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Don’t get your taxes in an uproar! Enjoy your victory

Feb 19, 2008 3:31 AM

Here it comes again”¦.as hoards of video poker players begin to needlessly pour sweat, grind their teeth nervously, and start cursing the day they got their first ever W-2G taxable winner at the machines (i.e., jackpots greater than $1,199.99).

The question is why?

First off, I have a difficult time understanding why those who come over to give you a W-2G say "Here’s the bad news." This while so many players simultaneously cringe at the thought of having to report their winnings to the Internal Revenue Service (IRS) since a W-2G form will also be sent to them.

After all, isn’t getting handed a W-2G synonymous with the word jackpot? And isn’t the bottom line reason why we play video poker — to see how much money we can take out of the casinos every time we walk into them? So then why is getting a tax form bad news of any kind? And, why would any player get queasy over sharing a report of an amount of cash won with our friends at the IRS?

If you’re going to commit on playing video poker either for a living or a hobby, then you’re just going to have to come to the realization that you want to collect as many of those happy little tax forms as possible.

Grinding it out on the small denominations could get you around some of the paperwork, but are poor pay tables and hours upon hours of play really going to get you anywhere?

Nonetheless, this time of year brings the nervous sweats to many players who look at reporting winnings as a nervous exercise in accounting. But as I look back over my nearly 18 years of play, I believe I’ve been through just about all of it when it comes to understanding what the IRS wants, how they want it, what they don’t want and why.

Folks, it really isn’t all that bad. Playing a winning strategy encompasses a proper bankroll, a pre-set plan, rock-solid understanding of how the game works and having the discipline to do exactly as you said before stepping foot inside any casino. You absolutely must know the ins and outs of how to keep your own books should the IRS ever want to look at your claims.

What’s that all mean? Well, although I have to explain that I’m not a tax professional, the information you’ll now read is the result of four audits over the years. It also comes from in-depth discussions with my daughter’s husband, who works for the IRS and has policy and procedure at his fingertips.

However, I’ve found my audits take on their own individuality. They have consistently taken on the flavor of either the auditor’s comprehension of IRS gambling policy or rolling in the direction I try to drive them. At the end of the day, like it or not, it is ultimately showing a noticeable respect for what the Government is trying to accomplish and how truthful you are, that dictates the eventual outcome.

And, therein lays the secret of success — truthfulness. Your first order of business is to never try fudging your numbers in your favor. So many people constantly and proudly announce how they cheated and got away with it or slick-talked their way around "the system." That’s just the wrong way to go about this type of activity. What goes around comes around, and in this business, believe me, you don’t want that.

I often read about what others have to say about which records we need to keep and how it should be done in case we’re ever audited. As usual, in nearly every instance, some of the information is correct while the rest is just flat out wrong. What I do find interesting is how some folks claim to be getting their "direction" from tax professionals. I guess that’s to make it appear they know what they’re talking about. And could they be selling anything related to this?

Rather than speculate or quote others who say they know how to approach video poker record-keeping, I’ll simply share with you exactly what I’ve experienced from my audits. Since I’ve gone through four of them since 1990 and I’ve filed as a professional gambler since 1999, I absolutely trust what I’ve learned.

This information, however, should in no way keep anyone from seeking professional assistance from a responsible and accountable individual or company if they’re not 100 percent certain when preparing their returns. I’ve always done my own because I made it a point (and still do) to be very familiar with the policies, It has also proven to be very helpful whenever I’ve been audited.

The record-keeping rule for video poker players is very simple: All information regarding your play must be documented as soon as possible upon completion of that particular casino visit.

List date of play, casino where you played, W-2G’s earned, net amount won or lost, approximate location in the casino where you played, and any other pertinent comments that you feel might help an outside viewer understand your experience.

It is very important to identify the amount won even if you received no W-2G’s, because an experienced IRS auditor knows there are sessions everyone plays and wins money without receiving a tax slip. If you play today and win $15 then it is as reportable as a $15,000 win.

What you don’t need to do is identify which machine you played, what time you played, who you played with, or bother getting those year-end casino gambling records. Auditors know you could just as easily have played without a card at any machine or table. I’ve found all those reports tend to do is give confidence without any audit value.

Just as important to the process is identifying from your bank statements or anywhere else is where your bankroll for gambling came from. Nothing substitutes for documentation — as I’ve so vividly discovered through the years. Try to dance around the subject with "I keep lots of cash in my home for gambling" and you’ll probably wish you hadn’t.

Another hot item people always bring up is how to handle all those freebies, comps and slot club cash back/free-play/bounce-back cash benefits that video poker players can’t live without. Some say to record all of them like it was sacred. Others say some is reportable and some not.

Well, here’s what I’ve experienced.

I’ve never recorded, reported or brought up the subject in my audits.

Should we be reporting this stuff as income? That isn’t the case. I spent my working career in airplanes and international hotel chains. Now I’m just doing it all in casino hotels and getting much the same benefits all over again.

Bottom line: Accurate and complete record-keeping should be a common sense thing if you gamble frequently or not. I’ve never had anything other than very minor corrections to make and once I even got a rebate.

Do it right and rest your mind. And don’t be afraid of all the W-2G’s!