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Anne, Master Tax Preparer
Category: Tax
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Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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Should Tom report $3,500 jackpot as income when he files 2010

Resolved Question:

Should Tom report $3,500 jackpot as income when he files 2010 federal income tax return? should he report any losses? Tom hit a $3,500 jackpot on a slot machine. Before paying off the jackpot, casino required him to provide them with indentifying information so the casino could issue Form W-2G, Certain Gambling Winnings, to both IRS and Tom. Tom also provides you following information: 1. On the day he won jackpot, he went to casino with $200 in his pocket. 2. After winning the jackpot, he continued to gamble. 3. By the time he left the casino, he had $3,000 in his pocket. 4. While visiting the casino, he only gambled. He did not spend money on food, beverages, on any other items. 5. he didn't gamble at any other time during 2010, doesn't expect to do so before the end of the year. 6. Last spring, he won $250 in a basketball pool at his office.
Submitted: 6 years ago.
Category: Tax
Expert:  Anne replied 6 years ago.

Thank you for using justanswer. Yes, Tom absolutely should report his gambling winnings. Not only are gambling winnings taxable income, the fact that he got the W2G means that IRS also got a copy of it.

He must also report the $250 he won in the basketball pool, even though there was no paper reporting document (such as another W2G for the amount he won)

Please see below:

Gambling Winnings Are Always Taxable Income

Tom may also write off his gambling losses up to the $ amount he included in his income for the year. He would take this deduction on 2010 Form 1040 (Schedule A) Itemized Deductions on line 28, not subject to the 2% floor, assuming he has enough expenses (home mortgage interest, real estate taxes, charitable contributions, etc) to bring above the standard deduction.

I hope this helps.
Customer: replied 6 years ago.
<p>1. Thanks, XXXXX XXXXX much should he report as income and how much should he report as losses according to the information that I provided?</p><p>2. The basketball winnings was from last yr, he also has to report that as income on the current year income tax return?</p>
Expert:  Anne replied 6 years ago.
If he went to the casino with $200, won $3500, and walked out with $3000, then his deductible losses, based on the above information is $700. (The $200 he came with less $500 from his $3500 jackpot.

Regarding the basketball winnings, I'm sorry, but when you stated he won them last spring, I thought you were referring to spring of 2010.

If he won the basketball pool in 2009, then it should have been reported in 2009, and should not affect his 2010 tax return. Each year must stand on its own.

I hope this helps.
Customer: replied 6 years ago.
<p>1.Thanks, XXXXX XXXXX haven't answered my question "how much should he report as income?" I got 2800 for it, but I dont know if it is right, I use 3000-200, and got 2800 as income he should report on 2010 income tax return.</p><p>2. And why the deductible loss is not 3500-3000=500? </p>
Expert:  Anne replied 6 years ago.
Tom must report all of his GROSS gambling winnings, which means he will report the full $3500. Since the basketball pool was won in 2009, that $250 should have been reported on his 2009 tax return.
Customer: replied 6 years ago.
Sorry, actually I'm not sure if last spring means 2010 or 2009, if it is the spring of 2010, do I still report 3500 as income on 2010 income tax return or 3500+250 as income on his income tax return? If I use 3000-200=2800, is that wagering gain or what? Thanks, I'll accept the answer after u answer this question!
Expert:  Anne replied 6 years ago.
You must report all GROSS gambling winnings, so if he won the basketball pool in 2010, you would report gabling income of $3750 ($3500 + $250) From the way you worded the question, it sounds like he would have won the basketball pool in the spring of 2010, so report the whole $3750 in 2010.

I hope this helps.
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