A last-minute response to some of the tax questions gamblers have sent me. Almost all of them required more than a simple one-sentence answer. Tax issues are always complex and when you combine them with gambling issues they become doubly complicated. So many of the needed details in the IRS publications are murky or missing, so the answers often depend on your personal financial circumstances.
If you are panicking because you haven’t filed your return for 2017 and the deadline is this coming Tuesday, the current e-book edition of Tax Help for Gamblers can be downloaded immediately at this website. Most gambling tax issues are covered, no matter what game you play, and many of the common tax questions are answered there. If your situation is so complicated that you are still confused, then I suggest you file for an extension and then see a professional tax preparer who is knowledgeable about gambling issues.
If you have questions about how the new tax changes will affect your filing of your 2018 returns, help is on the way as there will be a new updated edition of my tax book later in the year. In the meantime, I have discussed in some of my recent blogs some of those changes that affect gamblers specifically and talked about some of the techniques that players are using to mitigate their negative effects. One reader suggested using multi-line lower-denomination games instead of higher-level single-lines to avoid W-2Gs. That is a great idea but often one that is not an option because there are no games readily available with the same good pay tables at every level, and it really doesn’t solve anything since the IRS expects you to pay taxes on your wins whether you get any paperwork or not. Another reader suggested that I talk about using the session method for this purpose. That might be a good way but, until the IRS changes the way it looks at gambler returns, you might not want to face the hassle of explaining your figures in an audit.
I discussed taxes on a recent “House of Cards” radio show, Episode 53
And unrelated to taxes, you can read a recent interview I gave about casino freebies. I wasn’t given the opportunity to vet or edit it – so remember the author bears full responsibility for all the material there.
Insofar as W2-Gs are concerned, the day has not yet arrived when the IRS will require that every casino generate win-loss statements for every player and send them to the IRS, in the way that 1099s are generated for other miscellaneous income. Therefore, your non-W2-G gambling income is essentially invisible. While I don’t doubt that there are some stalwart souls who nonetheless report and pay taxes on such income, most don’t. And while I don’t think we’ll ever see any “gambling tax guide” recommend that you keep your gambling income under the radar by never getting a W2-G, it is a good way to not get taxed–and given the grossly unfair way gambling income is taxed, I personally have no moral compunctions keeping it invisible (and not reporting it) for those years wherein I show a profit.