Gambling / Taxes / IRS / etc

[NY Mane]

Topic 419 - Gambling Income and Expenses

Gambling winnings are fully taxable and must be reported on your tax return. You must file Form 1040 (PDF) and include all of your winnings. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and also the fair market value of prizes such as cars and trips. For additional information, refer to Publication 525, Taxable and Nontaxable Income.
* As a tax preparer I would not advise a bettor to report income from offshores and locals. The IRS can simply call the local police or FBI if they think laws were broken. These guys are cowboys and enjoy watching your pain.

A payer is required to issue you a Form W-2G (PDF) if you receive certain gambling winnings or if you have any gambling winnings subject to Federal income tax withholding. All gambling winnings must be reported irrespective as to whether any portion thereof is subject to withholding. in addition, you may be required to pay an estimated tax on your gambling winnings. For information on withholding on gambling winnings, refer to Publication 505, Tax Withholding and Estimated Tax.

You may deduct gambling losses only if you itemize deductions. Claim your gambling losses as a miscellaneous deduction on Form 1040, Schedule A (PDF). However, the amount of losses you deduct may not be more than the amount of gambling income you have reported on your return. It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to Publication 529, Miscellaneous Deductions, for more information.
* Again, if you won money at the casino or track then I think you are fine if you want to report it (unless you received a W-2G, then you are forced to report it). Do you really want to explain to the IRS Agent that you gamble illegally online and/or through the local? Casinos and tracks are legal.

[NY Mane]

Ohio Man Sentenced on Federal Charges

On July 25, 2005, in Cleveland, OH, David L. Hammon, Sr. was sentenced to 87 months in prison, followed by three years supervised release and was ordered to pay restitution to the IRS in the amount of $2.39 million. Hammon pleaded guilty to possessing approximately 443 grams of cocaine with intent to distribute, operating an illegal gambling business, evasion of payment of taxes, and money laundering. From November 1988 through September 26, 2004, Hammon attempted to evade and defeat the payment of a large part of the excise tax due and owing by him by transferring title of real estate he owned into the name of a nominee, by purchasing a condominium in the name of a nominee, by cashing checks at a bar rather than at a bank, and by transacting business in cash rather than by using bank accounts. With respect to money laundering, Hammon admitted that in 2002 and 2003, he cashed four checks totaling $29,000 that were proceeds of his gambling business with the intent to promote the carrying on of the business. Last week, Hammon’s son, David Hammon, Jr., and Hammon’s nephew, Howard Hammon, III, both pleaded guilty to related charges.

[NY Mane]

Ohio Man Sentenced to 27 Months in Prison

On June 23, 2005, in Cleveland, Ohio, Donald E. Simmons was sentenced to 27 months in prison to be followed by three years supervised release for conspiracy to commit bank fraud, filing a false tax return, wire fraud and being a felon in possession of a firearm. In addition, Simmons is required to pay the tax determined by the IRS as well as interest and penalties. Simmons entered into a conspiracy, devised and led by others, the objects of which were to induce mortgage lenders to provide mortgage loans in amounts based upon documentation fraudulently inflating the apparent purchase prices for the properties and for some of the conspirators to obtain the personal benefit of a portion of the loan proceeds to be used for repairs and improvements to the properties.

During 1998 through 2000, Simmons received income as compensation for security and property management services he rendered for a real estate company and as compensation for services he rendered for a numbers wagering business operated by another person. Simmons received cash payments from the real estate company by checks payable to another person, who negotiated the checks and provided him the cash. Simmons and his wife filed joint income returns for those years, which did not report his income. His wife caused the returns to be prepared and filed, reporting only income and losses attributable to her, due to Simmons misleading her into believing that he was unemployed and had no income during that time period. The returns failed to report Simmons’s income of approximately $31,100 from the real estate company and an unknown amount of income from the wagering business. Simmons also failed to file a tax return for the year 2001 on which he was required to report approximately $10,000 of income.

[NY Mane]

Who must file Information Returns?

Any person, including a corporation, partnership, individual, estate, and trust, who make reportable transactions during the calendar year must file information returns to report those transactions to the IRS. Persons required to file Information Returns to the IRS must also furnish statements to the recipients of the income. Filers who have 250 or more must file these returns electronically or magnetically .

Types of Payments

Below is an alphabetical list of some payments and the forms to file and report them. However, it is not a complete list of all payments, and the absence of a payment from the list does not indicate that the payment is not reportable. For information on a specific type of payment, see the separate instructions for the form(s) listed.

Type of Payment
Report on Form

Abandonment 1099-A
Accelerated death benefits 1099-LTC
Advance earned income credit W-2
Agriculture payments 1099-G
Allocated tips W-2
Annuities 1099-R
Attorneys, fees and gross proceeds 1099-MISC
Auto reimbursements: Employee W-2
Auto reimbursements: Nonemployee 1099-MISC
Awards: Employee W-2
Awards: Nonemployee 1099-MISC
Barter exchange income 1099-B
Bonuses: Employee W-2
Bonuses: Nonemployee 1099-MISC
Broker transactions 1099-B
Cancellation of debt 1099-C
Capital gain distributions 1099-DIV
Car expense: Employee W-2
Car expense: Nonemployee 1099-MISC
Charitable gift annuities 1099-R
Commissions: Employee W-2
Commissions: Nonemployee 1099-MISC
Commodities transactions 1099-B
Compensation: Employee W-2
Compensation: Nonemployee 1099-MISC
Crop insurance proceeds 1099-MISC
Damages 1099-MISC
Death benefits 1099-R
Death benefits:Accelerated 1099-LTC
Debt cancellation 1099-C
Dependent care payments W-2
Direct rollovers 1099-R, 5498
Direct sales of consumer products for resale 1099-MISC
Directors fees 1099-MISC
Discharge of indebtedness 1099-C
Dividends 1099-DIV
Education IRA contributions 5498
Education IRA distributions 1099-R
Education loan interest 1098-E
Employee business expense Reimbursement W-2
Employee compensation W-2
Excess deferrals, excess contributions, distributions of 1099-R
Fees: Employee W-2
Fees: Nonemployee 1099-MISC
Fishing boat crew members proceeds 1099-MISC
Fish purchases for cash 1099-MISC
Foreclosures 1099-A
Foreign persons U.S source income 1042-S
401(k) contributions W-2
404(k) dividend 1099-DIV
Gambling winnings W-2G
Golden parachute: Employee W-2
Golden parachute: Nonemployee 1099-MISC
Grants, taxable 1099-G
Health care services 1099-MISC
Income tax refunds, state and local 1099-G
Indian gaming profits paid to tribal members 1099-MISC
Interest income 1099-INT
Interest, mortgage 1098
IRA contributions 5498
IRA distributions 1099-R
Life insurance contract distributions 1099-R, 1099-LTC
Liquidation, distributions in 1099-DIV
Loans, distribution from pension plan 1099-R
Long-term care benefits 1099-LTC
Medical savings accounts: Contributions 5498-MSA
Medical savings accounts: Distributions 1099-MSA
Medicare+Choice Medical Savings Accounts: Contributions 5498-MSA
Medicare+Choice Medical Savings Accounts: Distributions 1099-MSA
Medical services 1099-MISC
Mileage: Employee W-2
Mileage: Nonemployee 1099-MISC
Military retirement 1099-R
Mortgage interest 1098
Moving expense W-2
Nonemployee compensation 1099-MISC
Nonqualified plan distribution W-2
Nonqualified plan distribution: Beneficiaries 1099-R
Original issue discount (OID) 1099-OID
Patronage dividends 1099-PATR
Pensions 1099-R
Points 1098
Prizes: Employee W-2
Prizes: Nonemployee 1099-MISC
Profit-sharing plan 1099-R
PS 58 costs 1099-R
Punitive damages 1099-MISC
Qualified plan distributions 1099-R
Qualified state tuition program payments 1099-G
Real estate transactions 1099-S
Recharacterized IRA contributions 1099-R, 5498
Refunds, state and local tax 1099-G
Rents 1099-MISC
Retirement 1099-R
Roth conversion IRA contributions 5498
Roth conversion IRA distributions 1099-R
Roth IRA contributions 5498
Roth IRA distributions 1099-R
Royalties 1099-MISC
Timber, pay-as-cut contract 1099-S
Sales: Real estate 1099-S
Sales: Securities 1099-B
Section 1035 exchange 1099-R
SEP contributions W-2, 5498
SEP distributions 1099-R
Severance pay W-2
Sick pay W-2
SIMPLE contributions W-2, 5498
SIMPLE distributions 1099-R
Student loan interest 1098-E
Substitute payments in lieu of dividends or tax-exempt interest 1099-MISC
Supplemental unemployment W-2
Tax refunds, state and local 1099-G
Tips W-2
Tuition 1098-T
Unemployment benefits 1099-G
Vacation allowance: Employee W-2
Vacation allowance: Nonemployee 1099-MISC
Wages
W-2

[NY Mane]

Triple X and you other guys who asked....

Form 4789 Currency Transaction Report

What to report: Each deposit withdrawal, exchange or currency, or other payment or transfer by, through, or to financial institutions (other than casinos)

Amount to report: Over $10,000

Due Date to IRS: 15 days after date of transaction

* What is disturbing about this is that there is no due date to the recipient.

[NY Mane]

IRS site...

http://search.irs.gov/web/query.html...mbling&qt=1099

http://search.irs.gov/web/query.html...q=&qt=gambling