Poker Taxes

Hello all. I have played online poker for few years. However, i was a breakeven poker player till last year. I made about $40000 for the year 2010. I have no job. I have never filed taxes because i never had a job aand told myself i would it next year because i read some people here said the penalties weren't that bad.


I want to file my taxes now because i don't want any trouble in the future. I hear how many people don't pay taxes and many mention how they haven't paid it for x amount of years already and i don't want to be in that kind of situation and for me its only 2 months. Can someone who filed taxes late tell me approximately how much i would have to pay in back taxes? I read that its around 4 percent every month? I'm from NY by the way.


I read interest/penalty accrues. So does that mean if i get it done by late June this month, then i'm penalized 2 months or 3 months? I think they calculate it every month after April 15th? Does that mean if i get it done by July 14th filed as oppose to July 16th i pay 1 month less penalty? There is no way i would be able to see an accountant and get it done by June 15th because its a few days away which is why i used those dates.


I hear that after you pay your taxes, the following year you have to pay estimately quarterly taxes based on the previous year. The thing for me is after black friday, i have made no money the last 2 months. I'm actually down money the last 2 months and pretty much quit poker online and haven't played at all much the last few weeks. I'm still up this year though from January-April and it would be impossible for me to make anywhere close to what i did last year. Right now at the moment, i'm not even sure if i should or not move to Canada. I just know that if i do move to canada, i would need proof of income since i would have to rent a place there am i right? Also, i do not own anything in terms of property, car or anything. Only thing under my name is my bank accounts.


Also, do most of you guys who have their poker accountant do your taxes, do you see them in person? I read there are some accountants that specialize in poker but they will do it through mail?


Another thing that bothers me is i have free health insurance and always had it because i have no income. My parents sign for me every year to get it. But does that mean if i file my 2010 taxes now, then i might get charged by my health care provider for all my previous doctor visits? I went to many of them the last 1.5 years which is why i'm worried if i will get a bill from them because i had health issues and most of those doctor visits were specialists and thus if i had to pay it out of my pocket, it would be really expensive.


I was going to not sign for the health insurance this year but then found out my parents signed up for me already which was another reason why i didn't file my taxes earlier this year.


Can someone tell me if filing my taxes now, thus 2-3 months late, would somehow cause my free health insurance company to bill me? Because i read that once you file for taxes, you don't get any health insurance so if i tell them to cancel my free health insurance now, would that be fine and thus i go and buy my health insurance? Would a poker accountant be able to answer all these questions for me about the health insurance?


And i would be correct to assume that a good amount of people don't pay a dime at all right? The thing is i never heard of any poker pro that got in trouble unless they are a big name or won some big tournament. I know the chance of getting auditing is something like 1 percent but to those that never filed, how would they ever get audited if they don't buy a house or a nice car? I see some people mention on another forum that if you pay taxes, your an idiot because the chance of getting caught is extremely low. Anyone have an opinion on this and do most of you pay it? I feel bad right now because i will get penalized already since i'm 2-3 months late and this would probably be another $2000-$3000 in penalties.


The thing about me is i'm not going to be someone who will play poker for the next 4-5 years. This is going to be my last year of playing most likely no matter what and i'm kind of worried i might get an audit because the amount i earn this year will be much lesser than last year. I was told most poker players usually make an income that is consistent.


But if i don't report it, that would mean i could never buy a home or invest right? Because if this is the case, why don't everyone report it because i think that is too much negative to it as oppose to positive since you can't spend money on big items. And would that mean i can't file rent a place under my name?


I would be interested in how much back taxes usually are approximately if anyone here has paid it.


Thank you.

You should consult a tax attorney and/or tax professional. Even if it costs you an extra month in penalties, you'll get the paperwork right and that's worth FAR more in the long run.

As for your quarterlies, there's a bit of a philosophical question wrapped into that. If the government considers poker to be a "game of chance", then how can you possible determine how much you're going to make this year? How much, for instance, would you pay in quarterlies if there's a chance you might win a multi-million dollar lottery?

I would consult the tax experts on that one, but I suspect that a reasonable strategy might go something like this: for a given quarter, make a payment on the money won that quarter. So your payments will fluctuate, but they'll loosely follow your progress.

Also, if you are declaring gambling earnings, you can deduct gambling losses if you itemize. Depending on other possible deductions such as home mortgage interest, dependent children, IRA contributions, etc. that may or may not help you.

Good luck to you, and let us know what the professionals advise!

I would for sure recommend seeing an accountant. I got myself in some hot water this year due to tax neglect for a business and a recommended accountant did a great job getting it squared away way under I thought I would owe.

And to the best of our knowledge, we do not have a tax attorney who frequents this forum.

The op is a very good question,ya dont see that one every day.Yet cc ers gave great advice,you definitely need a tax attorney or a very good book keeper.
Plus it goes to show,if you make your living playing poker,even online poker,you need to report it and pay taxes.You really should pay your own FICA too.so you may have enough paid into social security to earn a decent check someday.