> 7b. Re: gambling taxes
> Date: Sun Feb 24, 2008 5:02 pm ((PST))
>
> --- In vpFREE@yahoogroups.
> >
> > What makes the whole things worse and truly unfair is if you live
> in a
> > state that calculates state income tax off of your gross income on
> your
> > 1040. The effect is that for the feds you can deduct your losses
> from
> > your winnings, but for the state you have to pay taxes on the
> GS2's
> > without the possibility of deducting losses. In my case, I have
> 85K in
> > reported paper winnings I have to pay state taxes on even though I
> have
> > a 6K loss for the year.
> > I've checked quite a bit into this and if anyone knows that I am
> wrong
> > (in this case CT), let me know.
>
> I would attach a schedule titled "Net Gambling Income/Loss" and show
> all of your wins AND offsetting losses, and the corresponding
> negative total, and enter that (or "zero") in the space for
> Miscellaneous Income. Then let them try to prove that you had actual
> taxable income from gambling activity--they won't be able to.
>
> This is not to say that they won't try to bully or intimidate you
> into paying taxes that you don't owe.
>
What you owe has nothing to do with your actual net income -- if you don't believe it, try buying something when you have NO income, and see if you can get out of the sales tax!
Most of the states that have this (and there are several) have it in statute -- they have a GROSS (not NET) income tax for the state.
Still, doesn't hurt to try -- if you don't mind an audit, assessment, interest and possible penalty. It would be difficult for them to prove "fraud", which is what would get you in jail.
--BG
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