Just a little reminder to everybody considering writing their frozen NETELLER account off of their taxes.
For affiliates:
The income has to be reported before you can claim it as a write off! If I make $50,000 as an electrician and $10,000 in affiliate commissions, I would report a combined gross income of $60,000 and pay taxes on that amount. If ten thousand is stuck in my NETELLER account, I would deduct the $10,000from $60,000 NOT THE $50,000.
If you have already filed your taxes with income included in your NETELLER account, than you have to wait until their is proof that the debt will actually never be paid or file an amended tax return.
This is essentially just a write off of the income stuck in your NETELLER account so that you do not pay taxes on any income that has not been recieved. IT IS NOT A TAX CREDIT! – You cannot write off a loss of income that you have never declared as income in the first place.
Sorry to bust anybody’s bubble, and know this whole situation sucks and smells very much like political protectionism for state gambling enterprises( big tax money), but unfortunately if NETELLER folds and does not release your funds than you don’t get jack chit from Uncle Sam.
For Gamblers:
You might think you can just fill out form W2-G and claim it as a gambling loss, but the amount of deductible gambling losses are limited to the amount of winnings. Basically, if you haven’t claimed any winnings than you can’t write off the losses.
You can however, write if off as an ordinary loss on your itemized deductions IF you believe that the debt will never be paid. But, if your standard deduction is greater than your itemized deductions…you get screwed, and even if it isn’t than you still get screwed because you’re only getting pennies on the dollar.
On a side note, does anybody else find it odd that the unlawful internet gambling enforcement act was part of a ten part republican values campaign, yet we can still write off gambling losses EVEN lottery tickets. I also find it strange our government would endorse the freezing of funds that we can spend at home.
I’m not a tax lawyer so as always, just my two cents.