108

This was a really bad idea, on so many levels for so many reasons. Your friend accepted a tax liability that was more than the cash he got. Your friend involved himself in a fraud. When the IRS comes to his door, he should say "I have nothing to say until I consult with a lawyer". It may not be the IRS, it may be the FBI or the Department of Treasury. Your ...


89

To expand on RonJohn's answer (and make it more explicit): Your friend met a complete stranger who asked for his SSN. The stranger promised him $20k. The best case scenario is that your friend loses a lot of money to taxes (see D Stanley's answer). The worst case scenario: the stranger now has your friend's SSN. The stranger will probably also ask for your ...


77

Yes, that's called an annuity. You give them your money, and they pay you a lifelong monthly or annual payment. Of course, they want the money upfront, otherwise you could die and have nothing left.


44

I am neither Canadian, a lawyer nor a tax-adviser. This is neither tax- nor legal-advice. TL;DR: As far as Income Tax is concerned, it is very likely that there will be nothing to pay. You will, however, almost certainly have to pay Provincial Sales Tax (PST) (at probably 12% of the "fair market value" of the vehicle). In addition, should the vehicle ...


39

To expand on Aganju's answer, what you are describing is closer to a lifetime mortgage + annuity. With an annuity, you pay an upfront lump sum amount to purchase a guaranteed future income until your death. This is very much the reverse of a typical life insurance contract (term assurance) because it insures you against living too long (i.e. becoming ...


35

Gambling winnings are taxed when you file just like normal income so your roommate will now have to pay federal tax on $100,000 income (between 24% and 40% federal, depending on when it is reported and other income he/she has), and potentially state income tax, while the "winner" got $80K tax-free instead of paying tax on $100K. If this actually happens, ...


29

This is a supplement, not an alternative, to TripeHound's excellent answer. In BC you are required to pay tax (PST) on private vehicle sales. Moreover you are usually required to pay tax on the market value of the vehicle, even if you say you bought it for less (because it's far too easy for buyer and seller to report a price lower than they actually paid ...


22

The income tax on gambling is the same as the tax on anything else. It's the withholding that is 25%. Example source for 2018 tax brackets, as the IRS hasn't published theirs yet. Note that $100,000 almost puts him in the 24% tax bracket even without any other income. If he and his spouse have significant income, e.g. $30,000, then he will likely pay ...


19

A couple of things don't add up about this story: ...that person told my roommate that he does not have a social security to turn his winning money into cash. In the US you don't need a SSN to cashout winnings. If you choose not to show a SSN or TIN (taxpayer identification number) then the casino will automatically withhold 28%. The actual winner could ...


14

I think ultimately this is a marketing tactic. Some players may well be disciplined enough to just use the free stuff and then stop, but the casinos know that many other players won't be, and once they've started playing, will continue to play (and pay to do so). I've also noticed that in some online casino advertisements, there's a restriction that any ...


13

You are falling for the common misconception that 'high' taxes means 100% taxes. Which is of course wrong. Take a simple example (all numbers are millions!): You win 10 in the lottery, and they keep 50% of it - which is 5 - for taxes. You whine, and blow 2 of the remaining 5 in Vegas. Now you have 3 left (instead of 5), and at the end of the year - ...


12

As explained in Indictment of ‘Vegas Dave’ illustrates how casinos use Social Security numbers: If you offer a fake Social Security number or use someone else’s, you’re committing two crimes — misuse of a Social Security number, and causing a domestic financial institution (in this case the casino) to file a false report. As a result, Oancea faces ...


12

In addition to whatever he/you adopts from the other answers, he should also go immediately to the casino and tell them when and where he got scammed before they erase the security videos of the perpetrator.


11

In general, you can only deduct expenses in the year the expenses were paid. The only exceptions to this that are talked about in Publication 17 are investment interest carryover and charitable contributions carryover. Gambling losses cannot carry forward to future years, for most tax situations. Per the IRS: "If you itemize your deductions on Schedule ...


10

It's called a loss leader. They give away a few free bets to entice a portion of those that take up the offer to stay and spend more. If enough people end up spending money that never would have visited the site otherwise, then it's a winning proposition for the casino. Couldn't players just restrict themselves to these offer ... and pass on the other ...


9

You only asked if there exist people who made a living off of sports betting, not if there are a lot of them. And the answer to that is "yes". Bloomberg's profile of Bill Benter tells one rather interesting story of one who made his fortune writing algorithms that analyze horse-betting. The only sound was the hum of a dozen computers. Bill Benter and an ...


8

Gambling losses are only offset by winnings. Those losses can't offset other income. So, the guy that wins the $1M jackpot can deduct the $100 he spent on tickets that year.


6

I think it's obvious that it would never make financial sense to throw money away just to get a percentage of it back in the form of a tax refund. However, in this particular situation there may an interesting wrinkle worth exploring. Suppose you went to a casino and considered playing a game where the house has a slight edge of about 1% (blackjack, etc). ...


5

Your question seems like it could be interpreted in a few ways, but the law of large numbers is going to have a hard time identifying someone who is good enough at gambling to make a living (as opposed to someone that turns out to simply be lucky, which the law of large numbers suggests is likely to occur more often than never). Additionally, the amount of ...


4

As long as you don't miss any payments on the credit card, it will not have any long-lasting effects other than increasing your credit utilization ratio. This is the amount of credit used as a percentage of all credit available to you, and counts for 30% of your credit score. Once you pay it off, this effect will go away. I should say that it's not usually ...


4

Even if it is legitimate the tax bill would be more than 20% so your friend would be losing money. As pointed out in other answers is probably against tax code. It probably violates gambling commission code. At some point I suspect the winner will ask for some cash up front as assurance money. Say these chips really are worth $100,000 your friend could ...


3

My wife was once on a game show. The income was 1099 and wholly unrelated to gambling. I did offset the hotel cost on a schedule C against it (and filed a California return to get back the withholding) but a television appearance for a prize is not gambling. It is pay for a performance and she didn't risk any of her own money. Your friend's 8k loss can ...


3

Gambling is perhaps not well defined, but it certainly doesn't include things like reality show winnings. However, it is possible he could deduct something for this. If the reality show qualifies as a "hobby", and his expenses exceed the 2% of AGI requirement, it's possible he could deduct those airplane tickets and such. That deduction is explained in ...


3

In general the more different stocks you buy, the safer. The chance that one company will go down the tubes tomorrow -- because their brilliant CEO had a heart attack, their major factory burned down, whatever -- is much higher than the chance that 100 companies will all go down the tubes tomorrow. But on the other hand, buying stock in more companies also "...


3

The benefit is diversification. There is absolutely a mathematical principle behind the theory - which is the fact that the "risk" (variance of expected changes in value, or volatility) is lower for a diverse portfolio of assets. The downside is that the chance of hitting a windfall are significantly lower, but so are the chances of catastrophic losses. ...


3

From a comment to another answer: But actually its possible that somebody in the company spent a lot of money through the company on gambling, which while not causing a "problem", would be far simpler if we could claim it as a lose for the money that was lost. This sounds dangerously close to embezzlement and or fraud (if that's not what you meant, ...


3

I think the real question is whether sports betting is a game of skill. I believe the answer is definitely yes, there is at least some skill involved, making it likely to be a winning proposition for those at the highest skill level. I know of two people that might prove it's possible, even though both do not currently use sports betting as their primary ...


3

According to the Colorado Lottery web site FAQs, non-citizen lottery winners will be taxed at 34% (30% federal + 4% state). I think you'll find that the tax treaty between the US and UK only covers income and capital gains taxes, not gambling.


3

The fundamental problem with this for most people is purely that betting markets are not very liquid for this type of bet, and that relatively solid methods of doing this already exist in financial markets anyway. Take something like no deal Brexit: Right now on Betfair for Yes the order book has a spread of £12 available to back @ 5.2 and £66 available to ...


3

Yes, there are some actually. Check out the stories of: Tony Bloom Bill Benter Zeljko Ranogajec and David Walsh Billy Walters So, yes, it is possible. It is not easy, but a few do not merely make "a living". They make a crap ton of money. It is not what you would you normally consider as gambling. It is high-end computer banks finding edges and ...


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