Interesting Internet Tax law for Illinois

[StellarWind]

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I don't understand what you mean. Are you saying you have to list all your winnings on the front of your 1040 but can't deduct the loses on your itemized deductions?

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That is exactly what he is saying and it is true for state income tax in several states. I'm not familiar with Illinois in particular.

Probably they rationalize it as a sin tax and a remedy for fabricated losses.

[obsidian]

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This is referring to state income taxes, not federal I assume.

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Yes, this is only for state income taxes and only in a few states.

[cardcounter0]

Indiana and Ohio are two I know of.

[MyTurn2Raise]

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I recently found out that in Illinois that you are unable to deduct your losing sessions after adding all your winning sessions as gross income. I guess this is the case with about a dozen other states as well. Wow this just sucks.

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file as a professional

[obsidian]

Being as I also had a full time job for the most of the year and am currently part time + school full time filing as a professional is not something that would likely stand up if audited. Also, when filing as a professional there is a ~15% self employment tax I would also have to pay.

[MyTurn2Raise]

better than taxed on all your above the line winnings wihtout deductions for losses. 15% self-employment is OK in comparison.

If you have enough winnings to want to file taxes, professional status should not be too far a leap.

[srw5n]

Just to echo what has been said, assuming you kept good records and you are discussing poker winnings, you can probably file as a professional.

Massachusetts does not allow deduction for losses, but accepts federal definition of prof. gambler and therefore allows deductions for losses on a schedule C if you are filing accordingly.

You'll get dinged for SE, but without knowing your exact situation it will almost assuredly be preferable.

[AASooted]

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2. If you just paid them for the $25k you won even as a casual gambler I would be willing to bet it would work out fine.

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The problem with this is that you just enter your AGI from the federal form on your Illinois tax form and use that as a starting point. I think there's a better than even chance that they verify this number with the IRS.

To make this work, you'd have to use your net winnings as income on the federal form (which I can't do as a non-professional) or hope Illinois doesn't compare their number with the IRS. I don't like my chances in either scenario. I'll run the numbers, but since I only play recreationally (my winning sessions probably don't add up to a huge number) and the Illinois tax rate is only 3%, I'll probably just suck it up and pay them. They can't make me like it, though.

It occurred to me a couple of months ago that I might be better off playing the same number of hours in longer sessions rather than shorter. As an Illinois taxpayer, I'd rather net $5000 in 100 sessions at +$10,000 and -$5000 than net the same $5000 in 200 sessions at +$12,500 and -$7500. I'm assuming longer sessions would even the variance out a little bit.

[sofere]

Keep in mind, if you file as a pro, you will be liable for an additional 7.5% self-employment tax. There is a lot that goes into the cost-benefit analysis of whether or not to go pro.

[augie00]

wow, i hate/will hate taxes