Gambling Income

[Chief]

I just had a client who had gambling income from a casino. He was issued a 1099misc for this income instead of a 1099G. Right now our clients have one thing in mind--a quick refund. For that reason I just reported it on line 21 other income. Would you have insisted on getting a corrected 1099? What difference does it make?

[DaveinTexas]

It depends on the 1099

Normally, you would receive a W2G for gambling winnings. If the winnings are reported on a 1099 MISC in box 3; other income, the tax consequence is the same and I would report it on line 21 Other Income.

However, if the casino reported the income in box 7, Nonemployee Compensation, then IRS will want to collect SE tax, regardless of the payee.

I'd get a corrected W2G if the second scenario applies.

[Unregistered]

I will agree with Dave


Brian

[Gretel]

Gambling

If the amount indeed shows in box 7 you would also have the option to file a Sch. C and have an expense in same amount with a text like "reported on line 21".

[wv112]

Casinos issue 1099-Misc for items such as Slot and/or Poker Tournment wins. Gamblings losses can't be used against these winnings. Handle same as winning a prize from anywhere. List on line 21. That's why the income is not listed on a 1099-G or W-2G.

[Unregistered]

In all my 20 years of tax preparation I have never seen a 1099 Misc from a casino. It has always been a W-2G. That's another way of screwing up the client.It would not cost the casino any more or less to issue a W2-G.Maybe it's different in Florida.

[jainen]

When I do a tax return

When I do a tax return, my question is the correct characterization of income in the hands of the client. I am not bound by what the casino thinks about it and I'm not responsible for correcting the casino's errors. It's nice when the paper matches, but not that important.

Report the income correctly, supported by reasonable records. If the IRS has a problem, they will send a letter and you can explain it. That is all perfectly normal. If you are uncomfortable about IRS letters (especially the ones directed at practitioners) then you can disclose the variance with Form 8275. That's a bit extreme for a 1099 so just report the income correctly, supported by reasonable records.

[pmedders]

Question for wv112 on Gambling Winnings

Where does the IRS say that gamling losses can't be used against slot and/or poker tournaments? Learn something new everyday!!

[BOB W]

1099 Gambling

I also just rec'd a 1099 for gambling. It was a group of 31 winners of $250,000. The person whose claimed the winnings with NYS issued 30 1099s. He probably rec'd a W2G. The 1099s had Federal and state withholdings from the claimant.

I put it on line 21. My program, CS, had a drop down list for line 21showing gambling winnings, so I chose that and marked it "No SS". I then deducted gambling losses on schedule A.

I'm hoping IRS will allow the nominal loses without quesstion since it was on a 1099 not W2G.

[Armando Beaujolais]

Casinos issue 1099-Misc for items such as Slot and/or Poker Tournment wins. Gamblings losses can't be used against these winnings. Handle same as winning a prize from anywhere. List on line 21. That's why the income is not listed on a 1099-G or W-2G.

Do you have a source for that? I learn something new every day too, but I'm not ready to buy into this one just yet. From what I see the only gambling losses that aren't reported on W2G are certain payments from Indian gaming activities to tribal members.

As jainen stated, you report items based on the nature of the item, not how it was reported. For example, an individual is not supposed to issue 1099-MISC. That's supposed to be done by the payer in situations where there are multiple winners. It probably didn't hurt anything for an individual to issue 31 1099s, but it's another example of why you can't count on correct reporting forms.

[taxmandan]

W2G vs. 1099

W2-G is for gambling winnings, the casino issues a 1099 for prizes and gifts, not gambling winnings. Casinos give away alot of prizes and those are not winnings from gambling hence the 1099. Our local NA casino has a drawing every month to give away a new car, that's a prize and no gambling is required to enter the drawing. And they cannot be offset by gambling losses.

[Chief]

Gambling Winnings

Thanks to all of you who responded. Your posts have been most informative.