question on dealmaking and taxes - Page 2

gazarsgo · #11 03-15-2005, 09:29 PM

The way taxes on gambling income works, having losses to 'compensate' for being attributed more than you actually won is not 'fine'. It is a negligible difference for small sums of money but if it is a big payout it can mean the difference between one income tax bracket or another.

burningyen · #12 03-16-2005, 02:17 AM

And to piggyback on your post, in this particular situation there is a significant difference between (a) treating the "lost" deal money as gambling losses that can only be offset against income if the player itemizes his/her deductions and (b) not treating the "lost" deal money as income in the first place.

broiler · #13 03-16-2005, 08:10 AM

The casino is wrong in how they handled the W-2G for everybody in this situation. My guess is that they were being lazy. If I was a top 9 person, I would not want to receive a W-2G for the wrong amount because the IRS is good at matching up the amounts.

If you received an incorrect W-2G, you still have to report the full amount to keep yourself from trouble. The next line of other income should be a negative amount listed as "correction of incorrect W-2G". You still might get a letter from the IRS, but at least you have the correct impact on your tax return for reality of the situation.

A call to the IRS might be necessary if a letter arrives. The IRS will be willing to talk about the situation because the casino failed to file correct forms. An agent will light up at the sound of that because the penalty for failure to file is $50 per form per day late. The agent will also hope to find the other 10 people to see if they are correctly reporting income.

I had a similar situation happen to me where the casino claimed that they only had the number W-2Gs available for the payouts. When I mentioned the penalty for failure to file to the TD, they were able to find some more forms and report correctly. You should never let their ignorance or laziness cause you to have a problem with the IRS.

burningyen · #14 03-24-2005, 03:49 PM

Just to follow up:

The Taj has given a reasonable explanation for why the W-2Gs were handled the way they were. The Taj has to run their tourney payouts by the NJ gaming commission in advance. The actual payouts have to be in those amounts, and the W-2Gs have to reflect the actual payouts. Here's the key part: when the top 9 players were paid by the casino, they were actually handed the amounts they were to be paid under the original prize structure. Then, they went back to the tables where the tourney sponsors (who were not casino employees!) took out and distributed the deal money for players 10 through 19. So from the Taj's perspective, the casino did actually pay to the top 9 the amounts that were listed on the W-2Gs, and it is now up to the players as to the tax consequences of the deal. Something to keep in mind if you're ever in a deal-making situation in the future!

ilbeeg · #15 03-24-2005, 03:57 PM

So they are saying that after they figure out the prize pool they have to run it by NJ gaming commission, or they have to provide the NJ gaming commission a percentage breakout based upon total buy-ins/players. The first seems a little farfetched, the second I could understand.

Just curious,
Brian

burningyen · #16 03-24-2005, 04:26 PM

Yes, the latter.

giantsrule · #17 03-24-2005, 06:21 PM

[ QUOTE ]
Probably, they already had the w2-g's made out for any spot that paid over $599...

[/ QUOTE ]

Do you only get a W2-G if you win $600 or more? Less than that is there no tax paperwork? Why is this amount apparently so much lower than for sportsbook bets? Thanks for any answers.

burningyen · #18 03-24-2005, 06:55 PM

Yes, the threshold is $600. I thought the rule applied to all gambling, so no idea why it would be applied differently to sportsbook bets.

AngusThermopyle · #19 03-24-2005, 06:59 PM

[ QUOTE ]
Just to follow up:

The Taj has given a reasonable explanation for why the W-2Gs were handled the way they were. The Taj has to run their tourney payouts by the NJ gaming commission in advance. The actual payouts have to be in those amounts, and the W-2Gs have to reflect the actual payouts.

[/ QUOTE ]

So what the Taj is apparently saying is that the deal was illegal under NJ law.
It would be interesting for someone to ask the Gaming Commission directly.

Pulplife · #20 03-24-2005, 07:50 PM

I just glad that I play in AZ @ the indian casinos! No taxes. [img]/images/graemlins/grin.gif[/img]