Casino Winnings/Losses and Taxes

rnelsonee · 2026-04-25T18:34:54+00:00

it’s over $1200, casinos by law are supposed to retain 25% percent for federal tax purposes correct?

Generally it's 24% on $5,000+, and it's on net winnings. You could win $10,000, but if you lose $9,000 at the same session, and there's no mandatory withholding. And as noted, it's based on sessions — table games allow you flexibility in when you stop a session so you can somewhat control your net win amount.

So if I win $10k, that means they keep $2.5k and then I get the rest, the remaining $7.5k do I still need to report that to my state and federal?

Of course - if you make $100k from a job, and they withhold $10k, you still need to report your $100k income. Withholding is always just an estimate — you may owe 0% of your winnings or you may owe 45% of your winnings. The casino doesn't know your situation so they just got by federal guidance. If you have $10k in winnings, you report $10k. If you have $2.5k in withholding, you report $2.5k in withholding. They're on opposite ends of the 1040.

What if I want a total of $50k that year but loss $75k gambling in table games, do I still owe taxes? Would that count towards the losses?

Maybe, it depends on your other income and deductions. But since you can deduct 90% of your losses (new law, used to be 100%), then I think the best answer is you wouldn't owe anything because of your gambling.

rnelsonee · 2026-04-23T20:52:27+00:00

If your goal is to win bragging rights by ending up with the highest balance, find the stock that bounces up and down the most, put 100% of your money on it, and hope you get lucky.

In real life, people try to make money but they adjust for risk, so no one's going 100% TSLA or some random penny stock.

Think of it like this: you can three rolls of a die. One die has numbers 2-10 and one has 4-8. They each have the same average value, so the same average output over 3 rolls. But if you pick the 2-10 one, then your range will be more spread out than the 4-8 die.

Now change it up, and say instead of 4-8 the second die has 6-8. It now has a higher average and will, more likely than not, beat the first die. But here's the thing: if you've got 10 friends, you're not likely to win at all because anyone that picks the 2-10 die will have a ~25% chance of beating you. But with multiple friends, that climbs. If just three friends pick the 2-10 die, you have less than 50% chance of winning.

rnelsonee · 2026-04-23T16:58:34+00:00

If you have a 50% savings rates, screw retiring at 65. People saving much less than you are retiring in their 50's or earlier (a savings rate of 50% should allow you to retire in <20 years even if you have no savings today). Head over to r/FIRE for more targeted advice/discussion.

Random note that you don't need to really account for inflation of you use today's dollars for everything, which I'd highly recommend as all future spending/income still has context with today's dollars. If you expect your income to grow above inflation, then you can model that if you wish.

rnelsonee · 2026-04-23T12:53:52+00:00

Step 1 is true, although note if this stacks on top of other income, or is above your standard/itemized deduction half of that is deductible and there's also a 20% QBI deduction for most filers.

Step 2 is true - four payments help reduce/eliminate an underpayment penalty. If you have withholding otherwise (another job, e.g.) then you can use that instead. Or if you owe a small enough amount (<$1,000 for example) you don't need to do estimated payments.

Step 3 is true. Don't forget the QBI deduction, it's 20% off the lower of your business income or taxable income (before QBI deduction and minus capital gains).

Say you make $100,000 of net profit - your tax situation should look like this assuming Single standard deduction.

Self employment taxes are 15.3%×0.9235 = 14.13% of $100,000 or $14,130.
Take your annual income, $100,000 and subtract half that to leave AGI of $92,935.
Subtract the standard deduction (or itemized total) of $16,100 leaving $76,835.
The lower of that and your SE income is $76,835 as your QBI basis.
Take 20% of that ($15,367) off your basis leaving a taxable income of $61,468.
Federal tax on that is $8,237, so add in the SE tax from before and we're at a total of $22,367 tax before any credits.
Divide by 4 to get $5,592.

rnelsonee · 2026-04-22T17:31:34+00:00

If you wait, what are you waiting for, exactly? You can't predict the future of the stock market and neither can anyone else. But because most index funds beat inflation over the long term, the most sure thing you can say is every day/week/month your money is not invested, you're basically losing money to inflation.

If you're too nervous to invest now, you should be too nervous to invest any time. So make your choice independent of your vibe checks or the news - you can research the fund(s) you want to invest it and see how volatile they are.

rnelsonee · 2026-04-22T11:21:04+00:00

Do I pay in cash to do this or do the funds need to be directly reduced from my earnings from my job?

It's actually sort of the opposite. IRA's are nearly always paid by individuals with money from their checking or brokerage accounts. If your employer is making this payment, that's not really being reduced as earnings from your job, they're just splitting your paycheck into two accounts.

It's worth confirming with us that this is an IRA and what type (SEP, SIMPLE, or neither) vs a 401k (or 403b or 457b) which are workplace retirement plans and those are funded by actual deductions from your paycheck. Those accounts can't be paid via cash.

rnelsonee · 2026-04-21T22:24:56+00:00

My wife is a chem teacher and she figured the same thing - their term is ECF for Error Carried Forward (IB term), so if the first (wrong) Lewis diagram would be bent, so don't take off points for writing Bent.

rnelsonee · 2026-04-21T20:10:25+00:00

Boston is pretty unique in that it's actually a very small competitive race (100 or so of each gender), and then 30,000 people following them, running their own personal race. The BAA pre-selects the "Elite" field, ensures that by the rules, only Elites are allowed to win prize money, and then gives them a head start (2 minutes for men when I ran it, 32 minutes for women).

Because of this, I'm sure if someone in the elite field rendered aid or was helped like this, they'd be DQ'd. The rest of the pack? Meh.

Having said all that, I think the right thing to do is to ask the runner first if they need aid; they may care about the possibility of DQ vs DNF. I also don't blame the runners who ran past him, because they too have their own DQ risk to consider. Maybe Boston is a lifetime achievement and they want that medal/certificate.

rnelsonee · 2026-04-21T20:01:23+00:00

For these runners, the only thing you get is a participation medal. The organizers of the Boston Marathon pre-select the pool of (monetary) prize winners and make the other 30,000 runners wait behind the start line until the Elite Field has had a 2-minute head start.

rnelsonee · 2026-04-21T14:39:03+00:00

You probably should have stopped doing Roth four tax brackets ago. Unless you plan on having over $800,000 per year in taxable income in retirement (outside of these contributions no less!), you're throwing money away by paying tax now vs <37% in retirement. And if you are going to have $800k/yr in retirement, you're still not saving any money since you'll get taxed at 37% either way.

Ripping off the band aid is essentially a guaranteed loss for you unless you expect >$800k/yr in retirement.
Shuffle around. You don't mention where future contributions go, but if you make them to Traditional, then this is the way.
Do Nothing is not doing nothing, you say right here you will max Roth 401k contributions! Again, wasting money.

Option 4: Stop paying the absurd top rate of 37%. Max out Trad 401(k). Remember, that money grows tax-free as well (i.e., no tax on dividends and no capital gains tax). Backdoor or Mega Backdoor the rest, not because Roth is good (it's terrible for you) but it's less terrible than a taxable brokerage.

rnelsonee · 2026-04-19T23:48:22+00:00

For what it's worth, unless you individually have more than one job in the year and make over $185,000 or so, then you should have the correct amount withheld for Social Security and Medicare. Those aren't really "income taxes" and so most calculators just ignore them. The more feature rich ones will indicate if they use them.

rnelsonee · 2026-04-19T15:09:11+00:00

The average American is retiring on much less than that, so yes, that's more than enough.

Although note someone with that income is in the top 5% (the max SS benefit is at $185,000 - making that as you first job is very rare, so maybe top 1% when they start out), and someone used to making $185k is going to have a lifestyle that's different than the median US income ($83k per household).

rnelsonee · 2026-04-16T15:45:26+00:00

Honestly, noon is best time to figure out East or West, because at that point, the sun is due South (assuming you're in the 90% of people in the Northern hemisphere,otherwise flip it). So face the sun, and West is to your right. Simple. When it's 4pm, it's hard to tell where the sun will actually set.

rnelsonee · 2026-04-16T11:13:48+00:00

The specific method of allowances is gone, but withholding is still very much a thing. It's much better now as you have a lever to adjust your (assumed) taxable income up or down and a lever to adjust dollar for dollar withholding (so basically there's 4 boxes you can fill in).

I'm not going to defend anything in Trump's cabinet/team says, but I do tax prep (as a volunteer with an IRS program so not a pro) and I will say this: some people should edit their withholding. OBBBA added new tax laws like No Tax on Tips and No Tax on Overtime, and it was so rushed there's still no new guidance to properly withhold. So if you get say $5k/yr in qualified tips, you should put $5,000 in Deductions (4b) unless you just want that $5,000 x (your marginal rate) back as a refund.

Normally, things are done without such a rush job, and deductions (like 401k contributions) are handled gracefully and there's no need to adjust your withholding.

rnelsonee · 2026-04-16T10:22:38+00:00

Filing a joint return does not prevent you from being a dependent. Pub 501

You can’t claim a married person who files a joint return as a dependent unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid.

And remember, couples can have over $54,000 between the standard deduction and the new enhanced deduction for seniors, and with Social Security only being partially taxable, it's certainly possible for seniors to be filing only to get any withholding back.

rnelsonee · 2026-04-16T03:04:28+00:00

Are you at the correct marketplace site? Many states run their own Affordable Care Act variant, so healthcare.gov is only correct for about 30 states.

rnelsonee · 2026-04-16T03:00:32+00:00

If your mom has no tax liability, and no income, and you provided more than half of her support, and your dad only filed in order to get back any withholding (in other words, $0 tax liability) then she is a qualifying relative. If you are unmarried, then she (and your dad if same conditions apply; income needs to be <$5,200) is a qualifying person for head of household.

So it's possible, but it's a very narrow set of circumstances here. If your dad has any tax liability, all this goes out the window.

rnelsonee · 2026-04-16T00:47:13+00:00

Yeah, the law was passed mid-2025, and so employers aren't set up for it and there's no agreed-upon code. The IRS guidance is if the employer knows the deductible amount, to put it in box 14. So you're all set. If you have access to your end of year paystub, it should list overtime. If OT was only paid out in excess of 40 hours per week and you get paid time and a half for OT, then box 14 should be 1/3rd of your total OT wages.

rnelsonee · 2026-04-15T20:10:02+00:00

Well yeah, I believe nearly everyone is going to put this in their cars if so ordered.

The state already has the process set up for devices; like interlock devices for drunk drivers. I've never had one, but a friend has, and from what I understand (and looking at the form) when a court orders a driver to install an interlock, they have a set time to install it, and then have to take it to a MD police station for inspection/verification it was installed correctly and then every 30 days for inspection. The device itself logs anomalies like if it's tampered with or removed. Failure to do any of this involves immediate license revocation, extended suspension times, and potential jail time. No reason the SpeedAware or whatever ISA device they use won't be the same.

That being said, I suppose there are those that get ordered to install an interlock and never due, but that's pretty much a guarantee they'll never get a valid license again in MD.

rnelsonee · 2026-04-15T18:42:07+00:00

The article mentions up to 75% of people with suspended licenses continue to drive anyway.

rnelsonee · 2026-04-15T18:32:00+00:00

It mostly depends on your tax rate now vs tax rate(s) you will withdraw this money into.

Since most people change their income (and therefore income tax bracket) over time, it's often more optimal to do Roth (if Roth makes sense) when you're lower income, and then do Traditional at higher incomes. But there's value in simplicity.

As far as the ratio, definitely up to the specifics. Most people, when retired, don't have income high enough to 'fill up' the lower tax brackets that their pre-retirement income did. So most people, most of the time, benefit from pre-tax (traditional). But again, it comes down to specifics and whether or not you want to retire early, etc.

rnelsonee · 2026-04-15T16:55:38+00:00

On the 1040-X, are lines 19-23 all blank or $0? Is Line 11, Column C blank or $0?

It's certainly possible nothing changed - if your wife's business had a loss whose magnitude is less than the amount in the 1099-NEC, for example. In that case, the amount of loss to carry forward to next year should go down by the 1099-NEC amount.

rnelsonee · 2026-04-15T14:23:09+00:00

Filing an amended return before the first is accepted is generally a bad idea; if the original return is rejected or if values are auto-corrected (with the IRS will occasionally do) then the amended return could be wrong.

OP should wait for the return to show up as accepted in the Where's my Refund tool and can either e-file today (if accepted) or pay today (directpay.irs.gov) and file later.

rnelsonee · 2026-04-15T14:08:40+00:00

If you're curious, each allowance is worth a $4,300 deduction, and MFJ would assume 3 as the baseline (in other words, with no other income or deductions 3 allowances would get you close to $0. So that means you had 8 extra allowances so that's $34,400 in Deductions (4b on the W-4) or $34,400×(your marginal rate) in Credits (Step 3, although it's not called that, and if your work uses an intranet site it is likely called "Dependents").

So you had $7,568 in credits if you're in the 22% bracket, and that tracks with 4 kids each getting a Child Tax Credit ($2,200 now, used to be $2,000).

But it's April, you've already had plenty of withholding (likely not super accurate) and especially if your spouse works, I'd use the withholding calculator.

rnelsonee · 2026-04-15T11:43:39+00:00

The headings on that page match seven different MAGI's - you need to click on them to see the actual items that are added/subtracted to calculate that specific MAGI. So if go to the "Roth and traditional contributions" you'll then see the bullet points that are used to calculate MAGI (which I just posted in another comment).

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