Land mine for gamblers in Health Care bill

Land mine for gamblers in Health Care bill Ask the Wizard! (No. 240) November 6, 2009 column I have heard that to finance the health care bill, a surcharge will be imposed on GROSS income above a certain point. This will have a big impact on high-level slot players, who accumulate hundreds of W2-G forms, like me. Do you have any insight? — Joe from Denver Here is what the bill says: In the case of a taxpayer other than a corporation, there is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to 5.4 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $1,000,000. -- Section 59C(a) page 337 H.R. 3962 (PDF — 3270 KB) or CNN.com The surcharge would be applied before the gambler could deduct any offsetting losses. I verified this with Marissa Chien, co-author of Tax Help for Gamblers. For high-level slot players, it is not difficult to rack up W2-G forms in the millions per year. Most of these players will still have a net loss on an annual basis. Past the million point in gross income, the player will pay a 5.4% tax on any win of $1,200 or more, even if there is a net loss for the year. This is just my opinion, but I think that isn't fair. If we must tax gambling winnings (which they don't in Canada), it should be on the net, not the gross winnings, on an annual basis. Should this become law, it will ruin high-level slot play in this country.

so anyone with exactly $1,000,000 in w-2's will pay $54,000 in income tax, even if they lost money gambling for the year. Pretty sad our government is so broke they need to steal

If they had $1 million in W-2Gs, they would pay $0 for this tax. If they had $2 million, they would pay $54,000. This is clearly an oversight, but is it one that will be corrected? Generally speaking a casino gambling special interest would have to explain to enough Congressmen that the way the income tax law is written for this has to be modified. There's so few people with any sizeable W-2G income (let alone a million) that the impetus to change this just isn't there.

Me thinks if you have 2million in casino W2s you should prob file as a business

Not uncommon for high roller VP players to have W-2G's totalling millions - knew a casino supplier CEO who did. net loser as most are. Could hurt casino's handle and I'd assume Reid will try to fix - but agree, not a large constituency out there

Here in Michigan, where the tax base is basically the Adjusted Gross Income, he have gamblers that pay 4.35% to Michigan on gambling winnings, even though they might have losses to offset on their Federal tax return. Michigan does not recognize itemized deductions. I tell all my clients who happen to lots of slot action in downtown Detroit to have 4% withheld on each jackpot so they don't fall behind in taxes. The few whose taxes I do never have money, and they churn hundreds of thousands of dollars through, and routinely have W2-G's that total in excess of $500,000. That's a huge vig to pay on each jackpot, but once these people fall behind, they never have the money to cough up the $20k to MI at the end of the year. Better just to pay as they go along. I suspect that those in the same position, in excess of $1M, will do the same to prevent balances due, penalties, interest, etc. Just the cost of play, unfortunately.

[QUOTE=mrbowling300;9120]Here in Michigan, where the tax base is basically the Adjusted Gross Income, he have gamblers that pay 4.35% to Michigan on gambling winnings, even though they might have losses to offset on their Federal tax return. Michigan does not recognize itemized deductions. I tell all my clients who happen to lots of slot action in downtown Detroit to have 4% withheld on each jackpot so they don't fall behind in taxes. The few whose taxes I do never have money, and they churn hundreds of thousands of dollars through, and routinely have W2-G's that total in excess of $500,000. That's a huge vig to pay on each jackpot, but once these people fall behind, they never have the money to cough up the $20k to MI at the end of the year. Better just to pay as they go along. I suspect that those in the same position, in excess of $1M, will do the same to prevent balances due, penalties, interest, etc. Just the cost of play, unfortunately.[/QUOTE] This is the only state I know that does this?? States like LA and Miss automatically take out a certain % for state tax which is also a joke. Your clients would be better off taking residency in another state if they play that high. They have no shot at winning losing 4% per jackpot that is for sure. Lets say the play a standard 5$ DD bonus video poker machine they hit a 4 of kind for 1250 they loss 4%. As far as the W2-g rule for 1 million I believe it will never pass and if it does someone will set a presidente taking it to court rather than paying it which would make it unconstitutional.