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Paying Taxes on winnings

Discussion in 'Uncategorized Threads' started by 2bigdog, Mar 5, 2008.

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  1. 2bigdog

    2bigdog TS Member

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    Im sure some of you have recieved 1099s in the mail for those days that you had a good day on the line and say won a thousand or so. Now uncle Sam wants his piece. Through different discussions I have heard differing opinions. can't you deduct all the enrty fees it took you to win the money? What about travel/ Lodging/ammo/etc. Up to the amount that you won Right? Does it count as if it was gambeling winnings or do you have to be in business and teach officially as Leo & Harland & Kay do for your expences to become deductable towards your winnings.
    I don't care about deducting it against personal income I just don't want to pay income tax on $1500 worth of winnings at the grand when it cost over $3000 to win the $1500.

    Curious what everyone or claims to uncle Sam.
     
  2. waverider

    waverider Well-Known Member

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    My take is that unless you are conducting your shooting as a business you treat it like gambling winnings. In this case you can only off-set the winnings by the option amounts/"bets" made. I am not sure of the entry fee. Airfare and/or car expense, lodging, meals, ammo, etc are only deductible as a business expense. Hope you kept the receipt showing all the option "bets", you will need this if audited.

    Jason
     
  3. Vince McNamara

    Vince McNamara Member

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    The few times I have won and received a 1099, my accountant has written off the amount shown on the 1099 by listing shooting expenses. Unless you are a full time professional all you can do is to cover the 1099. You can't show a loss from your trapshooting.

    Vince McNamara
     
  4. Robb

    Robb Member

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    I did it like Vince in 2002 and have not heard a word yet and hope I don't.
     
  5. BrowningGal

    BrowningGal TS Member

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    I got one of these this year also. All you have to do is fill out a schedule C showing yourself as occupation "Amateur Trapshooter". Luckily I kept a couple receipts from these shoots, so I was able to offset the winnings using only my entry/option fees.

    When you're doing schedule C, you're basically setting yourself up as a business. It doesn't mean you do that business full time. I did this when I was teach woodworking classes at the local Woodcraft. Think of it as a contractor-type of business. Back then, I was able to deduct expenses for materials used in class such as wood and sandpaper. Not tools, though, since Woodcraft owned those.

    You are allowed to declare all your expenses. However, I would recommend you only declare those expenses for the shoots where you received a 1099. Also, I would not recommend trying to declare mileage. The regs require you to keep a mileage log, not just of the miles in question, but for the entire calendar year. Big pain, and not really worth it unless you're a full-time traveling trapshooter. I also would not try declaring the cost of your gun unless you can show that the gun is only used for competetive shooting. As for ammo, only declare the ammo used. If you have a receipt for five cases of ammo and only use three of them at the shoot, you only declare the three.

    As with any business, you can declare a loss. However, my accountant told me that any business that declares a loss more than two consecutive years is a red flag to the IRS. So, when you get to year three, just hold back enough expenses to put yourself a couple dollars into the black. Keep the receipts, though, in case you get audited. Then you can show that there are more expenses that could have been claimed but weren't.

    Set up a system now so that you can save your receipts separately for each shoot. That way, you can easily match up the receipts to the right 1099 when it comes time to fill out your tax forms and only declare expenses pertinent to the 1099's issued.

    Good luck!
     
  6. hmb

    hmb Well-Known Member

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    You gambled at the Grand and you won $1500. Now take your gambling losses for the rest of the year and subtract it from the $1500. You pay taxes on what is left, but you can not take a loss. HMB
     
  7. whiz white

    whiz white Strong Supporter of Trapshooting Banned

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    IRS told me I could use "training costs" to off-set winnings.
     
  8. code5coupe

    code5coupe Member

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    Please remember, "training" is not the same as "practice". For "training", you need a trainer.....

    At least, you do according to my CPA.
     
  9. dverna

    dverna Active Member

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    What a travesty our tax code is.

    We have too many rules and even the so called experts cannot always agree on what can and can not be deducted.

    Talk about wasted resources. Tax everyone at 10% - regardless of source and no deductions. KISS.

    If Big Brother cannot survive on 10% of what corporations and citizens earn they need to work smarter.

    Don
     
  10. vdt

    vdt Active Member

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    wish i had the problem....vdt
     
  11. whiz white

    whiz white Strong Supporter of Trapshooting Banned

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    Don: I've been proposing that for a long time.

    Do away with 1040's, W-2's, W-4's, and just tax only money spent nationally-everyone pays.

    If you saved, no tax, just when you bought something. Have the business collect it as most do now, and that would help with the missed taxes through Internet sales.

    Wouldn't be confiscatory at all, it would just be on money spent. I think churches ought to pay taxes too. So many are getting political.

    The poor spend less, so less taxes. The wealthy spend more, so they pay more. Pretty simple.

    Unfortunately, the lobbyists such as and for accountants, lawyers, banks, etc, would fight this tooth and nail.

    IMHO.

    Whiz
     
  12. jimbotrap

    jimbotrap TS Member

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    According to my CPA you can deduct travel to and from shoots, all entry fee's and practice costs, including travel to and from the gun club. But you can deduct only up to the amount of winnings. You cannot deduct added costs from your filings. But you can carry a loss forward to winnings the following year. That is if you can figure out how to make more winnings than expenses. - Jim
     
  13. tj303

    tj303 Member

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    Though a "flat tax" (10%)sounds great it creates an unequal burden. A minimum wage earner has an almost impossible time living on $12,000 a year let alone paying $1,200 in taxes while a CEO earning $1,000,000 can live extremely well,save money, and pay for his children's college education on his take home pay of $900,000. We may all be equal in the eyes of the law but we are not born with equal mental and physical skills (let alone being born into the 'right' families).
     
  14. pendennis

    pendennis Well-Known Member

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    TJ303, minimum wage earners need to carry their fair share of society's burdens. They use police, fire, and other services the same as high-wage earners. They also use their share, and sometimes more, of other societal costs such and schools and medical care. In many instances they use more, owing to the fact that many of them lead unhealthy life styles. Paying taxes also gives them more of a sense of responbibility in society.

    There few "minimum wage" earners who have to support families. Most all minimum wage earners are students, entry-level workers, or second income earners. These workers also spend very little time making minimum wages. They either get wage increases or move on to another better paying job. If the value of minimum wage labor were worth more, the wage would be more.

    It's also been shown that wages generally rise in response to higher tax rates.

    And, please, do not use the canard that taxes are regressive on the poor. Poor pay sales taxes every day, and they also pay taxes on items like electric and gas utilities, and telephone taxes.

    A ten percent tax does not create an unequal burden. It creates the same burden on everyone.

    Society does not guarantee equal outcomes. Our Constitution only guarantees equal opportunities.

    Dennis
     
  15. Dickgshot

    Dickgshot Well-Known Member

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    Here's the formula you must follow to deduct your shooting expenses.

    Shooting Income $ 1,500

    Shooting Expenses

    4,000 but limited to $ 1,500.

    Less: 2% of you adjusted gross income:
    What is adjusted gross income ? Sample:
    $ 68,500 salary
    500 interest
    1,500 trap winnings
    Total 70,500
    Less: IRA contribution (1,500)
    Adjusted Gross Income 69,000 time 2%= $ 1,380



    Maximum deduction for your shooting expenses $ 120



    Shooting income that gets taxed-$ 1,500 less $120 =$ 1,380

    This is the way it really works, like it or not.
     
  16. 870

    870 Well-Known Member

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    If you can argue it's a business for you, fine, deduct away; but for the majority that can't, where the H??? are you finding these CPA's that tell you this stuff?

    Only dickgtax above has it right.
     
  17. jimbotrap

    jimbotrap TS Member

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    dickgtax - Where did you get this information. It does no agree with accountants and tax lawyers I know. You can deduct expenses up to and not to exceed the amount of your winnings. Period. I have done this for years and have been audited 4 times. There was never a question about these deductions. Others yes. - Jim
     
  18. 870

    870 Well-Known Member

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    Jim:

    Just do a Google search on "hobby losses" and "miscellaneous itemized deduction".

    I would be amazed if a "tax lawyer" told you that hobby losses can be netted against winnings before entering on your return. It is clear thay cannot, since they are itemized deductions, first limited to revenue, and then by the 2% AGI limit as dickgtax says above.

    If you win $1,000. and spend $2,000, first you report the income of $1,000. Next, you limit your deductions to the same amount as the winning - $1,000. The problem is that this $1,000 deduction does not go on your return as a reduction of the $1,000 of income you reported. It may only be reported on Sch A as a miscellaneous itemized deduction. Here it is further reduced by 2% of your adjusted gross income as explained above.

    If you don't itemize, the result is pick up the $1,000 of income and then the expenses, limited to $1,000 are not deductible at all, since they are only available on Sch A.
     
  19. BIGDON

    BIGDON Well-Known Member

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    870 I suggest you read the tax code as it pertains to a profit or loss from a hobby, you can actually take a loss for the year but I believe you must show a profit within 5 years or stop filing as such. Also the section as an individual on winnings and what can be offset.

    Don
     
  20. 870

    870 Well-Known Member

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    Bigdon:

    You are in over your head. What section of the Code do you want to know about? The issue you are talking about is when you are arguing that the activity is not a hobby. That is when losses are deductible. The 2 out of 5 years profit issue you are referring to does not allow hobby losses - it allows losses because the activity is not considered a hobby.
     
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