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Server Time: 11/21/2008 6:22:55 PM PACIFIC |
 Poker Winnings and Taxes, THWebl, 7. Jul 2003 12:13 | ||
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| Having recently started playing poker for money (soley on-line), and realizing I was going to make some in the process (500 in a little under 2 months without going higher than 1/2 and likely more in the future, as I spent the first month completely at .05/.10 and .25/.50), I'm curious how exactly taxes work out? I figure in 12 months I should make a couple thousand, and I can't imagine that the IRS just has no interest in my bonus income. How do the US fellas deal with this...those that aren't looking to stiff uncle sam that is. | ||
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| Re: Poker Winnings and Taxes, shorn, 7. Jul 2003 12:37 | ||
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| Since it isn't regulated and you aren't a declared professional gambler, it is on the honesty policy. There is no way for them to track your winnings, so it is a personal choice. Frankly, I think Uncle Sam gets enough of my $$ and then some already, so unless I change careers, I will be pocketing 100% of it. | ||
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| Re: Poker Winnings and Taxes, Easy E, 7. Jul 2003 13:23 | ||
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| but you'll be screwed if you ever get issued a W-2G or 1099-MISC for some lucky tournament win, or lottery strike, or whatever.... and they go hunting for past years that you didn't report. To answer THWebl- it gets reported as miscellaneous income, against which you can deduct losses UP TO the total of your wins. If you want to report as a pro gambler and deduct expenses, there are specific rules and procedures to be able to do so. | ||
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| Re: Poker Winnings and Taxes, shorn, 7. Jul 2003 13:47 | ||
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| How will I be screwed? If I win a tournament and get a W-2, then certainly I would declare it. However, if I buy-in for $500 at the 10-20 and cash out for $1000 and no W-2 is issued, seems to me I am in the clear. | ||
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| Re: Poker Winnings and Taxes, DJpoker, 7. Jul 2003 16:34 | ||
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| Hey Shorn, Obviously, no one can track ring games. However, tournaments can be tracked as the hosts keep records of who won and the amounts distributed. In Vegas, a good number of the slots are set to pay out $1199 because from what I've been told, a jackpot of $1200 or more must be declared on your taxes. In California, if you make over $600 at a job, then a W2 is issued by the income source. That said, I doubt any B&M is gonna report some tourney winner who won the money from other participants. I am not sure how any of the websites are recording info. but I gaurantee they know exactly how much each person has deposited and withdrawn. It will be interesting to see what comes of it, but for now, I don't think any part time player has to worry about anything. | ||
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| Re: Poker Winnings and Taxes, stdioh, 8. Jul 2003 15:54 | ||
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| Since all of these websites are located on servers in countries that are completely unconnected to the US government and have no such gambling laws, the IRS couldn't get that information from them even if they wanted to go through the hastle of finding out. | ||
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| Re: Poker Winnings and Taxes, Easy E, 7. Jul 2003 20:56 | ||
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| on 7. Jul 2003 13:47 shorn wrote: > How will I be screwed? If I win a tournament and get a W-2, then certainly I would declare it. > However, if I buy-in for $500 at the 10-20 and cash out for $1000 and no W-2 is issued, seems > to me I am in the clear. Do you think the IRS will believe that the W-2G indicates the ONLY time you have ever won? And since ALL income, no matter how small, is supposed to be reported.... you'd be screwed. | ||
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| Re: Poker Winnings and Taxes, shorn, 8. Jul 2003 04:26 | ||
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| Any law that passes will grandfather in all past internet winnings/losses. There is no way that they will make it retroactive. I am sure there are plenty of Congressmen/women and Senators who enjoy a little online poker... :) | ||
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| Re: Poker Winnings and Taxes, beigs, 7. Jul 2003 14:19 | ||
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| What is the advantage of declaring losses equal to your wins? You still have to declare your wins so aren't you, at best, breaking even? Where's the tax incentive there? on 7. Jul 2003 13:23 Easy E wrote: > but you'll be screwed if you ever get issued a W-2G or 1099-MISC for some lucky tournament > win, or lottery strike, or whatever.... and they go hunting for past years that you didn't > report. > > To answer THWebl- it gets reported as miscellaneous income, against which you can deduct > losses UP TO the total of your wins. If you want to report as a pro gambler and deduct > expenses, there are specific rules and procedures to be able to do so. | ||
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| Re: Poker Winnings and Taxes, palman, 7. Jul 2003 14:47 | ||
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| There is no tax INCENTIVE for declaring. If you break even you pay nothing. If you lose you probably can carryforward the losses to future winnings. (as I'm a tax student, so don't take my word for gold but I'd be surprised if you couldnt) | ||
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| Re: Poker Winnings and Taxes, Easy E, 7. Jul 2003 20:57 | ||
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| You'd be wrong- no carry forward. You were correct about it not being a tax incentive. It's more of self-protection, since you are required to report all income. | ||
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| Re: Poker Winnings and Taxes, stdioh, 8. Jul 2003 15:56 | ||
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| Reporting your losses, if you are a declared professional, will still count as a loss against other income. Lets say that you are legally classified as a pro player, but this year you lose $5000. You also made $20,000 teaching poker lessons. You're only going to be taxed now based on $15,000 of income for the year. | ||
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| Re: Poker Winnings and Taxes, stdioh, 8. Jul 2003 15:52 | ||
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| And to deduct expenses as a pro you need to have been winning 3 of your last 5 years and have derived the majority of your income from it. Getting declared a pro in the states is tough. | ||
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| Re: Poker Winnings and Taxes, mkpoker, 7. Jul 2003 15:37 | ||
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| Unfortunately, I know a lot more about taxes than I do about winning at poker! You can only deduct losses equal to wins when you report gambling income. Say, for example, you declare winnings of $1,000 and losses of $800, you pay taxes on $200. BUT, you don't get a "credit" if you lose more than you win. For virtually all players, the "honor" system is right. The IRS has a lot more important things to worry about than some guy who made a few hundred bucks playing poker. The key is to watch for official tax forms, which are issued for any cash transaction of 20K or more OR for smaller tourney winnings--usually $600 or more. If you receive a W2-G form (gambling winnings) and don't report the income, you are asking for trouble! Do yourself a favor and pay the taxes! If you plan to deduct losses against those winnings, you need to be very careful and keep good records. You can't just say, "I lost 10K to go with my 10K win." You need accurate session records with dates, times, and places. Visit the IRS website and look for forms 5754 and W2-G for details. This information is posted for informational purposes only and does not constitute tax advice. For tax advice, I suggest you consult a professional. | ||
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| Re: Poker Winnings and Taxes, Jav, 7. Jul 2003 16:14 | ||
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| How do you document a poker loss? For ring games, it seems like the only proof you have is your word (preferably recorded in a log or book of some kind). Is this good enough for documented poker losses? For live tournaments, you sometimes get some kind of receipt, so this might be acceptable. The thing is you never know when you will win a tourney that has tax ramnifications, so it seems like good practice to always have some losses recorded so that you can offset your wins. Then hopefully the rest of your wins are undocumented, and you can make the taxes a wash. | ||
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| Re: Poker Winnings and Taxes, mkpoker, 7. Jul 2003 17:25 | ||
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| on 7. Jul 2003 16:14 Jav wrote: > How do you document a poker loss? For ring games, it seems like the only proof you have > is your word (preferably recorded in a log or book of some kind). Is this good enough for > documented poker losses? > > For live tournaments, you sometimes get some kind of receipt, so this might be > acceptable. The thing is you never know when you will win a tourney that has tax > ramnifications, so it seems like good practice to always have some losses recorded so that > you can offset your wins. You can document poker losses with contemporaneous records--a detailed log of your games with names, dates, locations and places. (Incidentally, this is the same way you can/should track low dollar charitable donations). It's still just "your word," but the IRS is much more likely to accept this kind of detailed record than a general statement of "I lost $500 over the year" Your log needs to be credible. You'd arouse suspicions with a log that said "I made $1,000 in a tournment (and received a W-2G), and the rest of the year, played only twice and lost exactly $500 each time." Your log should be the real deal, mixing wins and losses with uneven numbers. You should NEVER submit a false log--that's a crime you could go to jail for. | ||
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| Re: Poker Winnings and Taxes, stdioh, 8. Jul 2003 15:58 | ||
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| Yes. If you write everything in a bound journal and date it, then it can be used as evidence, even though you wrote it yourself. Of course if you keep such a journal and forget to write some winning entries into it every once in a while, who's to notice...but I still maintain that you should never CHEAT ON YOUR TAXES. | ||
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| Re: Poker Winnings and Taxes, 4 POKER, 7. Jul 2003 16:15 | ||
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| If you're just playing for recreational purposes and/or to just suppliment an already exsisting income, then you would just pay your taxes as usual and not have to claim your poker winnings if they were just small figures. That, the IRS is not looking for. But if you play poker for a living....you can be labled as a "pro gambler" when it comes to tax season. There are certain items that can be deducted like, tournament vouchers, losing sports bet tickets, lottery tickets, and so on. If you show too many assests without ever filing, if the IRS ever caught up to that, you'd be in trouble. That's why pro players file...they have to, just like anybody else does with their regular job....especially if that player is single and owns his/her own home (for example). Consult a tax consultant! | ||
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| Re: Poker Winnings and Taxes, Easy E, 7. Jul 2003 21:02 | ||
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| on 7. Jul 2003 16:15 4 POKER wrote: > If you're just playing for recreational purposes and/or to just suppliment an already exsisting income, then you would just pay your taxes as usual and not have to claim your poker winnings if they were just small figures. That, the IRS is not looking for. NOT true, as I understand it. Income is income, no matter HOW small. Yes, the IRS probably won't come looking for you, but you'd never better win anything significant, or they'll be up your ass for past years! "You JUST started playing poker THIS year, Mr 4Poker? Now why don't we believe you?" > > But if you play poker for a living....you can be labled as a "pro gambler" when it > comes to tax season. There are certain items that can be deducted like, tournament > vouchers, losing sports bet tickets, lottery tickets, and so on. Most of those can be deducted (only up to winnings) for recreational gamblers. Filing as a pro, which allows certain deductions (limited ones, from what I understand), is more restrictive. > If you show too many assests without ever filing, if the IRS ever caught up to that, Or if you ever have to report a tournament win, the IRS might come calling with "how LONG have you been playing poker?" > Consult a tax consultant! Definately! | ||
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| Re: Poker Winnings and Taxes, palman, 7. Jul 2003 21:23 | ||
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| Easy E, you are correct in saying any income is income. This according to laws. But does the IRS care if its a small amount of your income? no. It will cost more for them to audit you than the potential gain they get by your taxable gambling income. Oral sex is against the law in certain places, does that mean the law enforcement officers care? no. Just because its a law on the books doesnt necessarily mean its a law in society. | ||
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| Re: Poker Winnings and Taxes, timmer, 8. Jul 2003 08:09 | ||
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| on 7. Jul 2003 12:13 THWebl wrote: > Having recently started playing poker for money (soley on-line), and realizing I > was going to make some in the process (500 in a little under 2 months without > going higher than 1/2 and likely more in the future, as I spent the first month > completely at .05/.10 and .25/.50), I'm curious how exactly taxes work out? > > I figure in 12 months I should make a couple thousand, and I can't imagine that > the IRS just has no interest in my bonus income. > > How do the US fellas deal with this...those that aren't looking to stiff uncle > sam that is. what ever money you get a tax form w2-g, 10-99 or other for you better report. | ||
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| Re: Poker Winnings and Taxes, stdioh, 8. Jul 2003 15:51 | ||
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| Americans have to pay taxes on their wagering winnings, whether you are pulling slot machines, playing poker, or betting on who can eat more watermellon with your buddies. Likewise, maids, fruitpickers, and babysitters are legally obligated to pay taxes on all the money they make too. Of course the IRS has no way of knowing how much money you are making or losing at poker - you could make $10,000 on line and lose it in a home game - knowing your winnings won't help them figure out your net winnings/losses, and it is the net that you pay tax on. So basically you are doing something that should never ever be taxed in a free society (and it's not where I live thankfully) and the taxers don't know how much you are making. Of course I would never tell you to CHEAT ON YOUR TAXES since it would be immoral to advise you to CHEAT ON YOUR TAXES, but it would be very easy for you to not pay the IRS anything if you decided to CHEAT ON YOUR TAXES. While it is easy, I really don't think that you should CHEAT ON YOUR TAXES. :) | ||
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