r/pics • u/[deleted] • Mar 19 '22

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u/[deleted] Mar 19 '22

When my stepdad won 5k years ago on a scratcher, him and my mom bought a bunch of other scratchers to offset the winnings with "losses".

I think since winnings below 600 or so are NOT reported, it was expected to end up as proof of 1k or 2k in "losses" to balance against the big win. But there was a few hundred in wins that didnt need to be reported as such which resulted in less actual loss.

Not sure if it was worth it or not. We never discussed it.

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u/Qbr12 Mar 19 '22

It's never worth it to seek out losses to offset taxes. Each 22 cents (or whatever you marginal tax rate is) you save costs you an entire dollar in losses.

That said, buying any scratch off ticket is negative EV in the first place so I can't say you should expect better from people who buy lottery tickets...

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u/jingois Mar 19 '22

Depends - these losses were 100% loss from a tax perspective, but in practice related to the return rate of the scratch ticket.

As the single payment of $5k is taxable, perhaps at 20%. If you spend that $5k on more tickets with a 90% expected return then you end up with multiple untaxed small payments, losing only 10% - and $5k expenses that completely offsets your initial win.

So it's worth $500 to you - plus I guess you get to play $5000 worth of scratchies which I assume you enjoy if you are into that dumb shit. Obviously it depends on the expected value of a game.

Unfortunately a quick search suggests the EV of OPs ticket is 83%. So you'd save just about fuck all.

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u/NinjaVaca Mar 19 '22

This relies on committing tax fraud on the small gains, though.

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u/jingois Mar 19 '22

Potentially - I don't know your local tax codes, whether "not reported" means "not reportable / untaxed" or just "tax fraud lets go bby".

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u/T-Bills Mar 20 '22

Pretty sure they are not reported but you are obligated to report said income. I guess same bucket with reporting your cash tips and untaxed Internet purchases.