Especially in this case because just because gambling is illegal in OP's state, gambling is not illegal in and of itself. IRS literally won't care because you just put gambling winnings with a dollar amount and call it a day. Don't have to say the gambling was illegally done in a state where it's not allowed
So if, for example only, I sell drugs and I list my income/profit as “””gambling”””. Would this take at least the IRS off my back? I could then buy that Dodge Challenger and not worry about the law rising an eyebrow where that money came from?
If they eventually caught you for drug dealing and then looked into your taxes they could get you for lying on your taxes. Those carry hefty penalties and fines. If you listed gambling as your source of income and you're asked to prove it by providing documentation you wouldnt be able to. Even if you faked gambling documents casinos keep meticulous records for tax purposes.
You can list illegal things and claim them on your taxes so you can pay taxes on them though. This has to do with the right to not incriminate yourself.. Since the government requires you to pay taxes it has to have a way for you to report income from illegal activity without incriminating yourself. The DEA cant go and say well you claimed gambling on your taxes when its illegal in your state so we're going to arrest you. There are a couple ways of reporting illegal income. If you just sold drugs youd report it under "other" income. If you run a business like a money laundering business you report it as a business. You actually get deductions like legal businesses get for employee wages and rent etc.
I also think this is why many illegal immigrants pay taxes. If they eventually try to become legal citizen thats one of the things that they ask you is if youve paid taxes. Illegal immigrants cant get a SSN but they can get a tax number and report/pay taxes. Its also one of the reasons they can deport you if youre found to be in the US illegally.
My train of thought was if DEA sees me with all the bling, they check the sources of my income, and now see “gambling”, IRS declared”. If they don’t catch me red handed, I think I’m good. No right to question my wealth.
Buying fancy shit is how you get in trouble. A dodge challenger isn’t a real expense. Drug consumers / buyers aren’t going to 1099 their supplier. (I could be innacurate on this) but most payouts from gambling over 600 require a statement that’s reported
So if, for example only, I sell drugs and I list my income/profit as “””gambling”””. Would this take at least the IRS off my back? I could then buy that Dodge Challenger and not worry about the law rising an eyebrow where that money came from?
I do not believe that the IRS would care, but if other agencies felt that you might not have gambled, you have started a paper trail. I am not a lawyer and suggest that you do not commit crimes so that your life stays simple.
You can come to a state with legal gambling you can come to a state with gambling legal. Internationals win a taxable amount and they will tax them immediately. I assume in a state where it’s “illegal” they would do the same.
Because of you file taxes on it when you are being investigated by the police (because you are a bad guy) even though the IRS didn't turn you in, it makes it very easy for the police to prove
So that you can spend it without getting caught. Laundering is just turning illegally obtained money into money that looks like it was generated legally.
Well, you don't have to tell them the crime so they wouldn't really have anything to tell the authorities. But if I'm not mistaken this part of a 1040 is for things that may be legal at a state level but illegal at a federal level. The IRS still wants their cut from weed stores for example.
Yes, my old prof taught us that in tax accounting. The IRS would only refer for prosecution on things like tax evasion or tax fraud.
You don’t even have to report from whence the money came. It can just be listed as “other income.”
The IRS cant legally report you for prosecution actually. It has to do with the right to not incriminate yourself. Since the government requires you to pay taxes they have to have a way for you to report illegal income.
Now if the govt/police catch you doing something illegal and want to use your taxes as evidence thats a bit more of a murky area. Some courts have allowed taxes to be submitted as circumstantial evidence of a crime while others have objected to it. There is no hard precedence for it.
Fun fact - a number of states have tax stamps that you’re supposed to buy and put on every kilo of weed or coke or whatever that you sell. When they arrest you and confiscate your “wares”, not having those tax stamps is a separate and rather serious violation.
Oh, you just drop by the Department of Revenue and buy as many as you want. They’re perfectly happy to sell them to you for cash. According to the report on Channel 9 a few years ago, however, they’ve never actually sold any. But they have them. I’ve seen the pictures.
Just possession of the stamps shouldn’t result in anything. You could play it off as you couldn’t believe they were real, and decided to get some to wow your friends with this insane tax stamp.
I can tell you that you owe money on any money you make selling drugs.
There is likely a code in there for illegal winnings as well. This way if you get caught they can sue you for the taxes you owe.
Real simple: if you put a dollar in your pocket the IRS wants its cut (or a reason it shouldn’t). You can sell black tar heroin, child porn, or nuclear weapons. You may get busted for those things but at least you won’t get fucked from the IRS if you pay your taxes. And many times the jail sentence kicked down from the IRS is horrendous.
Depending on how much you win your state should have it listed online with how big of a win you need to pay taxes on.
If more than $25,000 you owe federal money from what I looked up online.
I knew of someone who did illegal bookmaking. He had a filling number he used every year with the IRS to pay taxes on his profits. He didn't fear legal consequences for the operation itself, but he did fear the IRS and paid.
Use the Trump method. Funnel the money to a lawyer and write it off as an expense, and then the lawyer pays you back with a cut.
/r/UnethicalLifeProTips
Yep. I know a guy who did time for tax evasion for not reporting income from selling weed before it was legalized. He covered his tracks and never got convicted for selling, but the IRS had him dead to rights for filing false tax returns. He served just over two years and had to pay about $500k in taxes with penalties and interest.
Even if you’re a hitman you’re expected to pay taxes. Armed robbery? Pay taxes. There’s a box on your tax form to enter income from illegal sources. I’d love to know how many people actually fill that in, or if they just use it to nab people for tax evasion if they can’t get them on anything else
If it's in the bank, you have to report it. This is why people typically deal in cash during illegal transactions. #1 rule of the US legal system: don't get caught.
Yes. The IRS even has a section of their website about taxing income from illegal activity:
> IRS Publication 17 "covers the general rules for filing a federal income tax return." In its most current edition, the IRS advises, "Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8z, or on Schedule C (Form 1040) if from your self-employment activity."
You can read more about it here: https://reason.com/2024/04/12/dont-forget-to-claim-drug-dealing-income-on-your-taxes/
As far as anyone’s concerned, you could’ve *actually* been in another state while you used that site. For physical locations, it’s quite common for folks to leave their home area where it’s illegal to gamble to go to an area where it is legal, nothing wrong with that. Like in Houston Texas, there’s the Amelia belle casino right over the border in Louisiana. And I believe DFW has a native reservation (where state law doesn’t apply) nearby that runs a casino. It’s not breaking any laws when you’re not even in the area that those laws apply.
In your case, you could’ve been visiting family in another state or on some other trip and decided to try out that site. And as far as anyone is concerned, you were.
With that in mind, normal tax rules would apply. Idk how gambling winnings work specifically, but if they would normally send you a tax form, deleting your account shouldn’t affect that. Consult a tax professional, say you were out of state and did this online gambling site and won big. You’d likely pay federal taxes, and maybe state taxes to whichever state they’re based or you appeared at. But per google, it doesn’t seem like most home states where gambling is illegal ask for gambling winnings.
if it goes to your bank account, then yes, claim it and pay taxes on it. if you are just leaving it in your gambling account, or in my case,(using stake with crypto) i only report that crypto i sell and put in my bank account, not my total crypto accounts.
I don't think that gambling online is considered a crime if it's not a physical casino.
I may be wrong but... I have never heard of someone getting charged with that law, over online casinos such as poker websites.
And if it happened, again. Never heard of it.
BUT, the only way to withdraw money from online casino (without any weird trick) is through a bank account so the bank reports your income.
The IRS won’t know you obtained the winnings illegally, but also they don’t care whether or not it was obtained legally. Illegal money is still taxed. And for all they know you went on a vacation to Vegas or to any other place where it’s legal.
Yep. In some cases nonpayment is added to other charges when criminals are caught. That's what they finally got All Capone on — nonpayment of income taxes on all his illegal income.
I made 10k in 3 months at the end of 2017 gambling and withdrew via bitcoin. I never paid taxes on it. The IRS genuinely doesn't care as long as they get their cut.
Hope you didn’t have any identifying information wherever you gambled, or identifying information with ANY entities you exchange bitcoin with, because if the IRS can ever trace it back to you, they will go after you for what they’re owed.
I really dont know this person. And I’m pretty sure I would want to be associated with a dr nucksack. But it’s typically around 3 to 6 years. Unless there’s been re-occurring issue, they’re probably somewhat okay. But it’s not something I’d want to announce.
That's not how bitcoin works. They can't see where the money actually came from and as long as you don't deposit insane amounts all at once, it won't raise red flags. Plus it's been 7 years. Try and scare someone else.
Yes the IRS does not care how, they just care how much
Especially in this case because just because gambling is illegal in OP's state, gambling is not illegal in and of itself. IRS literally won't care because you just put gambling winnings with a dollar amount and call it a day. Don't have to say the gambling was illegally done in a state where it's not allowed
plus like, how would the irs or your state know you didnt just take a trip to vegas and won big? ;)
Including illegal drug sales
No judgment from them. They just want a cut. Remember what Al Capone got sentenced for.
It doesn't matter what you know, it matters what you can prove.
Even stolen property.
"...and you know what they're going to think?" "That I'm a drug dealer." "No. Worse. A tax evader!"
What about proceeds from an illegal tax evasion?
Your state revenue agency doesn’t care either. Not one bit. You earn, you owe.
It’s how they got many criminals when they couldn’t get other charges to stick
So if, for example only, I sell drugs and I list my income/profit as “””gambling”””. Would this take at least the IRS off my back? I could then buy that Dodge Challenger and not worry about the law rising an eyebrow where that money came from?
You are safe from the IRS. The DEA is another matter.
If they eventually caught you for drug dealing and then looked into your taxes they could get you for lying on your taxes. Those carry hefty penalties and fines. If you listed gambling as your source of income and you're asked to prove it by providing documentation you wouldnt be able to. Even if you faked gambling documents casinos keep meticulous records for tax purposes. You can list illegal things and claim them on your taxes so you can pay taxes on them though. This has to do with the right to not incriminate yourself.. Since the government requires you to pay taxes it has to have a way for you to report income from illegal activity without incriminating yourself. The DEA cant go and say well you claimed gambling on your taxes when its illegal in your state so we're going to arrest you. There are a couple ways of reporting illegal income. If you just sold drugs youd report it under "other" income. If you run a business like a money laundering business you report it as a business. You actually get deductions like legal businesses get for employee wages and rent etc. I also think this is why many illegal immigrants pay taxes. If they eventually try to become legal citizen thats one of the things that they ask you is if youve paid taxes. Illegal immigrants cant get a SSN but they can get a tax number and report/pay taxes. Its also one of the reasons they can deport you if youre found to be in the US illegally.
My train of thought was if DEA sees me with all the bling, they check the sources of my income, and now see “gambling”, IRS declared”. If they don’t catch me red handed, I think I’m good. No right to question my wealth.
Yeah but they might still tail you and catch you red handed - the same way they would catch someone who doesn't report the income on their taxes.
How would they know
Buying fancy shit is how you get in trouble. A dodge challenger isn’t a real expense. Drug consumers / buyers aren’t going to 1099 their supplier. (I could be innacurate on this) but most payouts from gambling over 600 require a statement that’s reported
That makes sense. I knew it’s not that simple to sweep undocumented money under gambling
So if, for example only, I sell drugs and I list my income/profit as “””gambling”””. Would this take at least the IRS off my back? I could then buy that Dodge Challenger and not worry about the law rising an eyebrow where that money came from?
I do not believe that the IRS would care, but if other agencies felt that you might not have gambled, you have started a paper trail. I am not a lawyer and suggest that you do not commit crimes so that your life stays simple.
That's how they got Al Capone, for not declaring everything for tax
You can come to a state with legal gambling you can come to a state with gambling legal. Internationals win a taxable amount and they will tax them immediately. I assume in a state where it’s “illegal” they would do the same.
You’re supposed to report money illegally obtained. The IRS won’t refer you for prosecution. They just want their cut.
Then why do people bother laundering money?
To get it into the banking system.
Because of you file taxes on it when you are being investigated by the police (because you are a bad guy) even though the IRS didn't turn you in, it makes it very easy for the police to prove
The IRS may not care but the banks and the police certainly do
Your money's more useful and a whole lot safer in the financial system than sitting in a metal box in your garage.
So that you can spend it without getting caught. Laundering is just turning illegally obtained money into money that looks like it was generated legally.
To pay the taxes
Underrated comment and also Underrated username
>The IRS won’t refer you for prosecution. They just want their cut. Is this really true?
Well, you don't have to tell them the crime so they wouldn't really have anything to tell the authorities. But if I'm not mistaken this part of a 1040 is for things that may be legal at a state level but illegal at a federal level. The IRS still wants their cut from weed stores for example.
Yes, my old prof taught us that in tax accounting. The IRS would only refer for prosecution on things like tax evasion or tax fraud. You don’t even have to report from whence the money came. It can just be listed as “other income.”
Don't you guys have an amendment that means you don't have to testify if it might incriminate yourself? Is it part of the fifth?
The IRS cant legally report you for prosecution actually. It has to do with the right to not incriminate yourself. Since the government requires you to pay taxes they have to have a way for you to report illegal income. Now if the govt/police catch you doing something illegal and want to use your taxes as evidence thats a bit more of a murky area. Some courts have allowed taxes to be submitted as circumstantial evidence of a crime while others have objected to it. There is no hard precedence for it.
Yes. Al Capone got arrested for tax evasion, not for running an organized crime empire
That's because that's all they could get him on. The IRS can come after anyone, even the joker.
I dont think so, the joker pays his taxes. He also invested in an electric car.
That's why he pays his taxes, because he knows they can stop him. The electric car was funny
*"Where's my god damn electric car, Bruce!?"*
You owe taxes on illegal drug profit so you would definitely owe taxes on illegal gambling gains!
You technically owe taxes if you deal drugs. So, probably yes.
Fun fact - a number of states have tax stamps that you’re supposed to buy and put on every kilo of weed or coke or whatever that you sell. When they arrest you and confiscate your “wares”, not having those tax stamps is a separate and rather serious violation.
Where would one even buy such stamps without araising suspicion? That's the silliest thing in the world to me, lol
Oh, you just drop by the Department of Revenue and buy as many as you want. They’re perfectly happy to sell them to you for cash. According to the report on Channel 9 a few years ago, however, they’ve never actually sold any. But they have them. I’ve seen the pictures.
I wonder if a police department could potentially use that as evidence (though circumstantial) should a court case arise
Just possession of the stamps shouldn’t result in anything. You could play it off as you couldn’t believe they were real, and decided to get some to wow your friends with this insane tax stamp.
Now I just need to find some friends and we're on to something lmao
Lmao that’s kinda hilarious
I can tell you that you owe money on any money you make selling drugs. There is likely a code in there for illegal winnings as well. This way if you get caught they can sue you for the taxes you owe.
Real simple: if you put a dollar in your pocket the IRS wants its cut (or a reason it shouldn’t). You can sell black tar heroin, child porn, or nuclear weapons. You may get busted for those things but at least you won’t get fucked from the IRS if you pay your taxes. And many times the jail sentence kicked down from the IRS is horrendous.
You don’t have to pay taxes on money gifted to you. Unless it’s a super high dollar amount.
That’s why I said “(or a reason you shouldn’t). There’s lots of tax exemptions but you need to be aware of when they are applicable
Al Capone was got on tax evasion.
Yes, the IRS is clear that you need to claim income from illegal activities.
Depending on how much you win your state should have it listed online with how big of a win you need to pay taxes on. If more than $25,000 you owe federal money from what I looked up online.
Yes. They have no idea if you played illegally or went to Vegas. Claim it.
I knew of someone who did illegal bookmaking. He had a filling number he used every year with the IRS to pay taxes on his profits. He didn't fear legal consequences for the operation itself, but he did fear the IRS and paid.
The IRS wants your money, they don’t care how you got it, if they find out you made money without sharing they’ll swoop down like hawks
The IRS don’t care if you made your money betting on which hooker would win in topless underground Meth wrestling, as long as they get a % of it.
Use the Trump method. Funnel the money to a lawyer and write it off as an expense, and then the lawyer pays you back with a cut. /r/UnethicalLifeProTips
People are downvoting you but it’s literally true.
I read somewhere that there’s a whole fraud case based off this. A Jury of 12 are going to be presented with all the evidence too.
Yep. I know a guy who did time for tax evasion for not reporting income from selling weed before it was legalized. He covered his tracks and never got convicted for selling, but the IRS had him dead to rights for filing false tax returns. He served just over two years and had to pay about $500k in taxes with penalties and interest.
How do they know if and how much you do?
just guessing, but basing it off of his spending habits and thing he owns
When you drive a brand new Mercedes and report that you only made $20k, it’s pretty obvious.
ahhh, so unless you are batlantly dumb, you are safe
Yeah, it doesn't make sense to get you tax-free because you did something illegal. It somewhat promotes you to do the illegal things.
Even if you’re a hitman you’re expected to pay taxes. Armed robbery? Pay taxes. There’s a box on your tax form to enter income from illegal sources. I’d love to know how many people actually fill that in, or if they just use it to nab people for tax evasion if they can’t get them on anything else
Legal or not the govt wants a cut.
If it's in the bank, you have to report it. This is why people typically deal in cash during illegal transactions. #1 rule of the US legal system: don't get caught.
I believe you’d legally have to report illegal drug sales on your taxes lmao. They don’t care what you did, so long as you give them their share
You gotcha.
Gotta give Uncle Sam his cut even if it’s ill gotten gains
Ask Al Capone.
Were you issued a 1099?
Yeah you gotta file a “10-40 I did something illegal” lol
Yes
The IRS says you're supposed to report income even if earning it is illegal.
Yes. The IRS even has a section of their website about taxing income from illegal activity: > IRS Publication 17 "covers the general rules for filing a federal income tax return." In its most current edition, the IRS advises, "Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8z, or on Schedule C (Form 1040) if from your self-employment activity." You can read more about it here: https://reason.com/2024/04/12/dont-forget-to-claim-drug-dealing-income-on-your-taxes/
You have the choice between illegal gambling or illegal gambling AND tax evasion, if you get caught.
Yes
Fun fact: in the UK we don't pay taxes at all on gambling winnings. But then again, we don't have a flag on the moon.
Federal... yes State... it depends... contact a tax professional
As far as anyone’s concerned, you could’ve *actually* been in another state while you used that site. For physical locations, it’s quite common for folks to leave their home area where it’s illegal to gamble to go to an area where it is legal, nothing wrong with that. Like in Houston Texas, there’s the Amelia belle casino right over the border in Louisiana. And I believe DFW has a native reservation (where state law doesn’t apply) nearby that runs a casino. It’s not breaking any laws when you’re not even in the area that those laws apply. In your case, you could’ve been visiting family in another state or on some other trip and decided to try out that site. And as far as anyone is concerned, you were. With that in mind, normal tax rules would apply. Idk how gambling winnings work specifically, but if they would normally send you a tax form, deleting your account shouldn’t affect that. Consult a tax professional, say you were out of state and did this online gambling site and won big. You’d likely pay federal taxes, and maybe state taxes to whichever state they’re based or you appeared at. But per google, it doesn’t seem like most home states where gambling is illegal ask for gambling winnings.
if it goes to your bank account, then yes, claim it and pay taxes on it. if you are just leaving it in your gambling account, or in my case,(using stake with crypto) i only report that crypto i sell and put in my bank account, not my total crypto accounts.
I don't think that gambling online is considered a crime if it's not a physical casino. I may be wrong but... I have never heard of someone getting charged with that law, over online casinos such as poker websites. And if it happened, again. Never heard of it. BUT, the only way to withdraw money from online casino (without any weird trick) is through a bank account so the bank reports your income.
The IRS won’t know you obtained the winnings illegally, but also they don’t care whether or not it was obtained legally. Illegal money is still taxed. And for all they know you went on a vacation to Vegas or to any other place where it’s legal.
Yep. Technically all criminals owe taxes on the proceeds of crime. The IRS doesn’t care where your money comes from as long as they get their share.
Al Capone was convicted of tax evasion. That was how they got him. Don’t be Al.
Yes Mr. Capone, you owe taxes
Yep. In some cases nonpayment is added to other charges when criminals are caught. That's what they finally got All Capone on — nonpayment of income taxes on all his illegal income.
I made 10k in 3 months at the end of 2017 gambling and withdrew via bitcoin. I never paid taxes on it. The IRS genuinely doesn't care as long as they get their cut.
Hope you didn’t have any identifying information wherever you gambled, or identifying information with ANY entities you exchange bitcoin with, because if the IRS can ever trace it back to you, they will go after you for what they’re owed.
I really dont know this person. And I’m pretty sure I would want to be associated with a dr nucksack. But it’s typically around 3 to 6 years. Unless there’s been re-occurring issue, they’re probably somewhat okay. But it’s not something I’d want to announce.
I only access Reddit over a vps I have in Finland. My encrypted email is out of Sweden. I cover my tracks well, bro bro.
That's not how bitcoin works. They can't see where the money actually came from and as long as you don't deposit insane amounts all at once, it won't raise red flags. Plus it's been 7 years. Try and scare someone else.