Saturday, April 2, 2011

All In Against The IRS: Every Gambler's Tax Guide...

The book of the week was All In Against The IRS: Every Gambler's Tax Guide by Stephen Fishman. I am not a big fan of paying taxes. In fact, it might top the list of my least favorite things I have to do. But regardless of how much I dislike it, it has to be done. So I do my best to keep myself knowledgeable on different tax areas, so I can minimize my tax burden as much as possible. That's where Fishman steps in... I reviewed one of his books before and I liked it quite a bit, so I thought I would give it another try. He has a great way of taking a extremely dull subject and making it readable.

This particular book by Fishman was all about gambling i.e. slots, poker, blackjack, races, etc. And even though I don't particularly think gambling is a good habit, it is somewhat fun to go to the casino every once in a while and try my luck. However, I never spend any money at a casino that I expect to come home with. For me I will just do $100 max and when it's gone, it's gone. For me this book is good for when that trip to the casino results in a mega win. However, the book is very detailed and it would be really good for anyone that goes to the casino on a very regular basis.

The most interesting thing to me is the way gambling is taxed. There is a story at the beginning of the book about a man who $50,000 on blackjack. He didn't claim it on his taxes at the end of the year because he knew that he lost more than $50,000 that year too, so he figured it was a wash. He got audited and ended up owing $17,000 in back taxes. That guy had to find out how gambling taxation works the hard way... you don't have to.

The main thing you need to know when you are gambling is that you need to track all your wins and losses. You can use a log, which Fishman includes in the back of his book, that has all the relevant information. After each session, which is basically when you get up from the table or slot machine in one seating. You can claim losses equal to the amount of your winnings, but not more. You can not use gambling losses as a deduction from any income besides gambling income. And your gambling log will be your records needed to 'prove' against your taxes. However, it helps to also have a brochure or hotel folio to prove you were there when you say you were as well. Something interesting that I learned from this book is that the player's card that track your activity at a casino can print off a win/loss statement at the end of the year from you. But, this can not be used as sole evidence to prove your winning and losses because they have disclaimers and you don't have to use a player's card to gamble every time. Another thing to note... Don't use the difference between your winnings and losses to plug into your 1040. There are separate places to put winnings, under other income, and your losses, under other losses.

Lastly, don't think that you can get away with not reporting your winnings on your taxes. Certain gambling activities have different intervals in which the casino is obligated to report the winnings to the IRS. You definitely don't want the IRS sending you a big bill for back-taxes.

I think Fishman did a great job with this book and I think it's a solid read. Not boring and easy to read. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.

No comments:

Post a Comment