Skippy Posted January 16, 2006 Share Posted January 16, 2006 I know theres a bunch of you tax people out there so here goes an easy one. I think. Lets say that I have a W2G from a jackpot that I hit in Vegas. Does that force me to itemize on my tax form? I mean I would want to show that I lost money as well so how do I do that? Also, I have never itemized. Never felt that need and really don't think that I have the deductions to do so. However, in the next few years I am probably going to purchase a house. If I sell my old house wouldn't that sort of make me have to itemize? I really do need a list of things that I could itemize if I was going to. Quote Link to comment Share on other sites More sharing options...
Puddy Posted January 16, 2006 Share Posted January 16, 2006 Unfortunately you would have to itemize deductions. The income has to be included and can only be offset by gambling losses on Schedule A. The exception to this rule is the Professional Gambler, who can deduct losses directly from winnings. Well you do play Huddle Poker regularly, maybe you are a professional. Quote Link to comment Share on other sites More sharing options...
yo mama Posted January 16, 2006 Share Posted January 16, 2006 (edited) Unfortunately you would have to itemize deductions. 1269292[/snapback] I thought itemizing was elective? You don't "have" to itemize, do you? Edited January 16, 2006 by yo mama Quote Link to comment Share on other sites More sharing options...
Puddy Posted January 16, 2006 Share Posted January 16, 2006 I really do need a list of things that I could itemize if I was going to. 1269279[/snapback] Itemizing is pretty tough without the mortgage interest and real estate taxes associated with home ownership. Other common deductions include: Taxes paid to state and local goverments Personal property taxes (license plate fees, etc.) Donations But the big ones are normally mortgage interest and property taxes. Quote Link to comment Share on other sites More sharing options...
rocknrobn26 Posted January 16, 2006 Share Posted January 16, 2006 I thought itemizing was elective? You don't "have" to itemize, do you? 1269300[/snapback] No, but in order to deduct losses, that is the only option. FWIW, Pud see if you agree. If you win $10K and you can prove $10K in losses you still will not have a push on the winnings vs losses, because the $10K in losses is a deductable NOT a credit. Skip, call the Hotel you got the big win at. Ask them for a win/loss statement. Also contact any other hotel that you have a playing record with. Those will help a lot. Quote Link to comment Share on other sites More sharing options...
ChuckB Posted January 16, 2006 Share Posted January 16, 2006 No, but in order to deduct losses, that is the only option. FWIW, Pud see if you agree. If you win $10K and you can prove $10K in losses you still will not have a push on the winnings vs losses, because the $10K in losses is a deductable NOT a credit. Skip, call the Hotel you got the big win at. Ask them for a win/loss statement. Also contact any other hotel that you have a playing record with. Those will help a lot. 1269351[/snapback] Unless the tax is higher on gambling winnings shouldn't it cancel each other out, because even though the losses are not a refundable credit they should still lower your taxable income by 10k and winning only raised it by 10k so it sounds like it should be even If I'm wrong I know Puddy will let me know Quote Link to comment Share on other sites More sharing options...
Puddy Posted January 16, 2006 Share Posted January 16, 2006 I thought itemizing was elective? You don't "have" to itemize, do you? 1269300[/snapback] No, but in order to deduct losses, that is the only option. 1269351[/snapback] Righto. FWIW, Pud see if you agree. If you win $10K and you can prove $10K in losses you still will not have a push on the winnings vs losses, because the $10K in losses is a deductable NOT a credit. 1269351[/snapback] Not really but you are on the right path. If they would allow an 'above the line' (meaning above the Adjusted Gross Income line on the 1040) deduction for the losses he would still be okay. But since they force the itemizing what they are telling everyone is..."only win at gambling if you are also in a position to itemize. Otherwize we are going to tax you and there's nothing you can do about it to offset it." Just another example of keeping the little man down Quote Link to comment Share on other sites More sharing options...
Puddy Posted January 16, 2006 Share Posted January 16, 2006 Unless the tax is higher on gambling winnings shouldn't it cancel each other out, because even though the losses are not a refundable credit they should still lower your taxable income by 10k and winning only raised it by 10k so it sounds like it should be even If I'm wrong I know Puddy will let me know 1269375[/snapback] Yer right except if you aren't in a position to itemize, then the losses will not help you. Now if you won 10k and truly had 10k in losses, that itself is enough to warrant itemizing. Quote Link to comment Share on other sites More sharing options...
Skippy Posted January 16, 2006 Author Share Posted January 16, 2006 Skip, call the Hotel you got the big win at. Ask them for a win/loss statement. Also contact any other hotel that you have a playing record with. Those will help a lot. 1269351[/snapback] We've done this but thanks anyway. I have no mortgage interest at all. My house is paid for. I am not in business for myself. How much do I need to come up with, (deductions), to make it worthwhile? 6K right? Quote Link to comment Share on other sites More sharing options...
BYoder Posted January 16, 2006 Share Posted January 16, 2006 How much do I need to come up with, (deductions), to make it worthwhile? 6K right? You will want your itemized deductions, including gambling losses, to exceed the standard deduction for 2005 which are: Married = $10,000 MFS = $5,000 Single = $5,000 Head of Household - $7,300 (Wasn't sure on your filing status so I included all possibilities) Also, not sure if it has been mentioned yet, but you can only deduct gambling losses up to the amount that was won during the year. Quote Link to comment Share on other sites More sharing options...
Skippy Posted January 16, 2006 Author Share Posted January 16, 2006 You will want your itemized deductions, including gambling losses, to exceed the standard deduction for 2005 which are:Married = $10,000 1269661[/snapback] That sucks for me. I know I'm not going to be able to come up with 10K. And if I can't even fudge the win/loss then I am stuck at 3800.00 and some change on the gambling issue. I'm sure that I can offset the jackpot but to have to come up with another 6200.00 is not going to be possible. Quote Link to comment Share on other sites More sharing options...
Skippy Posted January 16, 2006 Author Share Posted January 16, 2006 Okay, just to make sure that I am on the right track here. The W2G that I got is for a 3826.00 hit. I do have to declare this as income but I don't have to itemize unless I want to. If that is the case then I am just going to end up adding the W2G info as if it is another W2 right? Quote Link to comment Share on other sites More sharing options...
BYoder Posted January 16, 2006 Share Posted January 16, 2006 Okay, just to make sure that I am on the right track here. The W2G that I got is for a 3826.00 hit. I do have to declare this as income but I don't have to itemize unless I want to. Right If that is the case then I am just going to end up adding the W2G info as if it is another W2 right? Basically this is correct except, IIRC, gambling winnings are reported on the Other Income line on page one of the tax return. That sucks for me. I know I'm not going to be able to come up with 10K. And if I can't even fudge the win/loss then I am stuck at 3800.00 and some change on the gambling issue. I'm sure that I can offset the jackpot but to have to come up with another 6200.00 is not going to be possible. This goes back to what Puddy said about the IRS keeping the little man down. Quote Link to comment Share on other sites More sharing options...
I Like Soup Posted January 16, 2006 Share Posted January 16, 2006 Itemizing is pretty tough without the mortgage interest and real estate taxes associated with home ownership. Other common deductions include: Taxes paid to state and local goverments Personal property taxes (license plate fees, etc.) Donations But the big ones are normally mortgage interest and property taxes. 1269301[/snapback] What about working from home for a company? I have my own office set up here as we left our building a couple months ago? Quote Link to comment Share on other sites More sharing options...
yo mama Posted January 16, 2006 Share Posted January 16, 2006 (edited) What about working from home for a company? I have my own office set up here as we left our building a couple months ago? 1270034[/snapback] Careful with that one. "Home office" deductions are valid, but commonly abused. If you go that route, make sure everything is documented. Because you're increasing your risk of audit just by taking it. Not saying you shouldn't. Just don't get overly agressive. Having things like computers, phones, copy and fax machines, etc. that are used from both personal and comany business make it more difficult to substantiate, too. Edited January 16, 2006 by yo mama Quote Link to comment Share on other sites More sharing options...
justin Posted January 16, 2006 Share Posted January 16, 2006 One tax planning technique is to prepay your state income taxes by Dec. 31. Sometimes that can push you over the limit to go from taking the standard deduction to itemizing. Unfortunitly, this won't help you here. But keep it in mind for future reference. Another area that you can increase your itemized deductions with is deductions. Both cash and non-cash. I try to make it a habit to to take old clothes or other household items to Goodwill on a regular basis. At the end of the year I have a bunch of receipts for donated items. You can take a deduction on Schedule A for whatever the fair market value of the donated items are. Quote Link to comment Share on other sites More sharing options...
rocknrobn26 Posted January 16, 2006 Share Posted January 16, 2006 Righto.Not really but you are on the right path. If they would allow an 'above the line' (meaning above the Adjusted Gross Income line on the 1040) deduction for the losses he would still be okay. But since they force the itemizing what they are telling everyone is..."only win at gambling if you are also in a position to itemize. Otherwize we are going to tax you and there's nothing you can do about it to offset it." Just another example of keeping the little man down 1269400[/snapback] I can't remember the exact circumstances, but did something change in the tax law? About 7-8 years ago I won $625 in a crap tournament. According to the rules of the contest, anything over $500 was taxable at the full amount. I could substantiate a $500 deduction so the taxable amout was $125. But as I recall, there was a multiplier so as to make a deduction substanially less (10-20%) because it was a deduction NOT a credit. I remember doing 'what ifs' w/ Turbo Tax, and even when I put in $625 on Sch.A as a deduction, I was paying more taxes than if I didn't win anything. Just curious. Funny story. My Mom won $8K in the state lottery one year. They held back $1500. She didn't itemize, nor could she. When I did her taxes she got back ~$800 and was complaining that she should have gotten the whole $1500 back. I had to explain to her that the $8K winning put her over the amount of income that was previously un-taxed. She doesn't make enough $$$ to have to file income taxes, but with the winning it put her over and NOW she had to pay taxes on it and her SS! She was pissed, said Josie SoandSo won money but got the whole amount. Anyway, at the senior center that week, she took my paper work to the senior center as they were doing taxes free for the seniors. After the Tax Guy saw the paperwork, he asked her who did these tax forms for her? She said "I did". He said "Ya want a job, they are perfect!" She has never doubted me since! Quote Link to comment Share on other sites More sharing options...
rocknrobn26 Posted January 17, 2006 Share Posted January 17, 2006 Bump for Puddy! Quote Link to comment Share on other sites More sharing options...
Puddy Posted January 17, 2006 Share Posted January 17, 2006 About 7-8 years ago I won $625 in a crap tournament. According to the rules of the contest, anything over $500 was taxable at the full amount. I could substantiate a $500 deduction so the taxable amout was $125. But as I recall, there was a multiplier so as to make a deduction substanially less (10-20%) because it was a deduction NOT a credit. I remember doing 'what ifs' w/ Turbo Tax, and even when I put in $625 on Sch.A as a deduction, I was paying more taxes than if I didn't win anything. Just curious. 1270169[/snapback] RR - if you showed $625 in income and then $625 as a Schedule A deduction, you should not have an increase in your tax liability as they wash. The only way I can think of for that to happen would be if your itemized deductions were limited due to a phaseout of deductions for high-income earners (although currently that doesn't apply to wagering losses). Not sure if it did at the time you filed. Otherwise you should have had no increase in tax liability, I don't believe. Maybe Yomama or BYoder would think of something I'm missing Quote Link to comment Share on other sites More sharing options...
rocknrobn26 Posted January 17, 2006 Share Posted January 17, 2006 RR - if you showed $625 in income and then $625 as a Schedule A deduction, you should not have an increase in your tax liability as they wash. The only way I can think of for that to happen would be if your itemized deductions were limited due to a phaseout of deductions for high-income earners (although currently that doesn't apply to wagering losses). Not sure if it did at the time you filed. Otherwise you should have had no increase in tax liability, I don't believe. Maybe Yomama or BYoder would think of something I'm missing 1271406[/snapback] Thanks Pud! As I said, I believe there was a 10-20% reduction on ShdA. It might have been due to high income. But I do remember that it was not a wash. Quote Link to comment Share on other sites More sharing options...
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