Cashout --- Taxes

[Hate Tom Brady]

I am about to cash out a large amount of money and want to pay taxes on it to avoid any legal issues.

A couple of questions...

(1) Before I cash out do I file for my winnings or wait til I receive the wire. I am sure the large amount that will be wired to my bank will draw a red flag that is why I am curious.

(2) I know you can deduct losses up to the amount you won, but I have no proof on prior losses except a bank statement showing the amount I deposited. Considering most online gaming sites show up as weird transactions on bank statements it might be hard to prove they were considered gambling losses. Sooo do I just say screw the old losses and pay full taxes on this withdrawal?

(3) Who do I contact to file the winnings? Do I wait until tax season and report is as annual income under Gambling Winnings or pay the taxes immediately and not have to worry about reporting it with my annual salary?

I have cashed out places before and normally report my winnings with my annual salary b/c they were a lot smaller than what I plan on withdrawing now. I want to do this the right way and if anyone has advice from cashing out large sums before please weigh in. All opinions would be great.

Thanks!!

 

[nonamedude]

You won't have to report the winnings until you file your taxes in 2009.

Not sure how much you are collecting relative to your earned income but you need to make sure you don't "under withhold" your taxes this year - you can either make a quarterly tax payment before 12/31 or, depending on your situation, you can fill out a new W-4 at work and have additional tax withheld from each pay check.

I believe you have to itemize in order to deduct your losses (to the extent of your winnings) and you will need bookkeeping documentation to prove your losses (receipts, journal, etc.).

No matter what, you will have to report your winnings with your taxes when you file them in 2009.

Disclaimer: I am not a tax expert and suggest you check with a tax accountant if you have questions.