Originally Posted by
gengar
But tipping is an instance when you don't pay taxes again. Unlike, say, gift tax over the exemption.
OK lets do a simplified example:
Salary 100K Taxed 30% Tax 30K
Take 10K in your pocket from 70K Net income to Casino for weekend.
Day 1 End with 20K in your pocket, having tipped 5K over the evening during 'hot streaks etc'
Day 2 End with 10K in your pocket.
Net Win/Loss to Casino (which reports to IRS) = 5K
IRS Then taxes 5K@30% for 1.5K
Net Annual is now $68.5K
So by tipping, you were taxed immediately, from zero upwards, with no 'gift tax exemption'.
Now, Dealer reports income to IRS of 5K for year (poor dealer) pays tax at 30% (for simplicity)
IRS Taxes Dealer $1.5K
Casino reports cap loss of $5K to IRS, they write this down against their $10K win (taxable at 30%) and save $1.5K in taxes.
So we have, from a 5K transaction:
Reported Win Tax 1.5K (Player)
Reported Loss Tax Deduction 1.5K (House)
Reported Salary Tax 1.5K (Dealer)
It is a double tap, because the house is not considering the cost of the transaction in the win/loss and I am saying dealer tip is a cost of transaction.
Simplified numbers, I know, but the concept is there.
I'm not saying the IRS isn't taxing like this. I am saying it is BS that they do!