Can't prove losses (gambling addiction)

[LdiJ]

So here is what I am thinking are my options.

1. Get compliant with the IRS. I am going claim all wins as losses as its the truth.
2. If and when I get audited I assume I will have to retain a tax attorney to argue my case. I have zero assets, no savings, etc. I hope the IRS can put 2 and 2 together.

Does this sound about right?

I think that you mean that you are going to claim that your losses exceed your winnings. You can do that, but if you get audited and you cannot back it up it will be problematic for you. Since it can take them several years to audit you, you had best pull together as many records as you can of your expenditures at the casinos (charge card bills, bank statements etc.) now and put them in a safe place. It may be difficult now to get records for 5 years ago. It will be even harder two years from now.

Please do not do these tax returns yourself. Get a tax professional on board for this. If you are not 100% that you have all of your tax documents for each of the years in question, then call the IRS and ask for an income transcript for each of the years. Make sure that you emphasize that you want an income transcript because if you do not, you will likely get the wrong kind of transcript.

 

[Just Blue]

So here is what I am thinking are my options.

1. Get compliant with the IRS. I am going claim all wins as losses as its the truth.
2. If and when I get audited I assume I will have to retain a tax attorney to argue my case. I have zero assets, no savings, etc. I hope the IRS can put 2 and 2 together.

Does this sound about right?

Personally I think if you were to take 12 Steps you may make things right.

 

[Taxing Matters]

So here is what I am thinking are my options.

1. Get compliant with the IRS. I am going claim all wins as losses as its the truth.

You need to have some basis for the losses you claim. You cannot just guess at what you gambled. Your lack of records will be a problem there.

2. If and when I get audited I assume I will have to retain a tax attorney to argue my case. I have zero assets, no savings, etc. I hope the IRS can put 2 and 2 together.

And this is the reason it matters: if you get audited and have no basis for determining the losses you claimed, the IRS is quite likely to hit you with at least a negligence penalty of 20% in addition to the tax and interest. And while not as likely, it is possible the IRS could go for a 75% fraud penalty. I suggest you see a tax pro now to review the records you do have and your pattern of gambling activity to see what kind of losses you may be able to support.

Not documenting your deductions, whether gambling losses or otherwise, is always a problem. When it comes to deductions, IRS agents start with the premise that "if it isn't documented it didn't happen."

 

[Just Blue]

You need to have some basis for the losses you claim. You cannot just guess at what you gambled. Your lack of records will be a problem there.



And this is the reason it matters: if you get audited and have no basis for determining the losses you claimed, the IRS is quite likely to hit you with at least a negligence penalty of 20% in addition to the tax and interest. And while not as likely, it is possible the IRS could go for a 75% fraud penalty. I suggest you see a tax pro now to review the records you do have and your pattern of gambling activity to see what kind of losses you may be able to support.

Not documenting your deductions, whether gambling losses or otherwise, is always a problem. When it comes to deductions, IRS agents start with the premise that "if it isn't documented it didn't happen."

This thread is from '16. It was necroposted.

 

[PayrollHRGuy]

@Taxing Matters

You got baited in by a necropost that has been deleted.

 

[Taxing Matters]

This thread is from '16. It was necroposted.

Dang, and I usually look too.

 

[Just Blue]

Dang, and I usually look too.

We all get caught on occasion in the necroposter web.

 

[Dandy Don]

What was your source of income during this period? Were you employed with a company where payroll tax and other deductions were taken from your paycheck or was this money from "off the books/under the table" income? Are you currently employed? In the future, how will you be able to pay off any tax liability that the IRS may charge you with?

Please give an example of how much money you won (and then lost) during 5 consecutive trips that you went to the casino. The individual amounts matter.

 

[davew9128]

What was your source of income during this period? Were you employed with a company where payroll tax and other deductions were taken from your paycheck or was this money from "off the books/under the table" income? Are you currently employed? In the future, how will you be able to pay off any tax liability that the IRS may charge you with?

Please give an example of how much money you won (and then lost) during 5 consecutive trips that you went to the casino. The individual amounts matter.

Dude, seriously? Did you see ANY of the posts above you?

 

[Dandy Don]

How is anyone supposed to ascertain whether the original poster has posted this question again in a continued attempt for assistance, or whether someone else reposted it?

 

[Just Blue]

How is anyone supposed to ascertain whether the original poster has posted this question again in a continued attempt for assistance, or whether someone else reposted it?

Ummm...By taking a look at the last time the OP posted. Just "hover" your curser over the user name for a moment or two...If the OP hasn't been back then that means we have a necroposter.

 

[quincy]

How is anyone supposed to ascertain whether the original poster has posted this question again in a continued attempt for assistance, or whether someone else reposted it?

Or, if using a mobile device, click on the user name. It shows that "needtaxhelp" has not been seen on this forum since January 13, 2016.

A good hint is also when a previous poster (or two) note that the thread is an old one revived by a necroposter (a spammer, a troll, the clueless).

These threads are generally reported, locked, and sent back to the archives.