Question of the Day - 14 February 2023

What constituents being able to call yourself a professional gambler? I visit a casino at least once a month. Visit local casinos and surrounding casinos in other states. I visit Las Vegas once a year. Could I be a "Professional Gambler"? I know that some of the YouTubers claim that status. If I document all of my play on a youtube channel could I claim to be a professional? 

The best way to fend off the IRS dragon is to smother him in paperwork. Make it time-consuming and tedious for them to go after you and they won't pursue you unless you look like a really juicy target. Show up for that audit carrying a dozen file folders. Be VERY helpful in explaining what they all contain.

If the rules were better defined, you wouldn't have to go through this sort of charade, but the sad truth is that there's a huge degree of subjectivity in the process and whether or not the IRS accepts your description of your activities may depend on whether the agent got laid last night.

If you have a friend who's willing to do you a huge favor...

Social Security rules have changed as to the amount you can earn and retain SS payments.  Now as to Professional Gambler status. Gambling has to be your main source of income which in your case means showing a PROFIT greater than your SS payments on an annual basis, not month to month. As all professional gamblers know you can have losing streaks that last for years. That is why a diary is needed as an audit happens when you do the short form for income tax but your W2G's show a windfall.  The IRS wants to know where their piece of the money went to so instead of the short form you itemize but never file as a professional, unless that is the ONLY source of income you have. After all, if you are not retired with SS payments you will have to pay into Social Security for your future retirement. 

I visited 5 Phoenix area casinos during Super Bawl week, all were extremely tight. My money flew away like New Years in Vegas.

There goes lewis again, the one who voted for the inept clown show circus who got us 87k new agents yet tells people on this forum how to "fend" them off and telling people not be to a "juicy target". How moral of you. Typical though. How about pay one's honest share in taxes Lewis, isn't that the right thing to do? You are a big government guy, now time to back it up and fund it. Rules for thee, not me though, I know.

Doc, I get that you don't like KL's politics, but nothing in his post inferred that he is not paying his fair share of taxes. His post merely says to keep great records, which is always a good idea when dealing with the IRS. Oh, and the IRS is not hiring 87K new agents. The agents they are hiring are going to be focusing on higher-income taxpayers, as opposed to now, when the majority of audits relate to folks improperly claiming the earned income tax credit. 

In any event, bless your heart, Doc.

Hey John,

When someone uses words like "smother him in paperwork", make things "time-consuming and tedious for them to go after you", sounds more than a bit dodgy and not forthcoming to me, on the dishonest side as I read it, yes? If not, fine, we agree to disagree. But in my world, if you have gambling winnings, you put them down, pay your taxes. Done. If one can write off things like losses, you write them down. Done. Not "smother" and make it a "tedious" process to the other side.

As for going after the "higher-income" taxpayer, you need to catch up and educate yourself about the new law they passed that 1099's will be generated for anyone using pay services like paypal, sell on ebay, etsy, that generate a very low $600 in a calendar year. That 100% impacts lower-income taxpayers, far more than high-income people. And good luck cost allocating that 45yr old item you sell on ebay for $723. Or the $125 someone paid you back for a meal via paypal.

No pills needed, just dif views.  

The IRS offices across the country are back open again for in-person meetings. There's one in Las Vegas, also most larger cities. You can go in there and meet with an IRS rep and ask them if you qualify as a professional gambler. You can call and make an appointment, then explain your situation and see ahead of time if you'll be able to file income tax as a pro gambler. There's a lot of tricky written rules and explanations about gambling, easier to just ask one of the IRS experts.

A little off topic but you brought it up, you stating the new agents are hired to focus on higher-income types: Search on "waiter's tips irs" or something close to that and tell me they are only going after high-income people. Ton's of sites reporting the reality for you if you care to look. Every waiter and waitress I've known work hard and are far from "high-income". 

Re-read the answer to the third question.  One size does NOT fit all. So many of these comments here give bad info. Gambling does NOT have to be your main source of income, there is no set rule about how often you play, in a casino or on YouTube.  It's a combination of many factors that I fully discuss in the book. You have to run it just like any other business. If you talked to 10 IRS agents in a letter or in person, you would get 10 variations of opinions. A friend may or may not know enough about your personal facts and circumstance to give valid advice.  My book will get you on the right path but only a professional tax preparer WHO HAS HAD EXPERIENCE with gambling returns can do the best job for you.  And even then, you may still have  a time-consuming fight with an IRS audit!!!!  Take it from someone who has dealt with this for umpteen years; it's not for the faint of heart!!!

I think we need some clarification from the Queen, Jean Scott and her trusted tax pro Marissa Chien that co-wrote the Tax Help for Gamblers book you sell. My memory is hazy at best, but I thought there was a more recent precedent set by the IRS regarding how detailed the records need to be for gambling wins/losses. I will admit that I come from a recreational marijuana state, but admit nothing else. :D