I thought it was a lesson to stop gambling. Then when I was 21 decided to go back in our nearest town casino. Then start gambling again, I played SicBo, then I use to play casino war for a long time and tried few games like pontoon, chasing for a like $2000, then for almost 2 years I lost approximately $10000 because of baccarat. Albert Belle, the slugger whose career has been tainted by temper outbursts, suspensions and fines, has admitted under oath that he recently lost as much as $40,000 betting on sports. Belle, who left the Cleveland Indians and became baseball's highes t-paid player by signing a $55 million, five-year contract with the Chicago White Sox in. Run on a safe, secure and trusted Lost 40000 Gambling casino platform; Provide a phenomenal array of online casino games; Have large casino bonuses and Lost 40000 Gambling other fantastic online casino promotions for US players that are regulated for safe and easy play.
Gambling income, unsurprisingly, is subject to income tax. This post is an overview of federal and Michigan treatment of gambling income and losses.
FEDERAL TAX TREATMENT OF GAMBLING INCOME & LOSSES
On your federal income tax return, you can take an itemized deduction for gambling losses, but only to the extent of gambling income (in other words you can’t claim an overall loss on gambling activity).
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Example: John likes to play blackjack and had winnings of $40,000 in 2009. He also lost $90,000 in the same year. John has to report his $40,000 winnings as income, but he can only deduct $40,000 of his gambling losses because gambling losses are limited to gambling winnings. Excess gambling losses cannot be carried forward.
It should be noted that taxpayers must itemize to claim gambling losses.
Example: Joan won $4,000 in the lotto in 2009. She also lost $5,500 in other gambling activity during the year. If she does not itemize, she has to claim the $4,000 in income and cannot deduct the $5,500 in gambling losses—not a good result.
Even though the itemized deduction for gambling losses can offset gambling income, it is a below-the-line deduction (i.e., it is taken after computing AGI). AGI is used to calculate various phaseouts for credits and deductions. Therefore, gambling income may affect your phaseouts even though they are offset by gambling losses.
MICHIGAN TAX TREATMENT OF GAMBLING INCOME & LOSSES
In Michigan, gambling income is based on the amount of gambling winnings included in federal AGI (the bottom line of the first page of your Form 1040) without taking into account the itemized deduction for gambling losses. So, in the above examples, John has $40,000 in gambling income on his MI-1040 and pays $1,700 in tax and Joan has $4,000 in gambling income on her MI-1040 and pays $170 in tax even though both John and Joan had overall gambling losses.
To get around this unlucky result, the strategy is to use gambling losses to directly offset gambling income, rather than take gambling losses as an itemized deduction. There are two ways to do this:
* Special Rule for Slots and other Casual Gambling
* Becoming a professional gambler (harder than you think and will not be discussed here)
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SPECIAL RULE FOR SLOTS AND OTHER CASUAL GAMBLING
Generally, gambling winnings and losses have to be determined on a wager-by-wager basis. For causal gambling (slots, poker, blackjack, horse racing, etc.) you can determine gambling winnings and losses on a net daily basis. By figuring gambling income on a daily basis (rather than wager-by-wager) gambling winnings are directly offset by gambling losses (and thus become excludable from Michigan income tax).
Example (wager-by-wager basis): Jimmy goes to the casino on Friday and buys $1,000 in tokens to play slots. He has $9,000 in winning spins and $6,000 in losing spins. He cashes out on Friday with $3,000. Jimmy wants to continue his winning streak on Saturday. He buys $4,000 in tokens. This time Jimmy has $1,000 in winning spins and $5,000 in losing spins. He leaves the casino with nothing.
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On a wager-by-wager basis, Jimmy has $10,000 in winning spins over the two days and reports this amount as income. Jimmy has $11,000 in losing spins over the two days and deducts his losses as an itemized deduction (limited to the $10,000 in gambling winning). However, on Jimmy’s Michigan tax return, he must report the $10,000 as income, but cannot take a deduction for gambling losses.
Same Example (daily basis): Jimmy’s daily gambling winnings and losses are netted. Jimmy has overall income of $2,000 on Friday (Cash Out: $3,000 & Cash In: $1,000) and an overall loss of $4,000 on Saturday (Cash Out: $0 & Cash In: $4,000). On a daily basis, Jimmy had $2,000 of gambling winnings on Friday and $4,000 of gambling losses on Saturday. On his federal return, he must report $2,000 of gambling winnings and gambling losses of $2,000 (again, the itemized deduction for gambling losses is limited to gambling winnings). On his Michigan return, he only reports the Friday daily winnings of $2,000.
It is CRITICAL that gambling winnings and losses be properly documented. The following information should be maintained in a log:
1. the date and type of specific wager or wagering activity
2. the name and address of the gambling establishment
3. the names of other persons present with the taxpayer at the gambling establishment
4. the amount won or lost
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Buzzkill Disclaimer: This post contains general tax information that may or may not apply in your specific tax situation. Please consult a tax professional before relying on any information contained in this post.