Tax return question

[coffeecrazy1]

I see...

Methinks I should buy a Tax for Dummies book or something, just so I don't feel quite so lost.

Thanks for the help on this.

[Luv2DriveTT]

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The deductions on your paycheck have nothing to do with itemized deductions you take on your tax return. The standard deduction for 2005 is $5,000, so if your total itemized deductions (including your gambling losses) are less than that then you can't itemize.

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I was told it was 7K as of 2005. I don't know if my information is correct, just pointing it out.

TT [img]/images/graemlins/club.gif[/img]

[JPinAZ]

$5,000 single or married filing separate, $10,000 married filing joint, $7,300 head of household

http://www.irs.gov/publications/p501/ar02.html#d0e6188

[Kurn, son of Mogh]

Would it be problematic to simply declare your profit as income, and list no losses as a deduction?

IRS publication 529 specifically forbids reporting the net of wins and losses as income. All wins must be reported as income on form 1040 and all losses must be reported as an itemized deduction on Schedule A.

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Would it be problematic to simply declare your profit as income, and list no losses as a deduction?

IRS publication 529 specifically forbids reporting the net of wins and losses as income. All wins must be reported as income on form 1040 and all losses must be reported as an itemized deduction on Schedule A.

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The above is the legalese. Congress REALLY screws gamblers. In theory, if you make relatively little money or just don't have many deductions so that you don't itemize, Congress has proclaimed that you cannot deduct any loses at all, and must declare all wins of every sort. So in theory if you play 30 tournaments for $100 each in a year and take in $3000 in winnings, you are expected to declare $3000 in income and you cannot offset the $3000 in loses. You broke even for the year, but are expected to pay income tax on $3000. The ONLY way to legally deduct loses is to itemize on schedule A, or quit your real job and become a professional gambler and move it all into schedule C.

And people wonder why folks cheat on their taxes. This is one of those rules that doesn't pass common-sense fairness tests. Write your congresscritter and demand they fix this.

Unless you've got large winnings that generated an IRS form(s), you may not have a problem.

<ul type="square"> [img]/images/graemlins/wink.gif[/img][/list]
(I am not a CPA or tax advisor, but I did spend a couple of nights in a Holiday Inn last week.)

[coffeecrazy1]

I had that thought, actually...but I don't want to get audited my first time out of the box. Any thoughts along these lines from folks who are wise in the ways of the evil tax?

[Bulbarainey]

chance of audit is 0.1%

[coffeecrazy1]

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chance of audit is 0.1%

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"Never tell me the odds." - Han Solo [img]/images/graemlins/grin.gif[/img]

[murellus]

nobody's going to notice $500...