If you win big can Uncle Sam Get His Cut?

[recovering77]

A friend of mine is just a long shot hoper, and wants to put in a $100 12 game parlay. On 5 dimes it pays 125k if he wins.

Question is, if he were able to hit, I would get an EFT from some middler like Moneybookers or something for 125k. Would the IRS have a right to investigate me and make me pay taxes from an offshore book? If he wins he wants all his money in a cashier's check, minus a little tip for me.

I'm just afraid I give him all his money and I get audited from the IRS and end up oweing them like 40k or something. I work in a bank and can find out soon, but theres only one guy at work I'd talk to about this, and he won't be in for a few days. I wanna get an answer about this tonight.

insights would be appreciated. thanks.

[beermantm]

Any transaction done in this country that is greater than a designated size has to be reported to the government. You better be prepared to pay tax on any money won and using your own name to place bets for someone else will probably open more legal issues you might not want to confront.

I would say just pay the taxes on a big win minus any amount that has been gambled and lost. The tax amount will be arround 28-30%.

[FlyersFan]

My thought would be to (a) take his 100.00 (b) not place the bet for him and tell him you did because it's not like he's going to win it anyway (c) keep the 100.00 and he'd never know any different and then you only have to worry about keeping the 100.00 you stole from him a secret from the IRS.....

[EdwardHaney]

You should probably wait to pose this question until after this 12-team parlay hits.

[Kevin]

Originally posted by EdwardHaney
You should probably wait to pose this question until after this 12-team parlay hits.

LOL

[jd08]

Theoretically, you have to pay taxes on all earned income. Gambling proceeds are no different, and the fact that the income is illegal doesn't matter. The IRS doesn't care how you came about it, but they want their portion of it.

[recovering77]

Well the guy owes me like 5 grand, but he never has more than couple hundred bucks on him, so I figure this is my only way to get paid back.

This goes back to the question I posted about a year ago though. I asked if I can claim losses to the IRS. Everyone told me gambling was illegal so I couldn't.

So lemme get this straight, reporting losses is not okay, but reporting winnings is?

How would they know even? Does the government like tap people's bank accounts or something?

[jd08]

After researching a little bit, I've found that you can only deduct gambling losses to the extent that you have gains from gambling. This obviously means, first, that to claim losses you actually have to report your gains. So if you want to get a reduction on your taxes you have to report all your gambling transactoins. Second, it means that if you lose money gambling, that you can't claim all of the money you spent on gambling as a taxable loss.

For example, say you bet 200,000 and win only 50,000. That 50,000 can only be offset against your winnings. Thus, you are still taxed on the 150,000 and can't claim it as a gambling loss.

[beermantm]

Originally posted by recovering77
Well the guy owes me like 5 grand, but he never has more than couple hundred bucks on him, so I figure this is my only way to get paid back.

This goes back to the question I posted about a year ago though. I asked if I can claim losses to the IRS. Everyone told me gambling was illegal so I couldn't.

So lemme get this straight, reporting losses is not okay, but reporting winnings is?

How would they know even? Does the government like tap people's bank accounts or something?

There is almost always some legal form of gambling in every state.(maybe somewhere it's still not available??) I would say to claim winnings and loses would be quite normal for a tax return. If there was an audit you should be able to show some sort of proof that you indeed lost as much as you claimed to have lost. If there is a boat or casino in the area then the gambling done there would be considered completely legal so you would have to show some type of money transactions. Maybe some ATM withdrawls in the casino or boat.(The table games are not kept track of) Also when claiming gambling winnings the IRS doesn't ask what form of gambling you won it on. A large payout however backed out bye the same in a loss may send a red flag.

If you run into a problem with a big payout consult an acountant.

Basically the jist of the situation is this...... If you won 100k gambling but you spent 300k getting the win the tax due on the 100k maybe completely wiped out.

[bonakid08]

any transaction over 10 g's has to be reported to the government

[recovering77]

In the bank we only do CTR (currency transaction reports) for CASH transactiions over 10k. If it is a check, we just pass it through.

[beermantm]

Originally posted by bonakid08
any transaction over 10 g's has to be reported to the government

That number has been reduced for oversea's transactions I believe but that has been the standard for years now.