Our guest this week is Russell Fox. Russell is a certified tax professional who handles many professional gamblers. We talk about strategies that effect people with gambling income.
click to listen – alt click to download
Show Notes
[00:49] Tax evasion v.s. tax avoidance
[01:43] The federal tax bill and its relevance to gamblers and non-gamblers
[08:29] What is the best way to list W2G’s for a professional gambler using schedule C?
[15:23] Online casinos in New Jersey require W2G’s for slot machine winnings of $1200 or more. In general, is free play taxable? Is the free room from the casino taxable?
[18:10] Keeping a diary of gambling wins and losses
[21:33] Can a player form a C-corp so that he can present his tax ID rather than his SSN when he hits jackpot
[24:11] Playing under an assumed name and producing an identification for the real name and the form W-9
[28:33] Is the U.S. the only country that taxes gambling winnings?
[29:10] If you hit a $20,000 royal flush and take it in cash, is CTR filled out on top of W2G?
[33:20] What should a U.K. citizen be worried about if he visits Las Vegas for a vacation and wins a significant amount of money?
[37:31] The tax implications for both the investor and the players of a blackjack team
[40:59] Should you pay taxes on gambling overseas?
[41:51] Are capital gains on cryptocurrency taxable events?
[48:29] Do you report gambling wins/losses for games that occurred on international waters?
[48:47] If you have a SEP IRA and a solo 401k, is there any downside for using solo 401k just for the $18,000 elected deferral and use SEP IRA for roughly 18.5% of the net contributions?
[50:15] 5 silly things that Russel heard from his clients
Russel Fox:
Never miss another post
Shame on the person paying the Blackjack player $20 an hour! I have a session BR of $1200 and make far, far, far more than that an hour (except on extreme negative variance). The indentured servant playing for this pittance ought to save their own BR and get rid of this parasite.
Mr. Fox was incorrect about the issuing of a CTR for slot machine jackpots over $10,000. FINCEN specifically says that slot machine jackpots are excluded. The reason is is that a W2G will be filed so the transaction is being reported.
Mr. Fox told listeners about the legal requirement that a United States person having foreign financial accounts with an aggregate value exceeding $10,000 at any time during the year file an FBAR (not to be confused with a FUBAR, though there is a family resemblance). There are additional considerations of which listeners should be aware:
(1) If you have a foreign financial account of ANY size, even though the total of your accounts doesn’t exceed $10,000, and you are otherwise required to file an income tax return, you are required to file Schedule B for the purpose of disclosing the existence of the account. Schedule B doesn’t ask you for additional information if the accounts don’t exceed $10,000. But you still must file the schedule to disclose the existence of any account, even though your interest and dividend income is so small that you wouldn’t otherwise need to file Schedule B. This can be quite a trap, because you wouldn’t know of the requirement unless you carefully read the full Form 1040 instructions, and tax preparation software is REALLY BAD about alerting users to this requirement.
(2) If at any time during the year the value of the foreign accounts was at least $50,000, you may also have to file Form 8938 with your return.
(3) The deadline for the FBAR has at times been different than the deadline for filing an income tax return. It is currently April 15. However, obtaining an extension of your time to file your income tax return does NOT extend the time for filing the FBAR. This is another big trap for the unwary.
A good summary of foreign financial account reporting laws can be found at:
https://www.goldinglawyers.com/file-schedule-b-foreign-accounts-but-no-foreign-income/
DRich is correct. Slot jackpot payments are exempt from CTR requirements under Title 31 Code of Federal Regulations § 103.22(b)(2)(iii)(D).