I started gambling at a crypto casino using a VPN because it’s illegal in the U.S. specifically CA. I use my brokerage to buy, transfer to my wallet, then send it to the casino. I had a slip up where I transferred straight from my bank to the casino once. I was surprised they didn’t close my account and thought it might be an important detail to mention. I won big in November only to give it all back and more through the new year. I am now negative -$8,000 and recovering from gambling addiction.
Now as I’m filing taxes, I’ve imported my documents from my brokerage to find out my total gain is $55,000 with a cost basis of $6,000. I don’t believe these numbers are correct because I liquidated maybe $20k and kept the rest ($15k) in crypto to keep as an ‘investment’. I ended up blowing through my ‘investment’ and bought back in with the $20k and lost that too. It should have been $35k max. However, the online tax service I’m using states it needs revision but trying to modify a 1099-B is a bit confusing. In addition, the casino site I use does not provide any tax documents but does have my P/L which is -$1,800.
I knew I had to pay taxes on gains but how does it work if I lost it all? I didn’t spend a $1 on myself with that money and the amount is more than my annual salary. I blew my life savings and have to start over. I now have to live with regret and fight a constant urge to gamble. I am trying to move on and need solutions. What is my best course of action here? Do CPA’s know how to deal with these kind of situations?
Did you ever trade one currency for another? Even if you dont cash out, and convert, thats a taxable event.
Taxes work on a per year basis.
You can deduct losses but only up to the amount of your winnings in the same year.
You can’t deduct your 2024 losses on your 2023 tax return.
You won’t be able to deduct losses in 2024 that are more than the amount you won in 2024.
Shehan from Cointracker here.
- I think you are dealing with a couple complicated subject areas here: gambling winnings/losses & crypto
- Unfortunately, your 1099s will not show the true gains and losses in you spefici case.
- I’d highly recommend working with a CPA who understands these two subject areas. Happy to introduce you to one. Feel free to DM me.
IRS doesn’t care that you lost it all. You had winnings, you owe tax on those. It is fully taxable, you must report it all. You’ll learn the hard way if you don’t, be it this year or a few years from now. If you itemize you can itemize losses up to winnings but not in excess.
Although the IRS and CA likely won’t care enough to do anything, I get really nervous when it comes to this kind of thing. I would talk to a tax attorney. A CPA will do, but since you broke CA law you’ll get better advice with a lawyer and you’ll have secrecy protection.
Btw, if you transferred less than $10K per transaction, then the IRS and CA will not know about it, and you can just use tax software or a regular tax preparer to do your taxes fairly safely.
Getting advice on reddit is a good start, but only trust advice from an expert in the end.
Going through the same exact situation. DM and let me know what your plan is - I need a copy or some input. Thanks - old guy here… looking for options.
What do you want to be when you grow up?
lol
This is just another reason why if you live in the United States I have been urging other crypto investors and people who have been in the crypto world as well as Gamers who don’t realize they are getting sucked into the crypto World by the simple Act of the gaming platform they are using choosing to tokenize their in-game currency. We need to push back against and demand our Congress set reasonable rules for tracking gains and losses on crypto. They need to be treated more like a casino chip or an arcade token in most cases but they are being treated as property similar to a stock or share of company. I did not do much gambling but did participate in nft buying staking raffles airdrops and a bunch of micro purchases that are also treated as property purchase and disposals. It’s honestly quite ludicrous. All this being said many of us share your frustration.
Check out
They also have a network of CPAs that specialize in crypto transactions. I urge you to write your senator, the president, and Congress to urge them to provide all of the people as mentioned above including ourselves that will be affected by writing to them in voicing your opinion does not alert the IRS. But also with the new rules any centralized Exchange that allows US customers to use their platform will report any accounts that have had over $600 worth of transactions as well as any transaction over $10,000 to the IRS. The bright side is some of them will provide tax documents. However any transactions that occurred off of those centralized exchanges for example if you send crypto to a self custody wallet, like in your case where you then send it to a crypto Casino then those transactions are not tracked by those centralized exchanges. We need to have a public and legal monetary and Taxation based conversation about how and when it is reasonable to record a gain or loss as actually realized.
If you lost it the following year after dec 31st, and had gains before dec 31st. On the hook for taxes on 35k.
Blow it all jan 1st… you get to deduct 3k for that year starting jan 1 and roll over 3k annually.
this will be a really funny screenshot at the trial
You spent it all on yourself at the casino. You can write off your crypto gains with gambling losses
You need a CPA. Simple as that. You don’t understand how this works. Therefore you can’t solve it. I’m not trying to be rude, I’m just saying you need professional help here. Don’t make this worse by getting yourself screwed for filing taxes wrong.
Pay your taxes and stop gambling, in that order.
So you’re saying converting say btc to ltc is a taxable event? I thought the only way crypto is taxed is when it is converted into usd
I thought about that too. I feel like I’m screwed here…
I was wrong for thinking it was only taxed when I sell. I should have left the money in my wallet than transfer it to my brokerage. I ended up depositing it back to my wallet anyways.
If it weren’t such a large sum of money I’d agree. I plan on talking to a tax attorney but having trouble finding one in my area. I don’t know how trustworthy hiring someone online.
I’m not that into crypto but isn’t the inherent nature of bitcoin a problem here? There’s no paper trail unless you do everything on coinbase or something. Even casinos mail out 1099s. This is part of the appeal, and part of why governments around the world try to ban it or create their own coins
You live and learn.
I don’t see how it’d go to trial.
wow love me some admonishing by a random condescending troll when someone just needs help. seek help, get f-ed. order is up to you.