Three Questions Every Gambler Should Ask Before Filing Their Income Tax Return
8 months ago Admin 0
Or money from private card games, federal tax laws require you to report it as income, So in case you take home casino winnings.
For a bunch of gamblers it is considered hobby income, that means that not all gambling expenses can be deducted.
When you qualify as a professional gambler you get to deduct all of your gambling expenses and losses, just like other business professionals. One or two winning pots taken home from the casino or poker games with your friends does not make you a professional gambler. The IRS has classified gambling as a hobby as long as most people gamble for fun. This is why gambling winnings are generally included together with other miscellaneous income. This is the case. This is bad being that even though each penny of gambling income must be claimed, the hobby gambler does not get to deduct the expenses involved in producing that income. Tracking wins, losses and expenses is very similar for both the hobby and professional gambler, and it must be done as pointed out by IRS rules if you need to survive a tax audit.
To escape the hobby classification a gambler must be prepared to prove that they are engaged in making actual and honest efforts to produce a profit. Fail to do so and those expenses and losses may be disqualified. Professional gamblers need to keep a log of all gambling activities. Documenting your gambling in a businesslike manner is a critical part of proving to the IRS that you are not a recreational gambler. All expenses involved in getting to any gambling event, with hotel costs, entry fees, meals, tips and private coaching must also be documented if you look for to survive an audit. Self employment taxes fund your personal Medicare and Social Security accounts. You should take this seriously. The ‘selfemployed’ person pays it all. Your employer pays half of those taxes and you pay the other half, when you are employed by others.
If you pay selfemployment taxes actually depends on how much you know about current individual enterprise tax laws. If you think you qualify as a professional gambler you must not be preparing your favorite tax return. She is the author of a series of financial workbooks for ‘selfemployed’ individuals including Gambling is my Business. This book explains what the IRS expects of professional gamblers, how to document events, expenses and losses, and makes it easy to keep records that will beat a tax audit. Actually, financial Organizer for Professional Card Players Other Gamblers. KiKi Canniff is a tax consultant with a talent for making IRS rules easy to understand.