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."
