Summary of Proposed Tax Reporting Changes

Summary IRS Notice 2015-21

You know by now that the IRS is holding hearings this June on casino requirements for reporting gambling winnings. If you haven’t read the details, I’d like to point out some of them to you and stress some parts of the proposed changes that might have escaped your attention. Keep in mind that these are proposals only and the regulations that are finally adopted may be very different. Also, nothing that is adopted will apply until tax year 2016.

If you want to read the proposal yourself, it’s at this web site: HERE

Here are the highlights.

First, these proposed changes are a safe harbor for “electronically tracked slot machine play.” What that means is that these changes are only for gamers playing with their player’s cards. If you have a win without your card in the machine, you’re are still being issued your W2G under the old rules for $1,200 or greater wins. You’ll need to keep a diary for any losses you hope to itemize.

Second, the casino will be issuing W2Gs to card-using players on the basis of aggregate slot winning during a single gaming session measured as the calendar day from 12am to 11:59 pm. This is good, actually, because as we play, we fluctuate between winning and losing and the casino is more or less netting these for us as it tracks our play.

For slot winnings to be reported to the IRS BOTH of the following criteria have to be met. (1) The total winnings netted against the total wagers during the same session totals $1,200 or more, and (2) At least one single slot win during the session equals or exceeds $1,200. If there is no single $1,200 win, reporting is not required. If any $1,200 win occurs and if the netted total during the session exceeds $1,200, then the total slot winnings for the session must be reported on Form W2G.

Third, a casino would no longer have to issue multiple W2Gs for a single gaming session. A single W2G could be used for all the card-in play in one day. The player using his card could net total wins and total losses from a single session (one calendar day, one casino). He cannot net wins and losses from multiple sessions. Play that stops and resumes at a single gaming establishment in the same calendar day is considered the same session of play if it is electronically tracked. He can NOT play with his player’s card and play without the card and net the two types of play under these rules.

Fourth, if a player moves from one casino to another, a new session of play begins. This is really not a new concept. If I play at Harrah’s Las Vegas for an hour and then move to Bally’s for another hour of play later that same day, even though I use the same Total Rewards Card at both, my play is tracked separately in each casino. It does not matter than both are owned by Caesars and I use the same Total Rewards player’s card both places. (This is also why the payout vouchers from one casino do not work in the other casino’s machines).  If I later play some more that same day at Harrah’s, I still have two sessions - one interrupted session at Harrahs and a second session at Ballys.

Fifth, playing a slot from 11 pm to 2 am is at least two sessions because it spans two days.

Here’s an example that shows the effect of the break into two sessions. Suppose I start the session at 11 pm June 1 with $200 and stop playing at 2 am on June 2 with $350. I notice that at 11:59 I am down to $50.
      If this were counted as just one session, I would have a $150 win ($350 - $200.) But it won’t be figured this way.

  I will have one session from 11 pm to 11:59 pm with $150 loss ($50 - $200) for June 1. I will have another session  from 12 am to 2 am  for June 2 with a $300 gain ($350 - $50). 

  If one session — I have a $150 win. If two sessions — I have a $300 win and a $150 loss that I might not be able to deduct if I can’t itemize. If this proposal is adopted, and you’re a late night gambler, it might behoove you to watch the clock and your credit total to time your near-midnight break.

I can see these proposed changes increasing the burden on the casinos who will have more reporting to do. I think it could possibly make some players’ reporting easier. I also think if IRS is asking our opinion, that they have probably already pretty much made up their mind what is going to happen, but want to give the appearance of considering our ideas. I may be wrong.

One more thing to think about:

I’ve saved this for last - not because it’s the best, but because it’s the worst. This was slipped into the section on filing requirements in the notice. It seemed almost buried, so we might not notice with all the tax talk going on. 

Basically it says that there have been advances in technology since the original regs were written almost 40 years ago. Compliance concerns prompted higher thresholds when the rules were originally written. Now it is easy for the casinos to issue W2Gs to the players and submit them electronically to IRS. So, IRS thinks this may warrant reducing the thresholds for bingo, keno, and slots to $600 [instead of $1200] consist with other reporting thresholds. They want to know what we think.

What IRS is proposing here is reducing the $1,200 requirement for hand pays and issuing W2Gs to $600. Some people would argue that the threshold should be raised, not lowered. $1,200 in 1977 dollars is now worth $4,677 according to John Mehaffey in his March 9, 2015 blog entry below.  

It may be easy now to electronically track the wins, and it may be easy to electronically submit the information to IRS, but think what it will do to the casino floor if the machines lock up for $600 hand pays! The blog written by John Mehaffey does the math for slots, and video poker, and other games of chance to show you what the effect of issuing W2Gs and hand pays for $600 will be for each game. I don’t know if he’s right - I don’t play all these games and I don’t bet at these levels - but I suspect he is.

      Take a look at this LINK and see what you think.

I’m currently doing research for a book on taxes and gambling, and have learned some interesting facts about how Canada views gambling wins. Maybe I’ll share that with you in a future blog. You’ll be surprised. You might even want to move there if you gamble a lot.

Las Vegas vs Native American Casinos

     When my husband and I retired from snowy Indiana to sunny Southern California, we discovered a new favorite pastime — playing the slots. San Diego  and Riverside Counties have a lot to choose from, 21 in just those two counties. Something for every taste — from the opulent Pechanga Resort in Temecula to the tiny tent that houses Cahilla Creek near Anza. We spend a lot of time playing in the closest of these Native American Casinos - probably more time and definitely more money than we should. In my book “Spin to Win,” I dedicate an entire section to describing our favorite places to play — how they differ and how they have changed since we moved West in 2002.

     We spend a lot of time in Las Vegas also. But it’s a long drive to Vegas. Even though our mid-week rooms are generally comped because of our play, and even though many of our Paris buffets are paid for with the tier points on our Total Reward’s Player’s Card, Vegas isn’t cheap. Every time we go, when we get ready to start the long drive home, we question whether we would be better off giving our money to the near-by Native American gambling houses instead.

     One factor that enters into that decision is: where do we make more money — or perhaps I should say, where do we lose less money? There’s not much difference in the slots available to play in Vegas or SoCal. The casinos are all replacing the less popular old machines with the new flashy ones introduced at the Global Gaming Exposition last October. We’d all like to try out these new games, and we wonder where’s the best place to do it.

     I found a popular internet site called americancasinoguide.com that posts the average payback for slots in each state compiled by the various state gambling commissions. It’s interesting reading, but not too helpful in solving the Vegas/Native American competition (at least for California Native American casinos.)  CA does not require the tribes to release information on their payout percentages. They could be anything. Las Vegas Nevada requires a payout greater than 75%, and it usually is in the low 90%. You might want to take a look at the figures in the Guide yourself.

     We all enjoy watching new and classic games on YouTube videos. We can sometimes learn a lot about the games we’re wanting to try by watching others play them. Now we might even be able learn whether we should play these games at the Native American casinos close to home - or whether it’s worth making the trip to Nevada.

     I recently started watching a new series on YouTube. It's called Las Vegas vs Native American Casino Series. Two friends have come up with a friendly competition this month, and it may help influence your decision where to play. Each plays the same machine on the same day, but one is playing in a Southern California tribal casino Harrahs (Rincon) Resort Southern California. The other is playing in an off strip casino in northern Las Vegas. The competition is double or nothing. They each feed in a $20 and wager the same amount on every spin. Whoever doubles his money to $40 wins. If both exceed $40, its whoever wins the most.  If nobody hits $40, whoever can play the longest on his stake claims the victory. 

     So far this month there have been four match ups. Episode 1 (April 1) they both played “Buffalo Deluxe.”  Episode 2 (April 8) they tried “Bier Haus.” Episode 3 (April 15) “Jewell of the Dragon” was the pick. Today (April 22) ShinobiYT and VegasLowRoller posted Episode 4 Gypsy Fire.

Here's a sample of how their Video Battles Work:

ShinobiYT playing Bier Haus

VS.

VegasLowRoller on the same game.



     I won’t spoil the surprise by telling you who won the first four matches — Las Vegas or Native Americans — but it’s been unanimous so far. 

     Who do you think won? Watch ShinobiYT and VegasLowRoller on YouTube and find out. View the games at “Las Vegas vs Native American Casino Series.” If you don’t want to watch all four matches, I’d recommend the “Bier Haus” battle as the best. You can find more of their videos HERE.

[UPDATED -- JULY 02, 2015]

       For all you fans of Bier Haus out there, there is a brand new version out that promises to be even more exciting and fun: Colossal Bier Haus! You can read my review HERE and watch a video of all the action. It's out in Canada right now, but hopefully will be here in the States soon.

Proposed Changes: Notice 2015-21

     There have been a lot of changes in the gaming industry since the IRS wrote its rules for reporting gambling transactions back in 1977. Technology has evolved significantly. Slot player cards and electronic slot machines were still to come. On line and mobile gaming didn’t exist at all. Wins were reported to the IRS by the casinos on paper forms. E-filing was unheard of at the time.

     After 38 years, change may finally happen. (Big sigh of relief!) We have seen how quickly the government moves on these types of things. Lets hope the change is one that benefits us all. IRS promises sometimes need to be taken with a grain of salt, and we’ll keep our fingers crossed.

     On March 3, IRS published Notice 2015-21 detailing a “Safe Harbor Method for Determining a Wagering Gain or Loss from Slot Machine Play.” The proposal defines a daily session for slot machine play where there are electronic records, and how wins and losses are reported — mostly by the casino but also to some extent by the player. I’ll go into detail about some of these proposals in a later entry. You can read through the entire notice on the web now if you don’t want to wait, but be warned, tax talk can be kind of dull. None of any changes adopted will go into effect before January, 2016.

     IRS will be holding a public hearing at 10 am on June 17 in Washington DC in order to gauge public opinion on the changes. You will need to register to attend. Written or electronic comments must be received by June 2. Usually, most of the discussion will be led by lawyers, CPAs, enrolled agents, and other tax professionals, but it doesn’t have to be that way. This is the opportunity for all of us gamers who are affected by this to have our say. While if may be difficult, and you might think they won’t listen, this is our chance. And here is how to do it:

     Hand deliver or mail comments to: Room 5203, PO Box 7602, Ben Franklin Station, Washington, DC, 20044

     Electronically you can comment at: Notice.comments@irscounsel.treas.gov
     Attend the public hearing: IRS Auditorium, 1111 Constitution Av, Washington, DC

     The IRS is asking for comments on specific issues. according to its notice. Specifically, taxpayers should comment on:

• Alternative definitions for the term “slot machine”
• Whether an interruption in play should result in more than a single session; 
• Whether a session should be based on a period other than a calendar day;
• Whether the definition of a single session should be determined by other factors;
• Whether the safe harbor should include merchandise and bonus reward payouts;
• Whether a safe-harbor method should be developed for other forms of gambling

     If you have other comments, include them too. You may not get another chance for another 38 years!

March Madness Office Pools

Baseball may still claim to be America’s National Pastime, but TV ratings and profits tell a different tale. More often writers and pollsters show the sport ranking third behind football and basketball.  But in March there is no contest. In March everybody’s favorite sport is basketball — NCAA tournament basketball. Ask anyone this time of year what’s his favorite sporting event to watch or bet on, and you will almost always get the same answers: the Final Four basketball tournament, March Madness. Professional football may be a fantasy favorite and have the Big Game “Superbowl Sunday”, but collegiate basketball has an entire month devoted to hoops hysteria.

Were you one of the more than 40 million Americans who filled out an estimated 70 million NCAA basketball brackets last month? How did you do? Did you win any money? Did you report those winnings as income? Probably not.

We’re told that more people fill out Final Four Tournament Brackets than cast a ballot for President Obama in the last election. (Does that mean Bracketology could claim to be the “National Pastime?” ) Obama fills out an NCAA bracket himself each season in the Oval Office, but he didn’t do too well this year. Kentucky let him down as it did many fans. But it doesn’t matter because he probably wouldn’t get to wager in a White House bracket pool anyway. As my readers know, sports betting is illegal almost everywhere. 

Nobody publicly offered a billion dollars for a perfect bracket this year as they did in the past, but there were many bracket contests you could enter - some for free. But, you know, it’s more fun to play if you have a chance to win a little money. That’s why office pools are so popular. Most of the wagering on the NCAA tournament didn’t happen in sports books in Nevada, where it’s legal to bet on sports. Most people who paid to play filled out their brackets with friends or coworkers, and pooled their entry fees for the chance to win the pot. Pretty much like players  and statistics lovers do for most fantasy sports  games everywhere. 

Gallup polls say 17% of Americans have wagered on sports in the past year. You may remember reading in my book, “Spin To Win,” and in an earlier entry in this blog that sports wagering is illegal in all states except Nevada, Delaware, Oregon, and Montana. That’s because only these four states allowed sports gambling in 1992 when the Professional and Amateur Sports Protection Act (PASPA) was passed. PASPA effectively prohibits sports gambling everywhere — except in these four states. So what did those 17% of Americans do? They just ignored the law. They made their picks and paid into their office pools — and didn’t once think they might be doing something illegal.

     The FBI estimates about $2.5 billion dollars was wagered on bracket contests last month. The American Gaming Association estimates a figure closer to $9 billion. Nobody knows for sure because nobody reports it - except for the large Vegas payouts and probably the bracket winners interviewed on TV.  Did you include any fantasy sports winnings on line 21 of your IRS form 1040? I didn’t think so. I guess we are all criminals at heart, guilty of violating the law by wagering where it isn’t legal to do so and failing to include our fantasy winnings in income.

Don’t worry. IRS and FBI agents will not bother to descend on your workplace to arrest everyone who entered your office pool. But maybe it’s time for further dialogue and a little common sense on the topic of sports betting. Most people don’t really think of fantasy football leagues or March Madness brackets as gambling, let alone as being illegal. And it would not occur to most people that they should pay tax on their winnings from these games if they had any. It’s entertainment. It’s your money. You should be able to do what you want with it. And it’s a lot more fun than buying a state sanctioned lottery ticket. 

Let’s use our common sense and modify our gaming laws so we don’t have to break the law next year when we fill out our brackets. Wishful thinking? Maybe. Or maybe it’s time to write our representatives a letter.

Tax Freedom Day 2015

April 15 is just around the corner and many of us procrastinators are still struggling with our 1040’s, attempting to complete the onerous forms before the deadline arrives. Will we owe? Or will we hit the jackpot and get a refund this year? How much of that tax we owe can we trace back to the fun we had playing the slots and table games at our favorite casinos? I hope we all won big and can blame a lot of our tax tribulations on lucky spins on our favorite games!

There’s another special day in April connected to taxes: April 24 - Tax Freedom Day this year.

No, that’s not a day we celebrate because we’ll be free of having to pay taxes on April 24. (Wishful thinking!) It’s the day when we as a nation will have earned enough to pay our total tax bill for the year. Tax Freedom Day takes all taxes - federal, state, local - and divides them by the nation’s income. In 2015, according the web site taxfoundation.org, Americans will pay $3.28 trillion in federal taxes and $1.57 trillion in state and local taxes, for a total tax bill of $4.85 trillion. That’s 31% of all national income. This year Tax Freedom Day falls on April 24, 114 days into the year. It’s one day later than last year due to the expected tax revenue boost from corporate, payroll, and individual income taxes. 

This year Americans will work longer than ever before to pay all of these taxes - 43 days. Payroll taxes will take 26 days to pay. Sales and excise taxes - 15 days. Corporate income taxes - 12 days, and property taxes - 11 days. The remaining 7 days are spent paying estate and inheritance taxes, customs duties, and other levies.

Since 2002, federal expenses have surpassed federal revenue. In 2015 the deficit will decline to $580 billion. (We hope.) At least that’s what this site says. If this annual federal borrowing is included - which represents future taxes owed - Tax Freedom Day would occur on May 8, 14 days later according to the site.

There’s a map  of the United States included on the taxfoundation.org site that gives the State Tax Freedom Day dates for residents of each state in the nation. You might find it interesting. I did. 

I live in California - and we pay A LOT in taxes here. The site says we are the 4th highest in the nation. Tax Freedom Day for those of us who live in the Golden State is not until May 3. In Indiana where I spent most of my life, taxes are the 10th lowest, and Tax Freedom Day is earlier, April 18. Connecticut and New Jersey have to work the longest, till May 13. Louisiana’s tax freedom day has already passed, April 2.

Thanks to taxfoundation.org and economist Kyle Pomerleau for the depressing statistics in this timely posting.

Gambling and Taxes: Part 3

 Part 3 

Keeping a Gambling Diary

     I know tax talk makes for pretty dull reading, but it’s a necessary topic. Stick with me and you’ll learn to keep more of what you’ve won when you file. I’ll try and keep this as simple as I can. 

     Previously we looked at a tax situation where the taxpayer couldn’t deduct his losses because he didn’t have more itemized deductions than his standard deduction. Even though he kept records for most of the year, he didn’t have enough to deduct what those records showed he lost gambling. But what if your situation was different? What if you could itemize. What if you were paying mortgage interest and property taxes and made charitable contributions and had other deductions that totaled more than your $6,200 standard deduction? Could you deduct any of your losses then?

     Suppose you also got a W2G for $4,000 from the casino where you played, but you knew that jackpot win wasn’t what usually happened. Usually you lost $100 or so on the slots when you played there almost every week. Suppose you also bought Powerball lottery tickets twice a week. Could you deduct any of those losses on your tax return?

     Well, it depends on what records you kept. Fair or not, the IRS says you have to keep records to deduct losses. If you don’t and you are audited, they can disallow part or all of your write-offs. They can refigure your taxes using only amounts you can prove and charge you tax and interest and even penalties on the difference. 

     That doesn’t seem fair, you say. I didn’t know I had to have proof of how much I lost, you say. It’s not right that the casino reported the $4,000 jackpot I won, but didn’t report all the money I lost during the year, you say. 

     No, it’s probably not fair, but that’s the way it is right now. Currently, casinos are only required to report winnings of over $1,200 from slots or bingo games and $1,500 or more from keno wins. Tracks have to report wins of $600 or more from horse or dog racing. None of them likes doing this. None of them wants to go to the trouble of reporting every payout for every gambler every time he plays. Who wants to fill out all that paperwork for the government if they don’t have to? They’ll report what the law says they have to report (your big wins), and they’ll leave it up to you to track the rest of it.

     IRS publishes revenue procedures to help taxpayers and tax preparers understand what the law requires. The revenue procedure that provides guidelines for wagering income and losses is Revenue Procedure 77- 29. It was published almost 38 years ago and went into effect May 10, 1977. It hasn’t been changed since. That seems like a long time to go without an update, but that’s the way it stands right now. It’s what will determine the taxes you pay this year. You can read it on the internet if you like.

     If you do, you’ll be told that in order to substantiate and deduct your losses, you must keep a gambling diary. In it you are expected to record every time you gambled, when and where you played, who you were with that could back up your claims, and how much you won or loss each session. They don’t tell you what a session is. Is it a single wager or is it all the wagers made on a single machine or maybe it could be all the wagers made during the entire casino visit on a single day? New regulations will be written later this summer that will clarify this, but for right now, you are on your own. Tax courts have ruled, however, that a gambler could not reasonably be expected to record the results of every individual spin of the slot machine. If you haven’t been keeping a gambling diary, start now. Sites on the internet will offer to sell you journals that you can use for this, but any notebook or computer spreadsheet will do.

     Don’t wait for the “big one” to start keeping records. Yes, it’s a pain to log your results each time you wager, but it’s not as painful as paying taxes on the entire jackpot win because you didn’t take the time to write down the information about your losses in a notebook.

     Along with your journal, the IRS says you have to keep verifiable supporting documentation like bank withdrawals records, cancelled checks, ATM receipts, losing lottery tickets, and statements provided by the casinos. Some of the suggestions in this 38 year old procedure seem unreasonable and outdated today. For instance, it suggests you write down the machine number for each slot you played and tells you ask the casino operator for it if you don’t see it. There are suggestions as to what supporting evidence you should keep for other forms of gambling like bingo, and horse racing, and table games in that revenue procedure too. 

      Here’s the most important thing to know if you are able to itemize and deduct losses against gambling income. The income and losses don’t have to come from the same form of gambling! You can have winnings from slots and table games on line 21 of your 1040 form and losses on your Schedule A from bingo games and lottery tickets and horse racing as well.  

     Gambling losses are gambling losses no matter where you lost the money. Gambling winnings are taxable income no matter where you won it. And it’s all easier to report and you’ll give IRS less of your hard earned money if you’ve kept good records every time you’ve played. 

     Hopefully when the new gambling regs come out later this year, IRS will clear up some of the problems with the old ones. Watch this site for more information as it becomes available.

Gambling and Taxes: Part 2

 Part 2
Netting Wins and Losses

     In Part 1 we reminded our readers that all gambling wins are taxable and must be included on line 21 of Form 1040. We also pointed out that gambling losses are deductible - but only as itemized deductions on Schedule A and only up to the amount of winnings reported. If you won a thousand and lost two thousand  - too bad. You can’t deduct more than the $1,000 you won. 

     Taxpayers sometimes argue mistakenly that, to be fair, they should be allowed to net together their wins and losses and report the difference as income. Will the results be the same? No, they won’t. The example that follows will illustrate the difference. IRS regulations do NOT allow this netting, and we all know why. IRS is in the business of collecting as much as they can to run the government, and they would collect less tax if netting were allowed.

     To illustrate this difference, lets take the next step and crunch the numbers on a very simple tax return. You’ll see that the amount of tax you would pay will differ under these two systems -  using IRS’s rules vs netting gains and losses, the method that seems fairer to many filers. Most people have more complex tax situations than this basic return, but the principle is the same no matter how complicated the rest of your tax return is. 

     To keep the calculations as simple as possible, our hypothetical gambler will be 24,  a renter, and single with no dependents.  His only income reported by payers to the IRS for the 2014 year was $35,000 of wages on his W2 and a $4,000 jackpot reported by a casino on Form W2G.

     When he won his jackpot, the workers at the casino advised him to keep a gambling diary for the remainder of the year. He did. It shows another $1,000 income from totaling his other winning sessions and $3,000 of losses from his losing ones. These amounts were not reported to IRS, but he was told he should voluntarily report his winnings on his tax return. Casinos don’t report losses to the government, and they only report wins of over $1,200. - now. This may change soon. More later on this.

     For 2014 the standard deduction for our young filer is $6,200. This is more than his $3,000 of gambling losses. Since he has no other itemized deductions like mortgage interest, and property tax, and large charitable contributions, he can not find more to write off by itemizing than the $6,200 standard deduction. You should always pick the bigger number. Since he can’t write off more than $6,200, there is no way he can deduct his gambling losses. The $3,000 loss goes to waste. This is the bad news that tax preparers hate having to tell you.

     In most gamers’ minds, the FAIR amount of gambling income to pay taxes on would be $2,000. (The $4,000 jackpot reported to the IRS by the casino, plus the $1,000 other winnings not reported to the government by but which he included voluntarily, minus the $3,000 in losses substantiated by his gambling diary and the win/loss statement for the year by the casino). The IRS regulations, however, say he has to pay tax on $5,000 of gambling income. (The $4,000 reported on the W2G and the $1,000 of additional gambling income from his records.) 

     Taxes are figured for our filer by adding all his taxable income, subtracting the$6,200 standard deduction (or the total itemized deductions if larger), subtracting $3,950 personal exemption, and looking up the amount remaining in the tax table.

     If you do the math the IRS way, you have $29,850 to look up in the tax table and the total federal tax will be $4,043. If you had been allowed to net the gains and losses together and calculate the tax on the difference, you’d have $26,850 to look up the tax on and your total federal tax would have been $3,570.  The difference is $473. That’s $473 more tax you’ll have to pay.

     Here’s more bad news. No taxes were withheld when you won that casino jackpot. So, you will probably owe money when you file. That’s money you have to come up with somewhere. Maybe you could go back to the casino where you won the jackpot and try to win another one!

     And there’s still even more bad news. If you live in a state that has a state income tax (which is any state other than Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming -- or Tennessee and New Hampshire which only tax interest and dividend income) the amount of income your state tax is calculated on will be $3,000 more than if you had been allowed to net gains and losses. So not only will most people pay more federal tax, they will pay more state tax also.

     And another problem many will have - probably not the gamer in this example, but filers with children or who have certain deductions, credits, or exclusions based on  their Adjusted Gross Income - inflated AGI will reduce many of these benefits. Taxpayers who qualify for the Earned Income Credit, or Child Tax Credit, or Adoption Credit, or various other credits will find the extra income reported on their return reduces the amount of credit they qualify for.

     And it doesn’t get better when you are older. My husband and I are both over 65 and have higher standard deductions as a result. Instead of $12,400, our combined standard deduction is $14,800 so there is even less likelihood that we can itemize and deduct our losses. In addition, we have enough other income that we have to pay federal tax on much of our Social Security income. The portion of our Social Security that is taxed also rises with higher AGI.

     As you might expect, the taxpayers who benefit from itemizing and can deduct their gambling losses are the ones with the large mortgage interest and property tax payments exceeding their standard deductions. Isn’t it funny how so many tax breaks seem to help out the wealthier filers but not the middle class or struggling wage earners!

     IRS may do something about the unfairness of taxation on gambling income in the near future. They may make things worse. I will be posting news about proposed changes to the gambling regs in a few weeks after this year’s returns are filed. I’ll also be providing you with an address where you can mail your comments and suggestions if you have ideas for ways the system can be improved. Stay turned.