VP AND TAXES

There are numerous discussions here as well as the newsletter about how much the royal on a vp machine must be in order for the game to become positive.

However, it does not take into account income taxes which can be over 30% when you factor in state, local and federal. When you factor in taxes the breakeven point is actually much higher and a player would be better off winning less.

That can be true.

When I see a quarter Prog that is just over 1,200 I avoid those.
Or I'lll play a Prog til it hits1,200 and then find a BIG prog. to play.
Definately have taxes in the back of your mind when youre a vp player.
Otherwise, you're just a tourist. lol

Most bars set their jackpots at $1199 for this reason.

You must pay taxes on all gamblings wins. Of course, one can offset winnings with losses, up to the amount of the winnings...as long as you file the long form with itemized deductions.

The $1,200 threshhold is when the paperwork starts.

I was referring to the progressives. The LVA frequently writes about progressives going positive when they go over $1,200 but when you factor in taxes they are not.

The general rule is all gambling winnings are reported on the front of the tax return and then you may deduct losses (if you can itemize) on Schedule A. Not such a hot result for non-itemizers or people subject to AMT. But a relatively new IRS Chief Counsel opinion says you may be able to net some losses against the wins on the front of the tax return if they were incurred in the same "session." Talk to your CPA about the not so difficult recordkeeping involved if you think this may help your situation.

Two comments:

1 - IRS Chief Counsel opinion - front page net losses. Do you have any more information about this? Links? Some of us are reporting some large numbers on the front page, and then with lots of records reporting a loss on the itemized section. Costs us money that we do not have.

2 - Progressives being positive: I personally think this is as close to a scam as you can get. Since one in 40,000 spins is a Royal, the game is far from posive for just about anyone playing. After all, it is not unreasonable to play all day and evening and get zero Royals, so this "positive" thing does not apply to you.

Showing a net loss on page 1 would be a dandy way to trigger an audit.

The "session" rule simply means that you need not segregate every single wager as a win or loss. Some groups of wagers would be aggregated. So if you play slots every day, you could aggregate each day's wagers into a net win or a net loss for the day.

But if the day is a win, it goes on page 1, and if it's a loss, it goes on Sched. A (not to exceed the wins on page 1).

The biggest problem with Sched. A, for most people, is the loss of the standard deduction when Sched. A is used. In some unusual cases, spouses who use Sched. A can do better by filing separately than by filing a joint return.

There's really nothing you can do about it, it's just the way the revenue law is. If you lose money gambling, you lose on your tax return as well. Heads they win, tails you lose.