No.

If I had not tipped in the example above the IRS would have 1.5k less revenue from the dealer income.

So the act of tipping incurs double dipping from a tax perspective.

Look at it another way..

The casino hands you an envelope with 5K in it, and they say: inside this there are 15 $100 bills with a blue 'X' in the corner that you will have to send to the IRS.

You say thanks!

You then give the envelop to the dealer and say:

Inside this envelope are 15 $100 bills with a blue 'X' in the corner that you must give to the IRS as this is your Income Tax payment.

The IRS then receives a note from the Casino that they passed you the envelope, and the IRS asks you for 15 $100 bills with a blue 'X' in the corner.

You say, oh no, I gave them to the dealer, he is going to mail them to you lickity split... they say "oh ok cool, as long as we get our 15 bills with a blue 'X' " or they say, 'oh no sir, our tax code states that since you touched the envelope from the casino we want 15 from you and 15 from him?

Of course, they say the latter. Which is why I think this is unfair. Get it?

rofl, what do you mean, "No."? You keep changing your argument. First you argued that played tips are some type of cost that shouldn't get taxed. That's bad logic, as I already pointed out. Then you argued that a gambler gets taxed twice when tipping. That's just completely wrong, as I noted in my last post. Now you are just down to arguing that when there is an additional transaction (i.e., you tipping and contributing to a dealer's income), it's wrong for the gov to tax that income. Um, OK. The government taxing a source of income once? We can't get more anecdotal than that. That's not what people complain about when they complain about double taxation.

Glad I am keeping you amused.

- I am still arguing that point.

yeah, that is a further example of how that same money gets taxed again.

I'm cool with the government taxing that income. Just not me also. Pick one, don't tax the same money twice.

The labeling of the same 5K as winnings and as income mean the effective tax that is received by the IRS is double what they should receive from 5K.

So what's your argument? As I already pointed out, if you lose a played tip, that comes off your W/L too. There's no disparate treatment. You can't have it both ways.


And again, the problem is that it's not the same money. The IRS gets to put its hand out an additional time because there is an additional transaction. You won money playing blackjack, that's one transaction. Then you tipped the dealer, that's another transaction. They're both income which is why the IRS gets a cut. They are separate, independent actions.

Complaining about tax on these separate transactions is like complaining that you had to pay income tax on $5 that you earned at work, then when you go buy your morning coffee you have to pay sales tax on that, and the coffee company has to pay taxes on the profits, and the barista who served you has to pay taxes on his income, and then so does the coffee bean supplier etc. etc. etc. etc. That's not what people are complaining about when they complain about double taxation.

You have to understand the concept of separate transactions or you are going to get burned when the IRS thinks you're cheating them.

Once you understand this you will complain about double taxation in a whole new light.

Lets take your Barista example, keeping it super simplified:

Zero Cost of Product (I know its impossible, but it keeps the numbers clear for the example)
Sale Price $5
Salary to Barista $5
Sales tax 0%

I buy 1000 coffees in 1 year. Cost to me= $5000
The Barista earns $5000 in salary from the coffee company from the cost of the coffee
The coffee company earns income of $5000

When the IRS comes a knocking, the coffee company says 'I don't have to pay you 1.5K because I paid that to my Barista as salary, it is a cost of the transaction'.

The Barista still has to pay 1.5K, but that is it - they aren't asking the coffee company and the Barista for the money.

However when you Tip - you cannot deduct the tip, and they are asking the coffee company and the barista for the money...

Get it?

I'm not even talking about sales taxes and all that - I am saying that from me to pass money from coffee company to barista - just pass it, not profit from the transaction at all, I have to pay 1.5K?

That is unfair.

As you can see I use the term Unfair, because I am fully aware that is what the IRS wants so don't worry about my comprehension of it, I know how they are scamming us and just think it is unfair.

Think about it some more.

So basically your argument is that when people buy products from companies, the companies' employees shouldn't have to pay taxes on their wages because that's double taxation. OK. I don't think anyone needs to respond to that. Way OT on the thread already anyway.

Nice. That is what you got from all that?

The employee should pay the tax on wage, but the company shouldn't pay taxes on the income if they are already paying out the employee.

It is what we call NET profit or loss.

If they had to both pay taxes the system would be untenable, and the company would become bankrupt.

You are confused on terms again, which is why your example made no sense. I see now that when you say "income", you actually mean "revenue". These are not the same thing.

Pointedly, the government does not tax revenue.

More pointedly, this line of the thread is way way OT.

OK lets leave it at this then, you think its fine, I don't. Cheers.

I don't understand the whole premise of your complaint. In the first place, unless you are a professional gambler, you are required to keep a contemporaneous diary of all your gambling sessions. The total of all your winning sessions goes on line 21 (other income) and the total of all your losing sessions, not to exceed the total of winning sessions, goes on schedule A. The casino's win/loss statement may provide corroborating evidence, but it does not provide the necessary information to compute your tax.

In the second place, pretty much everybody figures their session win/loss net of tips that are given during the session. If you are in the habit of finishing your session, waiting for the pit boss to determine your win/loss, and then tipping a huge amount, you are doing it in the worst possible way for tax purposes.

I'm guessing that you don't keep a diary, or the issue of tipping not being included in your W/L wouldn't come up. But are you claiming that the casino keeps track of all the tips you make and adds it to their record of your W/L? That would seem like a lot of work. Usually the pit boss just writes down how much you buy in for and how much you cash out for.

QL

Here is an example that might help.

I walk to a roulette table and call:

$100 on 8, 50/50 twoway bet.

That (for the non gamblers) is $50 for me $50 for the dealer.

8 hits, I get paid $1750 plus keep the $50, I never get to see the other $1800 as it is immediately taken by the dealer.

However, The Casino states I won $3500, so I get taxed on tip.

Then the dealer pays tax on the tip.

Happened to me a lot, as I bet tips.

Here is another one.

On a cruise last year I had lost throughout, and decided that I wanted to come in and leave a nice tip regardless.

I went to 3 card poker (with some bonus bet), bet only dealer bets, all spots, $25 per spot. Cost me $600 for the tip, it was a pretty lame performance by the dealer, but she hit one payout of $625 (plus kept the winning $25)

So the guys got $650.

My tip of $650 cost the house $50, so my tip, that I could never possibly win from, as it was all the dealers, was reported by the pitboss as a win of $50.

So I now owe taxes on the $50! (which was washed out by my losses, but that wouldn't have happened if I didn't have losses)

PS I worked in a casino for 8 years as a Pit Boss and Asst Mgr. They do not calculate what you cash out, because you could slip to other people or play on other games, they count what was removed from the float during your play.

This is seldom the case in the States; for those playing below purple ($500) chips. With the exception, perhaps, of being the solitary black chip player on a $5-$25 table.

A supervisor covering 3-4 full tables has no means of keeping that type of inventory on the lower denomination ($5, $25 and $100) chips. They need to rely on the buy-in and cash out figures.