> snipped-for-privacy@>>> Recently the IRS notified me that they changed my 2005
>>> return. They took my gambling winnings of $60,000, which I
>>> had indicated on line 21 (Other Income), and decided to call
>>> this self employment income. The result is a new tax bill
>>> of $8,000.
>>>
>>> IRS specifically states in their tax guide that gambling
>>> income is to be stated on line 21. Thus, how can they now
>>> justify calling this self employment income when I did
>>> exactly as they reference in their tax filing instructions?
>>> Moderator:
>>> File an amended return with the 60K on Schedule C and
>>> deduct your expenses related to earning this income. The
>>> IRS may reclassify this back to line 21.
>> Go a step further, if it is to your benefit, amend the last
>> two returns taking gambling losses on a Schedule C. That may
>> help put it in perspective for them.
> Thanks again for the responses. On line 21 I did indicate
> that it was "gambling winnings". The 60,000 total is what I
> won from sports betting, mostly football, after subtracting
> wins and losses.
I think you are still missing the point. What is supposed to be entered on Line 21 is the gross amount of WINNINGS, not the net of your wins and losses. Losses can only be claimed as an itemized deduction on Schedule A (if used).
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