A little tax help please

"But most things that happen at a casino are gambling, and the income is income from gambling. No matter whether someone names it a drawing or a tournament, and no matter whether someone correctly or incorrectly fills out this or that form."

Not necessarily. Mrmarcus, these are the facts of how casinos handle tournaments and drawings:

Cash wins of $600 or more (for the year -- may accumulate from more than one drawing) generate a 1099 -- NOT a W2G. This must be reported as "regular income," not "gambling income" for which you can deduct losses against it.

IF a casino offers you the option of cash OR free play and you choose the free play, you will NOT get a tax form.

Yes, if you win a car in a drawing, you must pay taxes on it. You will receive a 1099 form -- again, "regular income," not "gambling income."

Even when entries in a drawing or tournament are earned by gambling, the wins are not considered gambling income which would generate a W2G. And the threshhold is different, as well -- as I indicated, it's a cumulative total of $600 or more over the course of a year for drawings/tournaments which generates a 1099. A W2G is generated by a single hit on a machine of $1,200 or more. You can hit $1,000 multiple times during the year on a machine and never get a W2G.

Well done, Sue. You have a lot more patience than I have.

Just trying to clarify, Mare, and correct the misinformation some people have.

You're not clarifying, you're confusing people, by giving EXTREMELY POOR advice. That's why I'm responding. Again, to make clear --- IT DOESN'T MATTER WHO DOES WHAT FORMS, HOW THEY DO THEM, WHEN THEY DO THEM, OR WHAT THEY PUT ON THEM. The forms do NOT override the LAW. The casinos have no power over the Federal government. Zero, zip. The Federal government levies the tax and they decide.

There is an old tax doctrine called the fruit and the tree. You can't get oranges from an apple tree; the only fruit you'll ever get is apples. And the ONLY kind of income you get from gambling is GAMBLING INCOME. If you're gambling, and you get income, IT'S GAMBLING INCOME.

It doesn't matter who says what, who writes what, what gets posted on a website, or what forms get filed where. The ONLY kind of income you EVER get from gambling is GAMBLING INCOME. It is impossible to get any other kind of income from gambling.

If the slot tournament was part of the husband's gambling, then the income is gambling income. You are confusing the casino's reporting requirements with the husband's. Taxpayers are bound by the LAW, not by the forms they receive in the mail.

You're arguing semantics. The fact remains that slot tournament wins are reported to the IRS on 1099 forms, and 1099 income is reported on the 1040 along with "regular" income, such as your salary from your job.

Slot machine wins that generate W2G's are reported on the 1040 under "other miscellaneous income," a line further down the page. I believe the total on this line is the total that you are allowed to deduct for gambling losses. I am not a tax preparer, though, so people should consult their own preparers before filing.

So call it whatever you want. You can call a 1099 "gambling income" if you want to, but it does not change the fact that it's taxed as part of your "regular" income, separate from any W2G's you may have earned.

I believe you're the only person who is confused. I've tried to make it as clear as I can. I have worked slot tournaments and drawings in casinos and filled out W-9 forms with winners. They state very clearly that a 1099 will be issued for all winnings above $600 for the year.

You are the one trying to muddy the waters. I don't know what your point is. I never said casinos have power over the federal govt. You said " If the slot tournament was part of the husband's gambling, then the income is gambling income" -- that's the crux of the matter. Tournament and drawing wins are NOT considered part of a person's gambling by casinos. They are considered to be "promotions." There -- I've given you another word to dissect. Have fun!

Bottom line is that I work in a casino and know how these events are handled. I also have a very intelligent tax attorney who is also a recreational gambler, and she explained all this to me a few years ago when I had both W2G's AND a 1099 (from winning a casino drawing) to declare on my tax form.

P.S. Posting in bold-face and all caps doesn't make your statements any more right.

raisin -- listen to Sue.

From reading the comments, I do not understand Marcus’s concern. Sue is explaining how the income is reported, but using two separate forms…the W2G or the 1099-misc. Both types of income (gambling W2G) and tournament (1099-misc) wins are reported on Line 21 of a 1040 form.

You can deduct gambling losses if you itemize, but no more than the winnings reported on Line 21. Justmare stated that gambling losses cannot offset money gained from a 1099. I did not realize this was an IRS rule, since I did it once. Since, it was a small gain, it was not caught.

Since tournament entry fees are deductible, I was under the assumption that all gambling losses to include the fees can be used to offset gambling, tournament or lottery wins.

Johnny, it's my belief that 1099 income is not reported on line 21, but is included with your regular income (salary) -- I don't know what number that line is. Line 21 is for gambling winnings that may be offset by an itemized deduction of gambling losses. But as I said, people should ask their tax preparers -- I'm not here to give advice on filing taxes, lol.

BTW, Jean Scott reported in her book on taxes for gamblers that she was NOT able to deduct the fee she paid to play in some tournament. She said she won $600 in the tournament, which she had to claim as income, but she had paid $1,000 to play in the tournament and was not allowed to deduct that. So it was a losing proposition for her.

The reason I'm boldfacing is because you are giving incredibly bad advice. The casinos don't get to tell you how to fill out your tax return.

Suppose a casino offers a very bad game and a very good drawing. Anyone who loses at the game is allowed into the drawing. Change the numbers if you'd like, but suppose the game has a 99% chance of a $1,000 loss, and the drawing has a 97% chance of a $1,010 win.

According to your THEORY people who lose the game and win the drawing have $1,010 of taxable income and no deductible losses, all because the casino structured the two parts as a "game" and a "drawing."

If your THEORY is true, it should be a simple matter for you to cite the Federal law that states the loss is not deductible because the win was reported to the IRS on a 1099. Don't cite Jean Scott, don't cite a kind and benevolent tax attorney, cite the Federal law that states the loss is not deductible.

The apple stays with the apple tree. It doesn't go wandering off and become a pear.

Again with the fruit ...

Please learn to read. I never gave tax advice -- I said people should consult their tax preparers.

I am merely telling you which forms casinos submit for certain types of wins. This is not a "theory" -- it's a fact. It's up to you how you file your tax return. The IRS will determine whether you did it correctly. Casinos don't tell you how to file a tax return, and I never said they did.

BTW -- W2G's are for gambling wins. That's why the "G" is in the name. 1099's are called "1099-MISC" and are for "miscellaneous" income from various sources (not just from casinos). 1099's in and of themselves have nothing to do with gambling.