http://www.taxabletalk.com/2010/03/18/unearned-income-tax-in-new-healthcare-bill-will-impact-gambling/
Marissa, my co-author of Tax Help for Gamblers and an enrolled agent, says that the above explanation is "wrong for now." We need to wait until the final regulations come out in December. She answered this question on Twitter. (@taxpro4gamblers) You may ask other tax questions there.
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Jean $¢ott, Frugal Gambler
http://queenofcomps.com/
You can read my blog at
http://jscott.lvablog.com/
-----Original Message-----
From: mailto:vpFREE%40yahoogroups.com [mailto:mailto:vpFREE%40yahoogroups.com] On Behalf Of
sulbimenfg311
Sent: Monday, September 17, 2012 9:46 PM
To: mailto:vpFREE%40yahoogroups.com
Subject: [vpFREE] New unearned income tax
In 2013 a 3.8% unearned income tax goes into effect for taxpayers with MAGI
over $200,000 if single and $250,000 if married. Gambling income BEFORE
deductions for losses counts as unearned income. As someone who plays mostly
$10 machines I guess I'll have to move way down in stakes, file as a pro, or
give up VP. Since a large percentage of my income comes from other sources,
not sure filing as a pro is an option. Just wondering how everyone who plays
stakes high enough to be impacted by the new law is planning on handling
this..
Taken from
http://www.taxabletalk.com/2010/03/18/unearned-income-tax-in-new-healthcare-
bill-will-impact-gambling/
"The new healthcare legislation contains plenty of taxes. One especially bad
one is a new 3.8% tax on unearned income above $200,000. This will have a
very bad impact on amateur gamblers.
When I last looked at the bill, the tax was 2.9%. In the "final" version of
the bill, it's up to 3.8%. Let's take a hypothetical gambler, Joe Student.
Mr. Student has $500,000 of winning sessions and $495,000 of losing
sessions. After his standard deduction and exemption he owes no tax.
But not in the near future. He'll owe 3.8% on $300,000 of mostly phantom
income, or $11,400. What will Joe Student do? He'll cheat on his taxes, of
course. Pay $6,400 more than what he made on his income-you must be kidding!
But that's exactly what the legislation dictates."
------------------------------------
From: Cogno Scienti
Sent: Monday, September 17, 2012 10:21 PM
To: vpFREE@yahoogroups.com
Subject: RE: [vpFREE] New unearned income tax
I've been following this since it started. While we won't know for sure
until the IRS actually spells it out, all of the articles I've read other
than the one you quoted from Russ Fox say that the tax is only on net
investment income, which probably does not include gambling winnings.
However, in the same way that boosting your AGI already costs you more in
phased-out deductions, it will also mean that the 3.8% tax will apply to
more or all of your investment income.
Filing as a pro may actually cost you more if you don't have huge investment
income, since there is self-employment tax and an increased Medicare tax.
I'm watching this closely in case Russ is right and gambling winnings are
subject to the 3.8% tax, but so far all the other authorities I've read
don't mention gambling winnings.
Cogno
[Non-text portions of this message have been removed]
