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Subject Author Date
Self Employment Income of Gambling Winnings webmaster 08-04-2007
Posted by LoTax on August 6, 2007, 10:33 pm
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 webmas...@onfirebikinis.com wrote:

> Recently the IRS notified me that they changed my 2005
> return. They took my gambling winnings of $60,000, which I
> had indicated on line 21 (Other Income), and decided to call
> this self employment income. The result is a new tax bill
> of $8,000.
>
> IRS specifically states in their tax guide that gambling
> income is to be stated on line 21. Thus, how can they now
> justify calling this self employment income when I did
> exactly as they reference in their tax filing instructions?
>
> Moderator:
> File an amended return with the 60K on Schedule C and
> deduct your expenses related to earning this income. The
> IRS may reclassify this back to line 21.

I had to think about this one for a few hours, but the only
*right* answer is that the IRS has made a mistake in
reclassifying your income. And the only way that happened
is if they didn't notice that it was gambling income. I
suspect - but I'm not betting on it - oops, maybe I will;
what odds are you offering? - that if you point out that the
income was gambling income, they will quickly move it back
to where you had it on your tax return. Do not expect an
apology nor embarrassment nor even a "thank you" from the
IRS; they make this type of trip-up all the time. All the
time. All the time.

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Posted by Mike Wellman on August 6, 2007, 10:34 pm
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 webmas...@onfirebikinis.com wrote:

> Recently the IRS notified me that they changed my 2005
> return. They took my gambling winnings of $60,000, which I
> had indicated on line 21 (Other Income), and decided to call
> this self employment income. The result is a new tax bill
> of $8,000.
>
> IRS specifically states in their tax guide that gambling
> income is to be stated on line 21. Thus, how can they now
> justify calling this self employment income when I did
> exactly as they reference in their tax filing instructions?
>
> Moderator:
> File an amended return with the 60K on Schedule C and
> deduct your expenses related to earning this income. The
> IRS may reclassify this back to line 21.

Go a step further, if it is to your benefit, amend the last
two returns taking gambling losses on a Schedule C. That may
help put it in perspective for them.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by None on August 10, 2007, 2:03 am
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webmas...@onfirebikinis.com wrote:

> Recently the IRS notified me that they changed my 2005
> return. They took mygamblingwinnings of $60,000, which I
> had indicated on line 21 (Other Income), and decided to call
> this self employment income. The result is a new tax bill
> of $8,000.
>
> IRS specifically states in their tax guide thatgambling
> income is to be stated on line 21. Thus, how can they now
> justify calling this self employment income when I did
> exactly as they reference in their tax filing instructions?
>
> Moderator:
> File an amended return with the 60K on Schedule C and
> deduct your expenses related to earning this income. The
> IRS may reclassify this back to line 21.

I live in England, Great Britain and I am a professional
gambler I usually make a profit every year of between in US$
70,000 to $100,000 a year, over here winnings from gambling
are not classed as earned income and are therefore exempt
from Income Tax, also as I have several health problems I
collect disability income of around $12,000 a year. When I
first started my professional gambling career my social
security benefits were a lot more and in fact legally
speaking as my rent, property tax, Disability and additional
income related benefits amounted to around $24,000 a year I
could legally have still been entitled to this providing my
savings were less than about $24,000 and for a while I did
claim and collect this until I started to invest in
Apartments and Houses which bought my assets to over the
$24,000 limit for income realted benefits.

I dont have any moral problem with claiming social
security/welfare benefits as I still pay high tax on the
alcohol and tobacco I purchase along with sales tax on other
goods I purchase.

It looks like you have a raw deal in the USA compared with
some other countries.

John Wilson

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

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