Online Winnings - Taxes

Hi guys, I`ve just started playing poker online in 2008.. i did not win that much so i`m not expecting PS to send me any tax forms.. but some of you already know more about it then i do, so here are few questions i need answers for..

1. How much do you have to win to receive a tax form from Pokerstars?
2. Is it a combined amount for the whole year of winnings or 1 win needs to be over that amount? ex. I play 100 tourneys (for one year) and win combined total of 700, or 1 tourney and win 700. Lets say anything above 600 is being put on the tax form. In which case will the tax form be issued? combined? single win over 600 or BOTH?
3. What about cash games? this makes me feel like its the combined amount of winnings for the year...

So here's an example.. tell me if in this case someone would be issued the end of year tax form or not..

I deposit $100 into pokerstars on Jan1st 2008... play 1000 tourneys. combined winnings come out to $1000 dollars , all the winnings are on avarage $40. Will PS issue me a tax form?

Thanks.. I`m asking those questions since this is the first year i started to play online...

Stars issues you no forms. You are required to report everything yourself. If you file taxes (there are rules on that, but I'm assuming you work and already pay taxes) you must pay taxes on everything you earn. You can deduct losses up to winnings but they must be filed separately. Say you made 1k in the year. It's probably more like you won 4k but lost 3k. You must have earnings of 4k on there and you can then deduct 3k on a separate line.

Basically Stars has no business with the US government. They don't deal with US taxes. That's your responsibility. You are required to pay taxes on 100% of your earnings, whether it's a dollar or 100k. In fact even if you lost money I'm pretty sure you are required to report the winnings and then you can deduct enough losses to offset winnings. Don't think that would affect amount paid so probably wouldn't get in trouble for not doing that. But failing to report taxes you owe is illegal and tax fraud. Remember they only got Al Capone on tax evasion.

Zach, do you report your taxes? Also, does Full Tilt send forms to you? The one time I withdrew I didn't file it on my taxes...so...what bout you zach?

I was a student and didn't play enough to make enough money to report last year (I said every penny you have to report but that's only if you're already filing taxes. I think the limit is like 9kish for minimum to pay taxes which is total income from job, poker, other sources, etc.), but I fully intend to pay taxes for this year's income.

yeah man dont worry about taxes unless u win like 100k or something

You guys sure, don't want to get some nasty letter....I WILL blame it on you two and cardschat...lol

Idk if you noticed but we are in a recession and the government is penny pinching. I mean sure anything under 1 or 2k you can almost definitely get away with ( as long as your not committing fraud on some other front). But if you do end up taking down a big tourney or win a large amount of money your gonna have to pay taxes on it. And I bet paying taxes is a whole lot better than dealing with the IRS or catch a stretch in jail.

Wow, never thought of the taxes thing, is tax something only US players should worry about or Canadian players pay tax to? Are taxes for players who are withdrawing, or do you have to pay taxes on big winnings even if you dont withdraw? Can someone explain the whole taxes thing, Lol.

That's great, advocate tax evasion on a public forum. You do realize they run audits right? Not only on people with fishy transactions/other stuff that sets of flags but also random ones. Good luck explaining to them where the two separate checks came from that weren't income.

btw I'm not a tax expert, I've gotten all my information through the internet from various places. If you want an expert opinion hire an accountant. I take no responsibility for the following of any of my advice and my only claim I will make for what I posted is at the time of posting I believed it was true.

There now I can't get sued .

Thanks guys! i figured that they issue forms as well as casinos do when you win more then 600/1200... In reality i dont know anyone who pays taxes on casino winnings of less then the $600. Thanks once again i`ll speak to my accountant then..

Yes

Extremely difficult subject to discuss and very few people know how it really works (including many accountants without looking it up )

There are several areas on the web that discuss the subject with expert guidance. It is pretty messed up overall and weighted to gip the poker player (and other gamblers).

If you are following the law properly - every single penny you make playing poker is subject to tax treatment. It is NOT when you WITHDRAW it, it is the second you MAKE it.

THE ABSOLUTE BEST WAY to track poker play (and one the IRS accepts) is to keep a daily record of your poker sessions and then apply the tax aspect once tax time rolls around.

If you play poker it makes sense to at least get a grasp of how the US Tax System treats gambling gains so you can prepare yourself properly.

Everyone please read the expert sites/discussions and/or talk to a knowledgable accountant.

Barry Greenstine thought the same exact thing when he was younger. He would take his winning and only deposit somewhere around $9,000 to get around this and eventually got asked by the IRS. They didn't do anything like they could have, but they did tell him to NOT do this from here on out or they would take action. If you did it once, it might get through no questions asked, but I personally wouldn't take the risk.

I would HATE to see anybody here own a business, as the taxes will eat you alive.... THey did me! The ones who do know exactly what I'm talking about.... I wish you could all see how much I owed in taxes last year, you would shit your pants! The worst thing is that I know people who owe even more!

The cool thing is when your self employed you can write things off. I don't know if this would work for a Poker player, as I have never reported anything win wise on my taxes, because I have yet to have the pleasure of doing so. As a business person and being self employed you can write off so much of all of your personal bills such as your house payment, electric, water, ect... As you have a "home office"..... It is worth asking a tax professional if this is what you do for a living.


Are you serious? Maybe you haven't grown up yet.... That is STUPID! If you made any dollar amount off of a tournament and didn't report it, the government has every right to throw you in jail for Tax fraud.

Oh yeah...the $10,000 threashold thingy

THAT IS A FALACY.....anyone who proceeds thinking anything they do under $10K will go under the radar is making a large mistake

I will not go into the complexities.....but any SUSPICIOUS activity deemded so by the Bank and reported to Fed authorities will be on document for the Treasury Dept to investigate.

The US puts a ton of pressure on Banks to report such activity and it has NO MINIMUM DOLLAR THREASHOLD!!!!

Im in Canada and you keep saying "the US". Does that mean im fine where im at?

Brandonnj -- I cannot say anything in regards to Canada, I honestly have no clue.

Well, I know that it is the American economy with the recession and all that junk, but im still not sure if Canada has anything to do with it.

I do not believe you have to pay taxes on winnings in Canada.

Ok, thanks for letting me know, was starting to get just a little bit worried lol.

Well Zach, you're off the hook I guess =P Yeah, next time I'll withdraw I guess I'll mark it off. At least I got PokerTracker to keep record of my sessions and I don't have to calculate anything.

Thanks guys for the Information.

From IRS Publication 529, Miscellaneous Deductions:

Gambling Losses Up to the Amount of
Gambling Winnings

You must report the full amount of your gambling winnings
for the year on Form 1040, line 21. You deduct your
gambling losses for the year on Schedule A (Form 1040),
line 28. You cannot deduct gambling losses that are more
than your winnings. Generally, nonresident aliens cannot
deduct gambling losses on Schedule A (Form 1040NR).

CAUTION!
You cannot reduce your gambling winnings by
your gambling losses and report the difference.
You must report the full amount of your winnings
as income and claim your losses (up to the amount of
winnings) as an itemized deduction. Therefore, your records
should show your winnings separately from your
losses.

RECORDS
Diary of winnings and losses. You must keep
an accurate diary or similar record of your losses
and winnings. Your diary should contain at least the following
information.

· The date and type of your specific wager or wagering
activity.
· The name and address or location of the gambling
establishment.
· The names of other persons present with you at the
gambling establishment.
· The amount(s) you won or lost.
Proof of winnings and losses. In addition to your diary,
you should also have other documentation. You can generally
prove your winnings and losses through Form W-2G,
Certain Gambling Winnings, Form 5754, Statement by
Person(s) Receiving Gambling Winnings, wagering tickets,
canceled checks, substitute checks, credit records,
bank withdrawals, and statements of actual winnings or
payment slips provided to you by the gambling establishment.


For specific wagering transactions, you can use the
following items to support your winnings and losses.

CAUTION!
These recordkeeping suggestions are intended
as general guidelines to help you establish your
winnings and losses. They are not all-inclusive.
Your tax liability depends on your particular facts and
circumstances.

Keno. Copies of the keno tickets you purchased that
were validated by the gambling establishment, copies of
your casino credit records, and copies of your casino
check cashing records.

Slot machines. A record of the machine number and all
winnings by date and time the machine was played.

Table games (twenty-one (blackjack), craps, poker,
baccarat, roulette, wheel of fortune, etc.). The number
of the table at which you were playing. Casino credit card
data indicating whether the credit was issued in the pit or at
the cashier’s cage.

Bingo. A record of the number of games played, cost of
tickets purchased, and amounts collected on winning tickets.
Supplemental records include any receipts from the
casino, parlor, etc.

Racing (horse, harness, dog, etc.). A record of the
races, amounts of wagers, amounts collected on winning
tickets, and amounts lost on losing tickets. Supplemental
records include unredeemed tickets and payment records
from the racetrack.

Lotteries. A record of ticket purchases, dates, winnings,
and losses. Supplemental records include unredeemed
tickets, payment slips, and winnings statements.

Wow that's detailed as hell...thanks a lot RogueRivered!!!

its only income if you bring it into the country? I know that it is taxable upon winning and not cashing but is IRS seriously auditing poker games on internet for taxation purposes? Ask AG...he is w2 as pro gambler and knows more than I in this area.
Also, What zack holds true 4 me about being sued. Please investigate and determine your own conclusions mine is merely an opinion.

You play tournaments? opr and sharkscope exist. Play cash? Tableratings is for most major sites. These could probably not be used as proof against you in an audit but it could trigger an audit if somewhere you are linked to to your screen name or it's basically ever found out. During an audit the burden of proof is on you to prove your winnings, so you can't rely on stuff they can't find out about. If you don't have detailed enough records, be prepared for them to make them up for you. If you do (HEM/PT databases), they can basically ask to see them in full. The irs is good at what they do, and poker players try to skip paying taxes all the time. If you think you have a good scheme/excuse, they've probably seen it a thousand times before and they're going to see right through it. So sure if you don't report there's a good chance you don't get caught. But just remember that they know that too so that the ones they do catch they make it especially unpleasant as a further deterrant (I believe it's just pay tax+interest+penalty for negligence and extra fines/penalties and probable jail time for actual fraud).

Anyway long story short they make it such that it's beneficial for you to just pay taxes on it, and you should just do it. It's not worth the hassle to avoid it.

WEC is dead on !! Besides, the IRS doesn't 'flag' the $10k transactions, the banks are REQUIRED to file a Federal form on it, as explained.

Large deposits above and beyond your normal banking standards can trigger 'suspicious activity' reports, especially if they are just days apart.

During an IRS audit, they can also require you to produce your bank statements. Any idea how you would explain those 3 separate $5,000 deposits in January when your standard paycheck is on auto-deposit for $932 a week ... ??

I figured out how to get around it though. If I only cash in one Stars dimer each year for $.49, I can round down and not have to report ANYTHING !! ...

Speaking on Audits....... everybody here within the United States knows they are required to keep all records of everything from Bills, Checks, Receipts, ect..... for 7 years!!!!! If you were selected for an Audit they can only go back 7 years, so just an FYI.

For those who are interested: in the Netherlands you have the pay 29% of the amount you have won (1000 dollar you pay 290 dollar tax).

I used to work for the IRS (20 years ago!) and it was hard to believe how much the tax bills added up to after penalties and interest. Sometimes a $2,000 tax deficiency would result in a bill of over $10,000. Jail time was extremely unusual, though, and only for serious fraud. Criminal cases were really rare in my office. Nevertheless, Zachvac is right, better safe than sorry!


You could be right, but I'm not sure about that. Generally the IRS has 3 years to challenge your return from the filing date, but I suppose they can go back from there to prior years if they find something funny. There is no statute of limitations on fraud, however.

IANAA but being a former small business owner I can give a good starting point for some deductions should you have to report winnings.

1. Your computer is deductible for the % of time you use it for your business. So if you spend 75% of your computer time playing poker, you can deduct 75% of the expense.
2. Assuming you have a "poker area" say an office or desk, you can deduct the % of sqft that you are using as a percentage of your total rent and utilities. So if you have a 2,000 sqft house and your office is 100 sqft, you can deduct 5% of your rent and utilities. This is assuming your area is 100% used for poker.
3. Where most people will find help is in travel. ANY travel to play poker can be an expense. This includes travel to and from a local casino (and this year I think the write off is $.53 a mile) or long distance (say for a tourney). I believe even driving to your friends for a local game would be considered.
4. Another area that you can deduct is tools such as books, lessons, or any business get togethers. So if you take your poker friend Bob out for dinner with the intent of discussing your poker business, you can write that off.

Again I'm not an accountant so please research on your own, but these should be a good starting point. The write offs help offset the insane amount of taxes you will pay (15% off the top + whatever your federal taxes are). As a standard I would always take 35% of my earnings and hold them in an account I couldn't touch. I thought that was extremely aggressive and I still owed a few grand in taxes at the end of the year.

Maybe I missed it, but if the money isnt withdrawn from the poker site, do you still have to claim taxes on it? If yes, then I have to ask the site for documentation of deposits, winnings/loses, withdraws?

Also, say I play $100 and lose it all, then quite gamleing. On my taxes I would claim winnings as $0 and loses as $100 and it would equal out to $0 because loses cant be more than winnings?

My advice: move to France. Poker winnings are not taxable as long as it's not your main job.

Going back to the Barry Greenstein thing, if you make one $9000 deposit
you probably can get away without reporting it. If you are consistantly making
$9000 deposits you are going to send up more red flags then at a communist rally.

I have never been taxed on my winnings. And I have with drawn more than 1000 dollars at a time from bodog. Was I suppose to claim that on my taxes?

Yea, that is right. I only have to claim it when I win? What happens if I lose? You see, wouldn't have to go both ways?

None of this counts unless you're a professional poker player. There are rules regarding how to declare this to the IRS and have it approved. Being self-employed in some other field doesn't count.

You have to keep your own records of wins or losses. The sites don't do it for you. They are off-shore. That's why our government doesn't like unregulated Internet gaming. Regulated casinos in the U.S. have to report to the IRS or withhold some winnings right off the bat.

In your $100 dollar loss example, I'd say if you lost it all at once, then you don't need to report anything. But that's not how it usually happens. You usually lose some, then win some, then lose some, then win some, etc, until you finally lose it all. It that case, you need to keep a log of it all, and report your winnings, which can be offset on your itemized deductions by your losses. See the my long post above quoting from the IRS Publication.


The U.S. has a self-reporting tax system; it's up to you to claim your income. If you don't and they find out about it, it can be messy.