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Kentucky Derby's big winners include Texas woman's $1.2 million winning bet and IRS

Margaret Reid winning bettor Retama Park VP-GM Bill Belcher_Rachel Bagnetto
Margaret Reid won $1.2 million on an $18 Kentucky Derby bet at Retama Park in San Antonio. It was the biggest payout ever at the track, according to the racetrack's general manager Bill Belcher, who congratulated Reid. (Photo courtesy Rachel Bagnetto, Retama marketing department)

The Internal Revenue Service loves the Kentucky Derby. Actually, it loves the full Triple Crown slate.

Not only do thoroughbred owners, trainers and jockeys makes big, taxable bucks during the Derby's run for the roses, as well as at the subsequent Preakness and Belmont races, so do some bettors.

Few race aficionados, however, are as lucky as one of my fellow Austin residents.

One five-part bet = millions: Margaret Reid's $18 bet returned $1.2 million. That's almost as much as the $1.24 million winner's portion of the purse that went to Justify, the first horse to cross the finish line on Saturday, May 5.

Reid wasn't at Churchill Downs. She placed her winning bet at the nearer-to-home Retama Park in San Antonio.

Her big win wasn't just for her correct selection of Bob Baffert-trained favorite Justify in the main event. Reid's Pick Five bet also included the winners of the four races that preceded it.

Reid explained to San Antonio's CBS affiliate KENS5 how she was able to correctly pick the five very lucrative winners. Since Justify was the favorite, that was the easy part. But picking the other four race winners took some doing.

Even though Reid did her race homework, the odds for correctly picking all five winners are unbelievable, Retama Park general manager Bill Belcher told the San Antonio Express-News/MySA.com. That's why the payout was so big.

That's also why, noted Belcher, that Reid's betting success was the first time that Retama Park has had such a big winner.

A big Vegas winner, too: My Texas neighbor wasn't the only big winning bettor this past weekend. In February, a Las Vegas gambler placed a 300-to-1 futures bet at the Wynn casino's sportsbook on Justify to win the Kentucky Derby.

Wynn casino futures bet winning Kentucky Derby slip_Bill Krackomberger via Twitter

That $500 bet, made before the colt even was guaranteed a spot in the race, paid out $150,000.

With big winnings, federal taxes due on winnings are withheld before the bettor gets his or her cash.

Most of us casual gamblers, though, tend to win much smaller amounts (if we win anything at all). Those relatively small winnings, however, are still taxable.

The good news is that we still can deduct all our gambling losses during the tax year against our winnings. The Tax Cuts and Jobs Act did not change that.

Changes to work, not betting, itemized deductions: The Schedule A miscellaneous expenses that are unavailable for tax years 2018 through 2025 are unreimbursed job-related costs incurred by employees.

These are things such as license and regulatory fees, required medical tests, uniforms, continuing education and home-office costs that employees pay out of their own pockets in order to do or do better their wage-earning jobs.

Also now gone with the erasure of this section of the Schedule A, which was officially titled Job Expenses and Certain Miscellaneous Deductions, is the itemized deduction for tax preparation fees, as well as the write-off for investment expenses, such as a safe deposit box to security store your non-digital securities.

All of these now-gone allowable itemized miscellaneous expenses were limited to 2 percent of the taxpayer's adjusted gross income.

Itemizing still can reducing winnings and taxes: But the new tax law didn't touch the next section on Schedule A, the one for Other Miscellaneous Deductions.

The allowable other miscellaneous expenses that are entered on this line, which was 28 on the tax year 2017 form, include gambling losses. Gambling losses include, but aren't limited to, the costs of non-winning bingo, lottery and raffle tickets, casino games, poker games and sports betting.

You can use all your gambling losses to offset your gambling winnings. This is important if you spread around your gambling dollars.

It means that you don't have to have to use just losing race track betting slips to offset your winnings on horses at your local track. You can use any gambling losses against all your gambling winnings.

While there's no restriction on the types of losses that can offset winnings, those loss claims are not unlimited. You can only count up to the amount of your winnings.

So if you had $200 in scratch-off ticket winners and $300 in losing dog track bets, only $200 of your losing race slips can be used to zero out your taxable lottery winnings.

And you cannot carry any excess gambling losses to future tax years.

But unlike the work-related miscellaneous expenses, there is no AGI percentage to meet here.

So hang onto all your losing betting slips and other receipts and records in case you get lucky later this year.

You also might find these items of interest:

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Lmaris

The Pat Day Mile, one of the pick 5 races had 39-1 horse win, 31-1 horse place (come 2nd), and 21-1 horse show (come 3rd). That race alone paid $8,569.25 on a $0.50 trifecta wager.

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