I am not really a gambler, and while I provided basic tax information to clients that I helped with business matters, I’m not a tax attorney, and therefore referred my clients to tax professionals for their tax needs. With that said, I enjoyed reading “All In Against the IRS: Every Gambler’s Tax Guide” by attorney and tax professional Stephen Fishman, J.D. The book is short, very readable, and believe it or not, very interesting, even though the subject is one that most people would consider boring – taxes.
One of the things that made it interesting, as well as readable for anyone, not just those of us with J.D. or CPA behind our names, is the fact that Fishman wrote the book in plain, easy-to-understand, language, and with a more conversational tone, rather than a boring tax guide Tax Professional. He starts the book with a short chapter on the rules of the game, and his first rule states that gamblers are not treated fairly by the IRS, he suggest that it is perhaps because gambling is viewed as sinful, but regardless of why, gamblers are treated very harshly by the tax laws. If you are a gambler, or if you assist gamblers with their taxes, this is a very valuable book. (Then you might just be strange like me and find reading about the way the IRS treats some categories as interesting.)
After his ten short rules of the game, chapter two discusses what the IRS knows and when it knows it. This chapter covers things such as Forms W2-G, 1099-MISC, and Form 5754. What you need to know is that certain winnings are reported to the IRS. Fishman explains what they are. In the third chapter he explains how and when taxes are withheld from your winnings.
Chapter four is where the book became more interesting in how the IRS wants you to determine your annual wins and losses. You can’t just come to tax time and say, “Well, I won about 10,000 last year, but I lost more than that, so I don’t have to do anything.” That’s not how the IRS makes you report things, and if you get caught not reporting the correct way, it can cost you.
Fishman shows you how to document your wins and losses in chapter five, and then how to report them on your tax return in chapter six. He then address state income taxes in chapter seven. Up to this point, everything was aimed at casual or recreational gamblers. In chapter eight, the author shows what it takes to qualify as a professional gambler, and how the tax laws are different if you actually qualify per IRS guidelines for this status. The book concludes with a sample gambling log in an Appendix.
After reading this book, I bet (pun intended) that most people who gamble are not reporting as required by the IRS. Reading this book will enlighten you on what the IRS wants and requires to keep you out of hot water if they ever come looking. Fishman also points out when they look more and when they don’t. I also like that he included that the IRS wants you to report illegal gambling winnings and they won’t turn you over to law enforcement authorities for illegal gambling, they just want their cut. Hmm, I’d still want to think that one over, but remember how Al Capone was finally put in prison.