If you've got an IRS letter on your desk right now, you have a decision to make, and the clock matters. I'm Darrin Mish. I've spent 32 years helping people with exactly this kind of situation. Here's what you should do.
An important proposed change to how gamblers report W2-G earnings to the IRS at tax time has gone unnoticed due to the controversy around other proposed changes. Tax accountants have said this proposal is in the best interest of gamblers, and they should know about it.
A W2-G is given for all gambling winnings. Taxpayers have had to declare the winning amounts on taxes despite the fact that most gamblers use those winnings immediately to continue gambling and their actual session totals may be significantly different from the amount on the W2-G. The proposal by the IRS would allow taxpayers to only report income for the actual amount they had at the end of a gambling session.
A session is defined as one day during which a gambler participates in continuous play on similar game machines. While a gambler might get one W2-G for $3,000 and another for $500 during that session, if at the end of the day they only actually made $300 they would only have to report the $300 as income when doing taxes. This proposal does rely on gamblers to keep good records.
Ultimately, this makes income reporting more accurate and alleviates some tax burden.
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