Question About Filing Winnings in Taxes

Hey guys, I never really bothered about this but I thought this was actually an important topic. Should I file my Poker Winnings from online rooms, Full Tilt or PokerStars in my Taxes?
Few questions for this are:
1.) Is it illegal to not file it in your taxes?
2.) If it's alright and I won't go to jail if I don't file it, what are the benefits of actually filing it?
3.) Do I only have to file it if I withdrawal over a specific amount?

I think unless you're making in the thousands or tens of thousands of dollars you don't really have to worry about anyone coming after you.

I'm getting genuinely scared about this, though I realize the laws are different in Canada.

To be safe....If you win more than 400 or 600 in a year, I'd claim it.

The problem comes in when and IF the USA decides to allow online gaming. If they do this, they will demand that the Online poker sites fork over their records. Tax evasion is a MAJOR FELONY. Just google Wesley Snipes.

It might be a different case in Canada tho Chuck if you don't have another source of income/aren't going to school. I think the phrase in Canada is "reasonable expectation of profit" but i doubt that applies to casual gambling/poker provided you have another source of income or are a student (ie. are doing something). But i'm not sure if that is your case or not. In any case, i'm pretty sure the USA is more anal about this than Canada.

I don't declare it but i'm a student 8 1/2 months of the year and work steady through the summer so...

Yeah that's what I've heard - basically any intent/expectation to make money can mean being taxed. I just don't want them to show up out of nowhere and tell me I owe like 5k or some shit

In the US it's pretty cut and dry. If you profit, you HAVE to report it. If you don't and get caught, it's tax evasion, plain and simple.

Are you filing your winnings Zach? What's the damage like?

That's pretty much what I figured...that sucks...
Thanks guys.

The rules are ANY income over 1000$ in the US must be reported for taxes. Any less than that and you're safe.

only $600 or more though right?

from the IRS site

depends what country your in they have diff rules for diff countrys, like im from canada we dont have too claim winnings i mean maybe if they are huge but i dont think o in canada cause i know i go too casino and never put winning in my taxes lol

$600 at one time or through a course of one year?

Its not real clear but I would guess at one time. Reason I say this is because you can cash in lottery tickets every day of the year without being taxed for up to $600

I mean if it's just through each withdraw, then for now, I'm good and that's fine with me. I understand if you win thousands of dollars and withdraw that, then you may have to pay taxes but over such low amounts, they really shouldn't care....

That's a myth. Just because you don't pay them yourself doesn't mean it's not the law

The basic idea is what feitr said: if you're playing with any "reasonable expectation of profit", then any winnings you make are taxable.

reportable does not equate to having to pay. The winning threshold is for what casinos are forced to report to the irs. On your taxes you must pay any and all gambling winnings in the US. If you win $3 at a 2nl game and never withdraw, you are still required to report it. If you go to Vegas and win a tournament for $4,999 you still must pay taxes on it, but the casino isn't required to tell the irs about it.

At least that's my take on it, I'm no tax attorney, AG can recommend some tax books for you.

This book tells you all you need to know about Poker & Taxes and I highly recommend it:

Stick's Poker Blog: Book Review: "How to Turn Your Poker Playing Into a Business" by Ann-Margaret Johnston

Seriously.

All I know when it comes to taxes is that if I use a sub contractor in my business say for a few days or whatever...as long as he doesnt make over 600 in any given year I can use it as a write off and dont have to file any paperwork on them. Over 600 and then it has to be filed. At least thats how it works for employment purposes. On another note...if you loose money can you subtract that from your winnings. You can write off lotto tickets

Is there anyone that plays poker that dosn't expect to profit? I mean as long as you play for real money, I would assume that you expect to profit....

In the us. all winning should be reported. Gaming income is taved as normal income so your winning will be taxed at whatever rate you pay on your regular job. If you claim gaming as your first source of income report everything but claim all the allowed deducts.

Just over 10%. Up to $8025 is gonna be 10% and above that is 15% (up to $32,550).

I stole this from another thread, Search "Taxes" and you can read the whole thing. AG has the best grasp on it that I read, but here is a good place to get answers...Tax Aspects of Online Gambling

Don't be.... your would be giving your money away by submitting trust me. Like you said, it wont ring any bells, you arnt cashing out tens of thousands. its canada man, especially if this is your only income? - I dont know if it is - but the govt will be worrying more about the people making $100k++ a year, then a guy cashing a few pokerstars cheques a month worth a few K each.

Are you in school/have another job, or are you just playing poker now? I'd think you should probably talk to somebody about it if you don't have another source of income/occupation that can account for your time spent. These things tend to be very anal about what you were doing during a given unaccounted for period. If you were at school and playing poker part time i think you'd have alot more room to work with than if you are simply playing poker for a living. If Sept. is anything to use to scope the future (oh how i wish i ran like you) then you could be making serious money making poker, and if this is your only/primary source of income i think you should definitely check it out, as playing poker to what is essentially professionally and not reporting your winnings MUST be tax fraud i would imagine. I'm actually starting to worry somewhat about this, as although i don't really play all that much and have school during the year/job during the summer, i'll probably end up making something like ~$30k/year if i don't take a couple of months off during a year. But again, i don't know what other activities you have going on in your life at all.

gah!

I tried reading up on the massive 'canadian taxes' thread in 2+2 as well and got nothing but mixed messages about exactly how anal they are. Some say they've made in the hundreds of thousands and have no worries at all, others say they're worrying like crazy after making 'only' <50k in a year.

How do you think I should approach this? Call the CRA and ask them "if i were to consider playing poker professionally then what would I have to claim and how much would I get taxed?", or "I play x amount, what are you going to tax me?"

I've also heard you can claim poker as a business and get around some loopholes - I think Bryce Paradis did that.

bah!

Canadians pay NO taxes on gambling winnings, full time pro or part time grinder. US residents must declare winnings because they are allowed to claim there losses also. If I were a US citizen, I would NOT declare any online poker winnings as online poker itself is illegal in some states and you leave yourself open to prosecution. As you sat Chuck, if you register yourself as ChuckT poker player as a business, you will be able to claim certain things as a business expense, which then exposes your winnings to federal & provincial taxes.

I'd be happy to accept that as truth. Do you have some reference or link to prove it is true though?

You have a source for that? I'd be highly suprised if that was true.

I doubt they care so long as you aren't a professional gambler, but when you can no longer account for time spent/money earned separate from poker then i think it would have to be considered some form of tax fraud (seems logical at least).

@ chuck

yea i found the same when i tried to look into this back a while ago...it seems like such a grey area where nobody has a clue what is going on. From what i gathered, most of the ppl making "100k+" did not play poker full time but had other full time jobs...they just happened to make alot of money making poker. But yea i have no idea...i just don't think it would hurt to find out. If they don't have legal recourse to make you file your winnings then no harm, but if they do obviously you don't want to be in a situation where you could be guilty of tax fraud, seeing as it is super super serious.

IT-334R2 Miscellaneous Receipts

IT-334R2 income tax interpretation bulletin. It has the info on what the CRA considers taxable gambling income, and it certainly seems to me that player poker professionally would fall under this category.

@ pothole

Refusing to report money generated because it wasn't obtained "legally" is very illegal. Just look at section 10 in the IT-334R2...CRA at least makes it very clear you have to declare winnings from illegal gambling etc (provided you fall under the category of having to declare gambling winnings).

An interesting bulletin, the are many interpretations I can see where it could be argued that ONLINE poker winnings are exempt from taxation. Tournament winnings could easily be exempt under 3a and 3f, ring games could be exempt under 10c. I also suspect that as online poker is under the control of an rng, it could be classified as a game of chance and therefore could arguably be considered lottery winnings which are exempt. It could also be argued that there is no expectation of profit under section 11 as the randomness of an rng makes it impossible to predetermine the outcome, therefore there can be "no expectation" of a profit. The only clear information that can be gleaned from the bulletin is that illegal or illicet gambling profit is taxable, unusual for a CRA bulletin.

The skill argument is irrelevant. If you win the lottery, you pay taxes on it.

NOT in Canada. You will also find that anything YOU as a US citizen, win in Canadian casinos, you have no taxes witheld, yet Canadian players ( at certain games ) have taxes witheld by US casinos and have to claim it back. Enjoy Niagra Falls.

Thread. Unless you are from the usa dont worry about it man.

The falls will be hella fun, i predict some serious gambol going down. zach you want to do $500 on black with me? =X

Oh I apologize, thought you were talking about US.

Well imo that argument (re: the rng) still doesn't hold any weight, regardless whether lottos are taxed in Canada or not.

...leads me to believe that online poker is very taxable, especially by the means I'm winning. My heart is sinking

I guess you could still argue that there could be a loophole with respect to gambling online vs in a 'gambling establishment', but I'm still not confident about it...

Playing live would be so much easier to get away with. Online you're leaving a trail everywhere