Should you have taxes taken out or no?

I usually do have them hold out maybe 10%. 1. Because I don't make enough to be able to itemize and deduct my losses. And 2. Because I would probably not hold any back and gamble it all away the rest of the year. But that's just me! If you are able to put some aside in a decent account, then ya, go for it!

 

@tringlomane did you start a thread comparing VP returns with the new tax laws? I doubt we'd ever have 24k in deductions.

 

Put the $1100 on black and then you are covered

 

I didn't actually start it, but yeah we had a discussion on it.

https://www.vegasmessageboard.com/forums/index.php?threads/strategy-adjustments-due-to-tax-implications.148968/

If you can't write off your W2Gs dollar royals with losses that are itemized deductions, you probably should start holding 4 to a flush over any 3 to a Royal at 9/6 JoB. If you have a 30% overall tax rate and can't recover W2Gs, optimal return is only 99.01%.

9/6 JoB strategy with a 30% tax hit

Depending on your marginal tax rate (e.g. 30% federal + state as above), you might want to even hold 4 to a flush over 3 to a Royal Ace High even at 8/5 Bonus.

 

Whenever I read a thread about taxes now, it depresses me. Starting this year due to the new tax law, I will owe an extra 3K to 4k in taxes compared to other years. That's a trip to Vegas on which I will have to cut back. Well, I guess there are others that will be able to take an extra trip to Vegas, but it still doesn't make me feel much better.

 

I think it is somewhat careless to recommend that you should NEVER have taxes withheld on W-2g’s. Each person’s situation is different and there are scenarios where you either must have the withholding or pay estimated taxes to avoid potential penalties that can really add up.

For the typical gambler, I would not recommend withholding. However, high income people are at higher risk of audit. If you also play high limit slots, then you should have very good gambling records to prove losses against any wins. If you hit a lot of large jackpots and are up a lot for the year, it may be hard to prove you dumped it all back in the slots, especially if you take a check for a big win.

I was fortunate enough to have a fantastic year in 2017 and did not have enough losses to cover my wins, so I owed taxes. I started withholding in the second quarter when I realized how good the year was going, but still almost had to pay an underpayment penalty. The state really is problematic since I have to pay taxes on my Nevada winnings since that state doesn’t have an income tax. I am doing quarterly payments for my state taxes to avoid the penalty this year, since my state has a formula that allows one year for income to increase dramatically, but if it were to happen the following year, the formula is not so kind.

So, as with anything tax related, it is wise to be well informed or consult a tax professional.

Btw, I think it is ridiculous that gambling winnings are taxed at all. It is gambling after all, not an income. The new tax law is definitely not gambling friendly. A lot gets taken away regardless of losses for anyone with a few W-2g’s who doesn’t itemize.

 

This doesn't make a case to have the casino withhold then tax. It make the case for investing in TurboTax, running tax scenarios for 2018 and using it to do estimated payments. It's possible to be compliant without having the casino do withholding.

 

I respectfully disagree that there isn’t a case for withholding, but you make a sound point regarding tax planning with software. But, a large, unexpected amount of wins does support withholding. It is difficult to estimate your jackpot wins before they happen without a steady history of slot play, so estimating taxes would be difficult when completing an estimated taxes form. Therefore, in some cases, simply having them withhold on a particular jackpot may bring you more in balance on proper withholding without the extra paperwork.

I didn’t tell anyone to withhold, but that each individual needs to understand their particular tax situation and act accordingly. In my case, I elected to withhold, or risked owing a big underpayment penalty. I didn’t expect the big wins as I just converted to slots and was not doing estimated tax payments at the time. It is possible I could have lost my ass the rest of the year, but that didn’t happen and I was properly covered.

As you said, using software is a good tool for tax planning and allows a tax payer to be properly prepared if there is some consistency or reasonable expectation of income. Sure, you could end up loaning some money to the IRS by withholding, but my advice is geared toward a select few. When you have well over 100k in W2gs unexpectedly, planning goes out the window. I am now filing estimated tax payments on a conservative estimate of jackpots based on my last six trips average, minus estimated losses. I have enough of a history now to get in the ballpark, without overpaying, which is what I hope to achieve.

I understand that most gamblers lose on a yearly basis, me included, which makes withholding unnecessary. I am up for the second year in a row, so it is still a bit of a guessing game, because it could go bad or continue positive. I just don’t want to get caught owing penalties and play it as close to the safe side as possible.