In Lake Tahoe last weekend a friend of mine was under about 2 grand and was 'past' calling it quits. He went in the next night and flipped $200 into 2 grand and then I managed to get him to quit. He was playing the spinner, then won his last grand playing craps.

He received the 2 grand cash and based on what I saw it would be difficult for the $ to be tracked. He also received no forms of any kind.

They dont tax payouts unless it was a lump sum.

For instance.....lets say you walk up to a blackjack table, sit down with $200, and flip it to $6500. The casino has no way of knowing if you lost 10K before that, thus, taxing you on money you technically, didnt even win yet (you are still down if you lost 10K)....

This is why, casinos hand over a W2 if you win 10K+ or a lump jackpot.

In AC last year I won 5,500.00 at roulette. I went to the high roller cash out and they gave me cash...that was it.

My friend won 15k In vegas last summer and took a marker out to do so...and for some reason they tracked his winnings and losses and did get a 1099 but also on the other side..he got a slip with what he loss as well from another casino...

I think your buddie is fine if he didnt get a 1099 by now, and doesnt have his social on file...If I were him, id yank it out and keep in in cash and invest it in small chunks..JMO

Aaron

Call me old-fashioned but I don't understand tax fraud. I don't believe in paying more than I owe, but it's strange to me that people who would never consider stealing from a store or a friend or a bank have no problem with stealing from the gov't. which is in fact stealing from all of us. Just my old-fashioned .02 worth.

You cant really call it fraud. You cant be expected to pay taxes on winnings, if you arent getting a return for losses. The casino pays taxes. IMHO, its fraud that you have to pay taxes when you win large amounts of money. If I win 20K tomorrow, over the course of my life, I am still technically down. Ive lost way more than 20K in the last 10 years. Basically, you are paying taxes twice on the same amount of money.

well, if you consider casino winnings income, then why shouldn't it be taxed just like everything else? How you spend it is your problem. It's no different than working at a liquor store and spending most of your check on liquor and beer for your friends. The fact that little of what you made ever makes it to the street is not the IRS's problem.

For what it is worth, if your friend hasn't files a return, it'll be a red flag. If he has spent his winnings on things like finance payments to a bank, but didn't have a taxable income to support that lifestyle, it might trigger some sort of IRS inquiry.

I have a feeling most tax evasion cases are a result of poor record-keeping, laziness, or ignorance, rather than an intention to get away with it. The IRS is pretty lenient if you've a record of paying them in the past, but establishing a record of not paying taxes is not a good way to hang on to your money.

The only thing I agree with, that if he made $350,000 in one shot (a big tournament) its impossible to hide, unless you keep the money under your mattress. However, if the IRS sees you rockin a new Range Rover, living on the strip across the street from the Bellagio, that would definetely send a red flag.

Again, as a side discussion, why do you think its fair that someone has to declare their winnings as income, if they cant declare their losses as losses?

You can declare your losses up to the amount of winnings -- you just have to keep records. Most people don't bother with the records keeping as they never intend to declare the winnings.

Also, the casinoes are paying taxes on THEIR profits -- any winnings you take out are not their profits. And as has been stated, winnings from poker apparently don't go into their system anyway so aren't taxed to them. Thus the argument of double-taxation isn't quite right other than in the way that all money in the commerce stream is ultimately taxed more than once.

this statement is meaningless in this situation.

warren buffet is the second wealthiest man in the USA, and he pays himself $100k a year or some inconsequentially small figure. he has more write offs than you will ever have in a life time.

has nothing to do with your buddy, except warren buffet actually pays his taxes.

your boy needs to call a CPA, end of story

You mention you can't be expected to pay or that it isn't fair... it is what it is, regardless of how fair (I do agree, it's unfair) it is. You are expected to pay taxes on winnings regardless of prior year's losses. The gov't needs to raise revenue to support our country's infrastructure (as horribly inefficient as it might be).

Think of it this way, why don't we get to deduct all our every day expenses... we get double taxed all the time! Your earnings are taxed, you use what is left over to buy necessities, which are also taxed. Gambling winnings and losses work similarly but in this case they actually allow you to offset the winnings against the yearly losses. We should be complaining that we don't get to offset our everday purchases against our earnings!

And lets face it, if the rules were any more in the gambler's favor, we might be reconsidering our professions.

EDIT: I'll say it again, he should have reported any and all earnings in the year earned. He should seriously consider a CPA with a background in this field.