The hundredth tax question...

[Dave H.]

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IF YOUR INCOME IS LESS THAN 7,000 YOU ARE EXEMPT FROM ANY TAXES AT ALL DEPENDENT OR NOT.

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This is absolute, pure, utter nonsense. Taxes are serious business, and this is one area where, if someone is the LEAST bit unsure of what he/she is stating, he/she should NOT be giving out incorrect advice.

Please go to the link below to determine what your standard deduction is for tax year 2004 and remember that it makes a BIG difference whether or not you are claimed as a dependent on your dad's tax return! When you get to the link, look at the heading entitled "Standard Deduction".

Publication 501

Another note: As to how you track/report winnings and losses, here is another IRS publication. What you will discover is that you are taxed on your gambling income at the regular income tax rate, and NOT at the 25% rate that someone else mentioned earlier. That 25% rate referred to the amount which a casino would have to withhold, for instance, if you won some big jackpot and they had to supply you with a W2G. But that 25% amount which was withheld has NOTHING to do with the tax you owe at the end of the year!

IRS and Gambling Income

The bottom line here is that you ought to take a few bucks and go to a qualified tax preparer and make sure you'r doing this correctly so that you're not burned later. If you do it once, you'll get expert advice and you'll have this for the future (assuming the law doesn't change too much).

And one more thing...your dad doesn't want you to screw up; that's why he's concerned! Plus, he's claiming you as a dependent on HIS return, and he doesn't want you to be disqualified as a dependent, which could happen if you don't follow the rules.

[dakine]

Dave H.: Good information. We're just trying to save this young man from the pitfalls of stupidity. [img]/images/graemlins/tongue.gif[/img]