The answer to the original question is yes. If any self employed person is going to owe income tax at the end of the year they are required to send in estimated quarterly payments.
Take off that stupid mask you big baby.
And it is all and forever a game. Who actually claims money won as income when there's no tax form trail? Who (outside of professionals because they have other ways of writing winnings off) doesn't claim losses in their tax filings up to the total amount of their wins? Who doesn't make 3 or 4 passes when doing their tax returns in order to get it closer to where you want it to be? What businessman or woman doesn't look forward to filling out their expense reports so they can see how much their "creativity" netted them on their latest trip?
It's everyone for themselves in this world--nobody's just gonna hand anything to you. While you're out there grinding and scraping away at the prospect of having a decent life in this rat-race, the banks, credit card companies, tax collectors, insurance and mortgage companies, car dealerships and product price gougers are busy non-stop sucking away at the other end.
Certainly someone like me isn't going to chastise anybody who's smart enough to even the playing field or tilt this "game" in their favor. If you're the type who accepts the beatdowns as a way of life or who tries to make themselves feel better for supposedly "always doing the scripted right thing" then good for you--but chances are you will always be a going-nowhere nobody.
Some people have criticized me in the past for explaining how my 1996 bankruptcy was filed to make a tidy profit. I never had more fun in my life....until that day at a double up machine in early 2004.
Learn to play the game TO WIN, and you will be a much happier person. These giant entities around you that are always finding ways to chip away at your life's earnings? Everyone has an opportunity to even that score.
A professional gambler is "carrying on a trade or business" and is supposed to make quarterly estimated payments. The estimated payments are based on the prior year's income. There is a penalty for underpayment of your quarterlies. If your income varies greatly by quarter there is a form to submit that proves that your income did so vary and assists in avoiding some penalties where you have made disproportionate estimated payments based upon your income flow.
IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments)is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter that is contained in this letter or document.
Filing as self employed, or as a business are 2 of the options, but not the only options. Obviously not the best option for me. I don't want to get into suggesting any kind of tax advice, I'll leave that to tax specialist and my guy is THE gambling tax specialist here in Vegas.
For the short of it, in the last 10 years I have had a year where I made 27k and a year where I made 140k. So happens they were back to back. Both were extremes for me. I wouldn't want to use either figure to pay estimated quarterly taxes for the following year. One would have me owing a bucket at years end while the other would have me overpaying and I don't want the Government "holding" my money either.
Fortunately in recent years, the IRS has come to realize the uniqueness of professional gambling and has allowed for other options.
I must not have been clear. The IRS looks to last year's income to determine how much should be paid in as an estimate. If you make less you can certainly pay in less. If you make more, you only need to remit based upon the prior year's number to avoid penalty.
RS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments)is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter that is contained in this letter or document.
What's the Maximum Penalty for asking for the entire Jackpot in cash, claiming you'll pay your taxes when you file your tax refunds, and then blowing it frivolously and not having it when it is time to file your taxes? :/
Regnis I have a question. I never made a quarterly estimated tax payment during my ten year run, and I had quite a bit of gambling income properly reported. The IRS never got after me for not doing it, and even during my two audits the fact that I didn't make them was never brought up. Could this be because we filed jointly and we had other forms of income also?
Question for you Ron? During this 10 year run of 100's of thousands from the Singer progressive wagering claim and millions from the double up bug claim, did you not
consult a tax specialist? And I mean a gambling tax specialist, not a relative who works for the IRS. Gambling tax is so specialized, most IRS people get it wrong.
Kind of hard to believe for this kind of money you are claiming, you wouldn't spend a few bucks on a gambling tax expert.
Never needed to kew. Any questions I had, my son-in-law would look it up and tell me the best way to handle it. And none of the procedures and regs were very hard for me to understand. Dummies, yes. I'm no dummy.
Perhaps after a few more years of work and life experience, you might meet some people who can operate in this world outside of gambling, and you too will have some capabilities beyond the pedestrian.
That is possible. You may have had sufficient withholding to avoid incurring a penalty for lack of payment of estimated tax. Plus, you have suggested that in most years you offset the income with expenses and therefore didn't owe taxes for those winnings. There is no need to pay estimated taxes if you will owe no taxes.
First let me say filing as self employed, or as a business are the same thing. It isn't two options. It is the same option. You indicate there are other options. I'm only aware of one other option, but you seem to indicate there are several more options.
Anyway, it sounds like your tax specialist is advising against filing as a business. I do question this advice, and can't understand why you wouldn't want to file as a business. Okay, you don't have to pay self employment taxes (social security) if you file the other way. However, by paying these self employment taxes you are earning social security credits. When you earn 40 quarters of social security earnings, you qualify for social security benefits and medicare. Come age 65 let me tell you social security is pretty damn important.
If you file the other way you can't deduct any expenses. Your Reno trip expenses are deductible if you file as a business like flight, car rental, hotel etc. Heck even disguise expenses so Moses can't recognize you might be deductible. I know if I was a professional player that would surely be the way to go. Besides, there are other benefits such as being able to contribute to an IRA.
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