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Taxes on winnings vs. professional gambler status

Discussion in 'Non-Vegas Chat' started by ladyturtle, Jun 16, 2015.

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  1. ladyturtle

    ladyturtle Newbie

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    So I live in North Carolina. Last year, much to my dismay, I learned when I went to file taxes that the law had changed in NC. Now you must pay income tax on all earnings which are no longer offset by losses (as federal income tax is). This applies regardless of in which state the winnings are acquired. We owed a large amount of state taxes as a result. The local casino said they are lobbying to overturn the law, but I am skeptical. My husband keeps saying I should file as a professional gambler. But I am paid for 50 hours per week at a professional job with a good income, so I am doubtful that this would work. I am also fearful that attempts to file as a professional gambler would trigger an audit (which no one wants).

    Have others encountered this change in law? Or experiences with trying to declare oneself a professional gambler?

    Any information would be greatly appreciated! Carol
     
  2. nostresshere

    nostresshere Mr. Anti Debit Card

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  3. RiddickBull

    RiddickBull VIP Whale

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    If you don't get w2g, why would you file taxes if your wins is from table wins? If you get w2g, then you have no choice to pay the taxes
     
  4. shifter

    shifter Degenerate Gambler

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    Declaring yourself a professional will guarantee you an audit every single year.

    And there's no such thing as a pro at slots.....
     
  5. ladyturtle

    ladyturtle Newbie

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    I play video poker not table poker. I still cannot get my head around the idea that if I win 100,000 in a year and then lose 120,000 that same year (-$20,000 for the year) that the state of NC requires I pay taxes on the $100,000. So not only did I lose $20,000 for the year, I now owe 30,000 to NC. Sounds like declaring oneself a professional gambler isn't the solution. Sigh.
     
  6. Iceicecool

    Iceicecool Low-Roller

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    If that's true about North Carolina, you're only option is to stop gambling or move to another state. That is a really unfair law. I can tell you that you do not want to file as a professional gambler. Its not easy, i'll list only two reasons. First you must show a profit at least 3 out of 5 years and second you must show that you rely on this as your primary income.
     
  7. JaxxLV

    JaxxLV Tourist

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    NC has a flat 5.75 % tax for 2015...so on 100k gambling win you are looking at $5750. Since state tax is withheld every time you get a taxable JP, see if you can file a out of state tax return in the other states you gamble in to receive a offsetting credit on your NC state return.
     
  8. Chuck2009x

    Chuck2009x VIP Whale

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    The rules for being a professional gambler are similar to the rules for being a professional stock trader - it basically has to be your main occupation. Having a full time regular job nixes that.

    Unless it has some other method of determining wins at local casinos, NC is going to rely on IRS data (ie. W2-Gs) to determine your winnings, so your state return should reflect the same amount of winnings that you put on your Federal return.

    I'm in the same boat in MA - had a $12,000 slot win I was able to offset on the Federal return but had to pay $600 in state tax.

    Do you get $100,000 a year in W2-Gs?
     
  9. Piggylane

    Piggylane Well-Known Member

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    That's the same law we have in Massachusetts. Gambling losses are not deductible.

    One year I had $157K in W2G statements and while I could offset some losses for the Federal return I couldn't offset one cent to the People's Republic. I had to pony up over 5% and pay penalties because apparently I should have filed statements quarterly. Fortunately I had saved, not blown, most of it so I had the dough to pay them.

    That was the year I decided this wasn't so much fun and I backed off gambling so hard. The pendulum swung too far and the wrong people were winning. I play at lower levels and my W2G pain is much lower. So far this year I've had lots of fun and less than 5K in W2G activity. The less I pay in taxes the happier I am! I don't see my taxes being spent wisely.

    The ultimate solution is to play table games, which are not subject to W2G statements. However, your win/loss statements are discoverable in divorce court! I know... Whether that could or could not be turned over to the tax authorities is another issue. In my case it hasn't happened.

    Best bet in all cases is to consult a tax professional in NC but I think the answer will be the same.
     
  10. nostresshere

    nostresshere Mr. Anti Debit Card

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    So, back to Carol (OP)... how much in winnings are we talking about here?
     
  11. NickyDim

    NickyDim VIP Whale

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    Sounds like it's time for the OP to move to another state.
     
  12. BayouBengal

    BayouBengal VIP Whale

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  13. ladyturtle

    ladyturtle Newbie

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    I won 120k last year, lost 130k, so about 10k losses for my hobby...but then taxes on 120k in NC nearly killed me.....
     
  14. merlin

    merlin VIP Whale

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    Obviously the math is way off, since NC tax would "only" be a few K..
     
  15. ladyturtle

    ladyturtle Newbie

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    I am a contract worker (not salaried), so I had to pay the state taxes on that income too.....and the winnings were probably more like 150k with 160k lost.....the NC tax bill came to 16k which really hurt and was a surprise since it was a new law that went into effect....
     
  16. merlin

    merlin VIP Whale

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    Why was the tax so high when NC taxes at less than 6%, 5.8% of even 150 K would be about 9K, please explain. It sounds like your tax situation was a result of a variety of factors, including your other income, and you are blaming it all on the gambling wins. Are those all w2g's?
     
  17. shifter

    shifter Degenerate Gambler

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    a) first it was 100, then 120 now 150? how do you not know exactly how much the winnings were?
    b) the total tax bill includes tax paid on your other income, so that isn't really accurate.
     
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