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This Idea is posted for those who need to catch tax
cheats,
because it is about a seemingly-very-easy tax cheat.
1. Go to any/many local outlets for lottery tickets. Very
often when people find a ticket is a loser, it is thrown
away. Scratch-off tickets are especially subject to being
trashed
at the place purchased;
tickets that await a particular "drawing" event are more
often thrown away at other places. (If you know where
those are, you might want to include them in your site-
visitings.)
2. Collect as many trashed tickets as you can. Let us
suppose that you collect $10,000 worth of tickets
(different
tickets have different prices, remember).
3. You now need to be lucky. Let us suppose you win a
$10,000 lottery prize after buying a not-from-trash
ticket.
4. When doing your taxes, at least in the USA, the
Internal
Revenue Service conveniently allows you to take a tax
deduction against your winnings equal to your losses.
So,
if you spent $10,000 on lottery tickets, AND HAVE
SUPPORTING EVIDENCE FOR THAT, then you can subtract
the amount you spent from the amount you won, and you
only have to pay tax on the difference (unbalanced
winnings, that is; there is no tax deduction for only
losing money on gambling).
5. Logically, if you won $10,000, and have picked up
$10,000 of losing tickets from the trash, then a simple
lie
("I spent $10,000") can now be supported with all those
very-real losing tickets in your collection. You therefore
get to keep your actual winnings tax-free.
Note: It is possible that the Law is becoming a bit more
strict about what counts as "supporting evidence".
Recently one retailer gave me an actual cash-register
receipt. Collecting those from the trash might be more
trouble than it is worth....
Apparently this has been tried already
http://www.courierp...e?AID=2013304150021
[ytk, Apr 22 2013]
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Annotation:
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You read that article too, huh? |
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Surely lottery winnings are tax-free? |
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[edit - apparently only in Europe] |
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Hmm, I don't know about the States laws but winnings from betting or gambling for simple recreation or enjoyment and lotto winnings are exempt from tax in Canada.
In fact, if an auditor wants to know why your bank statements show more savings than can be accounted for by your earnings you just need to tell them that your an avid back-room poker player. |
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I imagine that they'll be buttoning up that loophole soon as it becomes easy then to make money under-the-table while still appearing to be close to the poverty line which would save even more tax on the actual taxable earnings by being able to stay in the lowest tax bracket. |
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In the UK, lottery winnings aren't taxable. If I
understand correctly, if you place a bet at a bookies,
you can opt to either pay tax on the bet _or_ pay tax
on the winnings. |
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^ haw, and if you can't figure out which is better you shouldn't be gambling. |
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In the U.S. gambling winnings are taxable as regular
income, but they can be offset by gambling losses.
So you can't deduct more in losses than you actually
won in a year, but if you can show your net
gambling profit was zero you will pay no taxes,
hence the idea. |
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Though as I've said, this has already been tried,
perhaps even successfully. My guess is you'd
probably get away with it, as long as you don't try
to get /too/ cute. The IRS would have to prove that
you didn't actually buy the losing tickets, which is
very hard to do since you're paying cash for them.
That said, they can trace all of your bank
transactions, and if they find you have a
suspiciously high amount of cash gambling
transactions (i.e. you only ever withdrew $5,000 in
cash all year but claim to have spent $10,000 on the
lottery) they may start asking where that
undocumented cash income came from. |
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[ytk], as it happens, I had not read about this scam
before thinking it up. I do agree, though, that it
isn't obviously easy for tax cheaters who try this, to
get caught. Fortunately(?), most people DON'T get
lucky enough to be tempted to try this.... |
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The thing is, if I win $X on a lottery ticket, it sort
of makes it a waste of time if I have to pick $X
worth of used tickets out of rubbish bins. Even if
you're in the top tax bracket (which is what in the
US?), that makes every used $1 ticket worth only a
few tens of cents. |
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If it takes you an average of 30 seconds to collect
each used $1 ticket (allowing for the time taken
to get to wherever you find them), that means
your time is being reimbursed at way less than $30
per hour, which is a non-starter even if you have
just won a big prize. |
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Who is going to bother doing that? |
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//Even if you're in the top tax bracket (which is
what in the US?)// |
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Depends on where you live, but it's roughly 50%
between state and federal. |
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//Who is going to bother doing that?// |
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People will and have. Check out the article I
linked
(I read it about a week ago, so I thought maybe
Vernon had
seen the same article). The best place to get losing
tickets is apparently at the racetrack. I've never
been to one, but I would guess one could collect
hundreds of high-value losing tickets in just a few
minutes. |
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Heck, I'd do it if a) I played the lottery and b) I
weren't scrupulously honest on my taxes. |
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