if you hit a Royal on a quarter machine you get 4000 coins...and you keep all 4000 of them. If you play 50 cent VP or higher and hit a Royal you get 3000 coins and Uncle Sam gets 1000.
This especially holds true with the higher standard deduction making your gambling winnings more difficult to offset.
so is quarter VP the only way to go in today’s world? I’m thinking so.
Theoretically one must declare and pay taxes on all gambling winnings, regardless if one gets a W2-G or not.
Each individual's tax situation is different, depanding on many variables. But I do see your point. The $12,000 standard deduction will cause many who did itemize in prior years not to do so for the 2018 tax year and beyond. One can only claim gambling loses (up to the extent of gambling winnings) if they itemize.
And the W2-Gs get added to your adjusted gross income (AGI), which can artifically increase one's taxable income. So I can see the "theory" of avoiding W2-Gs at all costs, so there is no paper trail of wins and therefore no increased AGI.
But I'm also thinking that a "higher" level gambler will not be impacted, since his/her W2-Gs will easily exceed the $12K threshhold and they will itemize and be able to offset some or all of their winnings. Am I thinking correctly here?
not an expert ----but-----do not believe you need to itemize to deduct gambling losses from gambling wins---
just checked with my acct-----only when you itemize
If nothing else it might be a good idea to stick with the "Double Bonus" games at the higher denomination levels where you can cash out with the big 4OAK's underneath the tax radar.
Duke - you are correct. But you are much less likely to itemize now with the big standard deduction. So you are more likely to get hit with the income and not be able to neutralize it with the deduction - at least at my income level =)
Don,
Not quite. Let's say you have $5,000 in deductions and have $5,000 in W2s. Since the $12k standard deduction is more than the itemized amount, no gambling deduction.
Now, let's say you have $5,000 in standard deductions but you have $9,000 in W2s. Now, the $14k standard deduction is greater than the $12k standard deduction so you itemize. But that first $7k in W2s works the same as the standard deduction so you only really get to deduct $2k in W2s.
The higher standard deduction is great for a lot of people but gamblers aren't one of them.
And the 2019 tax year will be worse.
Suggestions (if you itemize) from one who endured sticker shock last year:
- If you have to take a MRD from your IRA, confirm that your investment people take out enough taxes. Mine didn't take out enough. Have them overestimate your tax bracket and have them use it to "pay your taxes" on that MRD. That is if you don't wish to write the big check at tax time.
- If you cash in other investments, again be sure enough taxes are paid. Or you will pay at tax time, as with your MRD.
- If you hit a taxable jackpot, have them take out some Fed taxes BEFORE they pay you. This hurts. You want it all right then. Some casinos will let you specify how much, e.g. $100 etc. Some will require that it be a minimum (25%, e.g.) of the jackpot if you want some taken out. Don the Dentist has it right. Your W2-G total is added to your AGI. A big jackpot year may cost you at tax time, even if your losses exceed W2-G total.
- Investment fees used to be deductible. They were not last year, and I suspect not this year. Talk to your investment people. Many of those 'trades' incur a fee. Know what your investments are costing you.
