Time to Empty the Mailbag

Question: I have entered a football contest in Las Vegas (buy four entries, get one free; the total cost is $100). If I win, do I have to pay taxes on the money I win? All the information I can find states that taxes must be paid in the following cases: a win of $1,200 or more on slots, $1,500 on keno, and any amount of $600 or more and 300 times the original investment. I would appreciate the right information regarding the taxes on the winnings from a football contest.

Answer: The federal government taxes its citizens on all worldwide income, regardless of the source. The figures you quote as to when gambling wins are taxable are the rules regarding when a casino must report your winnings to the IRS on form W-2G. All gambling winnings are taxable, whether reported on a W-2G or not. On the other hand, all gambling losses are deductible to the extent of winnings. The IRS does require that a diary, among other records, of all gaming activity be maintained to substantiate your wins and losses.

Q: Can I deduct the losses of one form of gambling from the winnings of another? I had an overall loss playing poker, but hit a slot progressive last year.

A: Yes, it does not matter what type of wager it is. Gambling losses are deductible to the extent gambling winnings. That's why it's a good idea to always keep records, whether it be for playing poker, betting in a sportsbook, or playing keno. All forms of gambling count.

Q: An interesting thought occurred to me as I was fantasizing about my upcoming trip to Las Vegas and betting on the horses. I usually win. The problem is, my wife is not as successful playing the ponies as I am, and will most likely lose (hopefully, I will win more than she loses). Can I take advantage of her losses by applying them against my wins for tax purposes?

A: Yes, married couples most certainly can combine their wins and losses for reporting purposes (regardless of the type of gambling), as long as they file a joint return, whether they are regular folks playing for recreation or professional gamblers.

Q: Could you tell me the tax requirements on winnings from gambling in international waters? I am specifically talking about the gambling boats that are in Florida and cruise in international water while you gamble. If the winnings over a year are significant, what is the tax responsibility?

A: As stated above, the federal government taxes all worldwide income, whether reported or not. The winnings do not have to be "significant"; you are required to report any gambling winnings, and losses to the extent of winnings. This goes for Internet gambling, legal or illegal gambling, and cruises in international waters, including poker cruises; the IRS does not care. The IRS just wants you to pay your fair share of the tax burden required to run this country and support its thousands of government agencies, many of which you benefit from. But we represent the taxpayer, and believe you should pay the least amount allowed by law.

In conclusion, we would like to remind you that Al Capone went to jail for income tax evasion.

If you have any questions regarding tax regulations as they apply to gaming that you would like to see answered in Card Player, please mail/e-mail them to us. We will keep your identity confidential. If you would like to utilize our professional services or order our book, The Tax Guide for Gamblers, please call (800) 829-7271. R.B.S. will prepare your return without your having to leave the comfort of your home, no matter where you live.