Where to store blackjack cash and have it non-taxable?

[dgu334]

This is somewhat of an odd question but I’m currently a resident at a hospital that’s <10 minutes from a casino. I have been going to the casino like 3x/week for the past couple of months playing blackjack and counting cards. Overall, I am netting approximately anywhere from $500-700 a week. I have made 4 trips in the past 2 months to my bank ATM to deposit 4-digit lump sums of cash. I am wary of continuing to do this because I don’t want to draw attention from the IRS/get flagged by them. I know you have to fill out a form with the bank if you’re depositing >$10k but the IRS may flag your bank account for money laundering if they see frequent deposits of <10k in a short period of time that doesn’t add up given your occupation. My resident salary is standard and I wouldn’t have an explanation for this extra cash inflow. I also don’t want to keep lots of cash inside my apartment or physically on me. Is there a clever way to deposit this cash without drawing too much attention to me?

[CordMcNally]

What you're proposing is called structuring and is illegal. You do have an explanation for depositing the cash: you won it gambling. That isn't against the law. Why don't you just deposit it as you get it and pay the taxes on it?

[dgu334]

If I report it and pay taxes on it, I would be using post-income tax money to gamble and pay taxes on any winnings, effectively paying taxes twice...

[CordMcNally]

dgu334 wrote:

If I report it and pay taxes on it, I would be using post-income tax money to gamble and pay taxes on any winnings, effectively paying taxes twice…

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No. You'd just be taxed on your winnings once. Do you feel like you're being taxed when your investments make money and you're taxed on your gains? That's the same thing. You could also write off any gambling losses. Your other option is to continue what you're doing and keep rolling the dice (heh) that the IRS doesn't catch you.

 

I doubt anyone here is going to help you in skirting the law.

[Lordosis]

Why do you think there are people who pull out a wad of cash to pay for groceries,clothing, etc  rather then use a credit card...

 

However,

If you report the winnings you only pay taxes on the gains not on the money you start with (already paid tax on)

[JBME]

I would strongly suggest you follow the law and report it. If you are a resident and not married and hopefully contributing to a retirement account, you could be falling into the 22% bracket, which means you're losing at most not even a quarter of your money. Tax rates are the lowest now than they have been for decades, and they're probably at their lowest that they'll be for decades going forward. Don't expect sympathy on this forum-most people here pay tens of thousands, if not over a hundred thousand, dollars a year in taxes. Welcome to America. If you don't want to pay taxes, don't make the money.

Moreover, as others said, you only pay a tax on the gains. So if you make $1000 in winnings this year perhaps you'll lose $220 to taxes. But you get to keep $780. Be happy

[IntensiveCareBear]

If you want the hassle of chasing your tail and wasting ATM fees, you can take out the money to play casino games on casino ATMs and save/photo the receipts. Then, don't make any deposits for more than 600 over what you took out recently. Also, take out cash at those same ATMs to buy your groceries, bills, etc. Remember to pay taxes as applicable... I think you can connect the dots there. It is a big hassle and fair amount of fees, though.

Storing stacks of cash isn't a big deal. Think of where nobody would look... not a safe or sock drawer or something dumb and obvious (thieves almost always go for bedroom first... most common place for jewelry and valuables). Cash loses to inflation at roughly 3% per year, though... that, not theft, is its biggest downside.

A much simpler and better solution is that gold is an extremely compact store of wealth. You can buy it with cash (or MO/check)... exchange it for cash anywhere in the world at any time in the future. I have tens of thousands in gold coins around my townhouse (eagles, sovereigns, etc), and nobody would ever know. You can put enough gold to buy a new car in the palm of your hand. I keep them in an empty soup can buried in the pantry, shoe box piled over in the closet, old board game that nobody plays, etc. Gold's a highly compact store of wealth, keeps up with inflation (not day to day, but over the long haul), and is a good diversification asset (just shouldn't be more than 3-10% of portfolio, depending on market conditions, due to no dividends). Silver doesn't really work... more variable in price and not nearly as light and compact.

...Congrats on your success, but also remember that there are many things more humanistic than taking money from people on a little felt table. You might be asked to 'retire' from playing at that casino at some point, especially if you increase the stakes and continue to have success. Also, bear in mind that the stock market is a skill game with +8% expected return (rather than -2% to -10% on blackjack, poker, or most other casino games). Just food for though. GL

[jacoavlu]

I would strongly suggest you stop going to the casino 3x/week as a resident.

[Craigy]

You get to deduct your gambling losses to the extent of your gambling winnings.

After tax, use it to fund a roth IRA.  And max your hospital 403b while you're at it, which should be completely doable since you have all the extra outside income.

 

Lordosis wrote:

Why do you think there are people who pull out a wad of cash to pay for groceries,clothing, etc  rather then use a credit card…

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Exactly.

At this point in my life, whenever I see someone bust out any non-nominal quantity of cash, I assume they're dodging income tax.

[Dreamgiver]

I don’t condone skirting the law, but anybody is allowed to pay cash for expenses, groceries, gas, rent, save some in a safe deposit box.

[GUtiger]

Here's one more angle to consider. An extra $500 per week is pretty fat cash as a resident. In a few years as an attending it will seem negligible. But, the tax dodge could easily follow you into your post-residency career if you get audited. In my opinion that risk just isn't worth it. Pay the taxes and move on.

[dgu334]

Technically, the law states that winnings from table games (including blackjack) are not taxable (unless you hit the jackpot stuff which doesn’t apply to me cause I don’t play the side bets). I just don’t want to draw extra attention from banks/IRS with routine deposits of large amount of cash because there’s been reports of the IRS seizing bank accounts without sufficient evidence (bank secrecy act) as a prophylactic measure for underground crime and/or terrorist organizations.

[EndoRobert]

At what point do casinos start to notice someone hitting them up fo $600/week always from the same game over a couple of months?

I’d spend cash on everything I could and deposit the rest. If you’ve won $600/week for six months that’s “only” $15k. Use the cash for all the regular consumption I could and deposit the rest.

[Lordosis]

IntensiveCareBear wrote:

I have tens of thousands in gold coins around my townhouse (eagles, sovereigns, etc), and nobody would ever know. You can put enough gold to buy a new car in the palm of your hand. I keep them in an empty soup can buried in the pantry, shoe box piled over in the closet, old board game that nobody plays, etc.

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I would be very nervous about accidentally throwing away or forgetting about tens of thousands of dollars.

 

 

 

[Anne]

OP, your statement that the law states that the winnings from table games is not taxable is false. The casinos don't report it but the IRS considers all gambling winnings as taxable.

Everyone wants to get free money from the taxpayers (e.g. PSLF) but nobody wants to pay their taxes. Where do people think the money comes from?