00 and no IRS came to see me..There is no paper work when you cash a ticket for 1.00 and it pays 599.00 or less..Simple..Read your IRS rules..If you don't trust cashing them all at once then cash them one at a time..Excuse me while I go bang my head against the wall.....

                mybelle's avatar - chick
                Palm Harbor, Florida
                United States
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                March 28, 2007
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                Posted: October 16, 2009, 6:59 pm - IP Logged

                Direct from the IRS:

                Topic 419 - Gambling Income and Losses

                The following rules only apply to casual gamblers. Gambling winnings are fully taxable and must be reported on your tax return. You must file Form 1040 (PDF) and include all of your winnings. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and also the fair market value of prizes such as cars and trips. For additional information, refer to Publication 525, Taxable and Nontaxable Income.

                A payer is required to issue you a Form W-2G (PDF) if you receive certain gambling winnings or if you have any gambling winnings subject to Federal income tax withholding. All gambling winnings must be reported irrespective as to whether any portion thereof is subject to withholding. In addition, you may be required to pay an estimated tax on your gambling winnings. For information on withholding on gambling winnings, refer to Publication 505, Tax Withholding and Estimated Tax.

                You may deduct gambling losses only if you itemize deductions. Claim your gambling losses as a miscellaneous deduction on Form 1040, Schedule A (PDF). However, the amount of losses you deduct may not be more than the amount of gambling income you have reported on your return. It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to Publication 529, Miscellaneous Deductions, for more information.

                Jack C,

                The first sentence in the 3rd paragraph is inaccurate.  You can use a 1040A for tax return and not have to itemize deductions.  Yes, you do need to use a Schedule A, and you can zero out your winnings by showing your losses (if you can prove this), and this "0" goes on your return.  I won more than 20K at casino and have proof that I lost equal to that if not more (by saving my cancelled checks).  My tax return is in a box, but if you have any questions, I can retrieve it.

                MyBelle - Florida

                Somebody's gonna win tonight  I Agree!

                MYBELLE

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                  NY
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                  October 16, 2005
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                  Posted: October 17, 2009, 1:44 am - IP Logged

                  I put $20 into a Quarter slot machine, get 80 credit, and use three credits every spin. If I lose the first four spins, the credits are now 65. On the fifth spin I hit 3 mixed bars, "win" 15 credits ($3.75), now have 80 credits, and cash out the $20. According to you, we're suppose to report the winnings ($3.75), but I have the same amount of money I started with.

                  What exactly did I win that needs to be reported?

                  Nobody said you have to report the $3.75. For starters, a credit in a slot machine is no different than a paper profit on a stock that you don't sell. You may have a theoretical profit, but until it's a real profit there is no tax implication. As for actually winning from gambling, it's your net result during each gambling "session" that counts. What constitutes a session will vary a bit, but at the least it requires that you cash out. As a practical matter, if you spend a week in Vegas and you buy in and cash out every day you're going to have a lot more paperwork to deal with than if you  just wait until the end of the tip and cash out once.

                  " If a lottery retailer in sells $2000 worth of scratch-offs to oneplayer and pays out $1200 for winning tickets, they showed a $800profit. Some people want us to believe the player should report the$1200 as winnings on their 1040, deduct up to that amount usingschedule A, and totally ignoring the fact the player had a net loss of$800."

                  Why shouldn't the $800 be ignored for tax purposes? The $1200 win is offset by the $1200 that's deductable as a loss, so there is no net taxable income. Are you suggesting that all gambling losses should be deductible, even if there are no winnings to be taxed? If so, why shouldn't other people get deductions for their recreational drugs, internet porn, smoking, or other vices?

                    tiggs95's avatar - Lottery-036.jpg

                    United States
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                    Posted: October 17, 2009, 9:52 am - IP Logged

                    Some of these post sounds like the IRS,all confusing..If they give you money and don't ask for your SS card take the money and run..simple..They know the IRS law or they would not be in business..ban bang<<<---my head pounding against the wall..........

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                      Kentucky
                      United States
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                      Posted: October 17, 2009, 9:53 am - IP Logged

                      Nobody said you have to report the $3.75. For starters, a credit in a slot machine is no different than a paper profit on a stock that you don't sell. You may have a theoretical profit, but until it's a real profit there is no tax implication. As for actually winning from gambling, it's your net result during each gambling "session" that counts. What constitutes a session will vary a bit, but at the least it requires that you cash out. As a practical matter, if you spend a week in Vegas and you buy in and cash out every day you're going to have a lot more paperwork to deal with than if you  just wait until the end of the tip and cash out once.

                      " If a lottery retailer in sells $2000 worth of scratch-offs to oneplayer and pays out $1200 for winning tickets, they showed a $800profit. Some people want us to believe the player should report the$1200 as winnings on their 1040, deduct up to that amount usingschedule A, and totally ignoring the fact the player had a net loss of$800."

                      Why shouldn't the $800 be ignored for tax purposes? The $1200 win is offset by the $1200 that's deductable as a loss, so there is no net taxable income. Are you suggesting that all gambling losses should be deductible, even if there are no winnings to be taxed? If so, why shouldn't other people get deductions for their recreational drugs, internet porn, smoking, or other vices?

                      If I buy $2000 worth of a stock and sold it for $2500, I'd have a taxable income of $500. If I sold the same stock for $1200, I'd have a $800 loss and no taxable income. The paper worth of stock fluctuates the same as credits on a slot machine and the determine factor of profit or loss is the amount you sell or cash out for.

                      If I buy $2000 worth of scratch-off tickets, I'm out $2000 before I scratch the first ticket and won't know my winnings or losses until I scratch the last ticket. Cashing the tickets for $1200 is no different than selling stock for the same amount because I still lost $800 and have no taxable income to report. If the value of one of those tickets was over $599, I would be given W2-G, it would be recorded as taxable income, and I could deduct all or any part of the $800 loss up to the value of the ticket.

                      For taxable income, a gambling session starts on January 1 and ends on December 31. To my knowledge there is no IRS requirement that casual gamblers keep a ledger of all their bets and/or any profits or losses for an entire year unless there are "wins" over $599, a W2-G form is issued and the tax payer chooses to itemize. Lottery clerks, race track tellers, and slot machines have never asked for my name and SS number when placing wagers so whomever makes the bet is not reported to the IRS. By law they don't report wins of under $600 and since most gambling operators show a profit for the year, there is no winnings to report.

                      You could keep a ledger starting on January 1, record all wagers and wins, and if you happen to show a $2 profit at the end of the year, report it as gambling income; I'm sure the government would be very grateful.

                        Jack-C's avatar - us
                        San Diego, CA
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                        Posted: October 17, 2009, 10:17 am - IP Logged

                        Jack C,

                        The first sentence in the 3rd paragraph is inaccurate.  You can use a 1040A for tax return and not have to itemize deductions.  Yes, you do need to use a Schedule A, and you can zero out your winnings by showing your losses (if you can prove this), and this "0" goes on your return.  I won more than 20K at casino and have proof that I lost equal to that if not more (by saving my cancelled checks).  My tax return is in a box, but if you have any questions, I can retrieve it.

                        MyBelle - Florida

                        I copied this directly from the IRS web site.  If you think it is not correct, then you need to contact the IRS and tell them, not me!

                          Jack-C's avatar - us
                          San Diego, CA
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                          Posted: October 17, 2009, 10:22 am - IP Logged

                          What some of us are trying to say here is what the law is, NOT what you would do!

                          I have owned a few businesses here in California.  As a business owner I had to pay sales tax to the California Franchise Board and I had to have a copy of the California regulations.

                          One of the regulations is that if someone buys something from out of state (by internet, telephone, catalog, etc.) and does not pay California sales tax, then they are required (by law) to pay the California sales tax.

                          Of course, the number of people that do that is very close to ZERO.  But, it is the law!!

                            sunjune6's avatar - Lottery-010.jpg
                            Atlanta,GA
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                            Posted: October 17, 2009, 12:31 pm - IP Logged

                            Let's see now..You go to the race track and play a trifecta and it pays 600.00 for a 2.00 tri you have to pay taxes on it but they tell you that if you play a 1.00 tri twice for 2.00 on the same numbers it pays you 300.00 for the 1.00 tri and they tell you that way you don't have to pay taxes..Makes sense to me?

                            All income earned or won is taxable. All income is not reportable(meaning reported to IRS). Only amounts over $599. That is the cut off that IRS has set. Reason being it would be a chaotic situation for them to track smaller amounts. This is how it is and everyone that gamble and say they report all of their income on their tax return is lying big time.

                            If you think you can or if you think you can't you are right!

                            Today could be the day!

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                              NY
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                              Posted: October 17, 2009, 7:54 pm - IP Logged

                              If I buy $2000 worth of a stock and sold it for $2500, I'd have a taxable income of $500. If I sold the same stock for $1200, I'd have a $800 loss and no taxable income. The paper worth of stock fluctuates the same as credits on a slot machine and the determine factor of profit or loss is the amount you sell or cash out for.

                              If I buy $2000 worth of scratch-off tickets, I'm out $2000 before I scratch the first ticket and won't know my winnings or losses until I scratch the last ticket. Cashing the tickets for $1200 is no different than selling stock for the same amount because I still lost $800 and have no taxable income to report. If the value of one of those tickets was over $599, I would be given W2-G, it would be recorded as taxable income, and I could deduct all or any part of the $800 loss up to the value of the ticket.

                              For taxable income, a gambling session starts on January 1 and ends on December 31. To my knowledge there is no IRS requirement that casual gamblers keep a ledger of all their bets and/or any profits or losses for an entire year unless there are "wins" over $599, a W2-G form is issued and the tax payer chooses to itemize. Lottery clerks, race track tellers, and slot machines have never asked for my name and SS number when placing wagers so whomever makes the bet is not reported to the IRS. By law they don't report wins of under $600 and since most gambling operators show a profit for the year, there is no winnings to report.

                              You could keep a ledger starting on January 1, record all wagers and wins, and if you happen to show a $2 profit at the end of the year, report it as gambling income; I'm sure the government would be very grateful.

                              "If the value of one of those tickets was over $599, I would be givenW2-G, it would be recorded as taxable income, and I could deduct all orany part of the $800 loss up to the value of the ticket."

                              You're either doing a bad job of saying what you mean or you're confused about how it works. You seem to be saying that if you won $1200 on one ticket that you would only be able to deduct the $800 net loss, and therefore still have $400 in net income to pay taxes on.  What you'd actually have is a loss of $1999 on the 1999 tickets that didn't win. You'd also have only $1199 in income from the remaining ticket, since it cost $1. That's $1199 in taxable income, offset by $1199 of your $1999 in losses.