Taxes on poker earnings

Does anyone know if we have to report our earnings and get taxed if you are earning money from online poker?

Not sure where you live..but

I read that in Australia, you dont have to if its not your main income source.

thats pretty sad if thats true, but it would be considered a job and i think if you win the WSOP you are taxed....i dunno

taxes on your gambling funds. might notwant to report it if you live in the u.s.

in cal in live tourneys u get 1099g on like $680 in a tourny win

in the USA you do, but you can also deduct any losses you have incurred as well. This doesn't mean just poker, any gambling losses can be deducted from your winnings.

IN THE U.S. It's like any other errnings you make. I believe anything over $300 or $600 you have to claim on your taxes. This only go for your payouts though. Not what you have sitting there.

Move to the UK.. Its all tax free

NO Taxes in the UK! Brilliant!!! I live in the US, but I've never won enough money to find out. So what if you play online and you win tons of small cashes, then you cashout like $1000. Would you have to pay taxes on that?

For anyone who lives in the US, I will personally nominate you for a Darwin award if you do this.

In the U.S., definitely.

Not exactly. Well, yes, but you can't just net them out. You can only deduct the losses if you itemize deductions instead of taking the standard deduction. Unless you're a pro, that is. Then you can net them out and take other poker related deductions beyond losses.

Wrong. I don't believe there is any threshold above which you have to claim. You have to claim all of it. But more importantly, it's not when you withdraw, but when you win it. You must keep a log of your sessions.

I really wonder how many in the U.S. do report their winnings accurately. My guess is pretty close to zero. But the IRS can get you on it, and if they do, it won't be pleasant. You might wish you'd been given the Darwin Award.

I your total income is below $1000 you dont have to pay taxes. But its a good idea to file anyway, just so they can see it. (I beleive it is $1000, might be more or less)

Rogue, do you know what level makes you a pro? Not that I am any where close, just for the info.

Also, there was alot of info on this subject in this thread: Online Winnings - Taxes

Yeah, I was thinking that he was saying other earnings on top of your regular job earnings, but if you don't have payroll earnings, then I suppose you don't have to file unless you go beyond the threshold. I don't know what that is, but I'll go with your $1000 without looking it up. The problem is that your poker winnings may put you over that amount before you itemize your losses. You can't net them.

Well, I don't think it is any set amount. You just have to completely treat it as a business, put in long hours, keep detailed records, and be ready to convince anyone looking at your return that you were intending poker to be your main source of income. Producing several years of losses probably wouldn't look good for your proof. I think they would pretty much assume it's a hobby, unless you can strongly convince them otherwise. It's a judgement call, in my opinion. Having another full-time job at the time wouldn't look good either.

How can the IRS 'get you on it', unless the Feds are hacking your computer? And to do so without just cause would probably be thrown out. Wouldn't you think we'd be hearing about it if anyone got caught and proscecuted for even playing online poker, much less tax evasion? Any stories or accounts welcome from anyone.

Live poker rooms or horse racing are a different story. US regulated and legal. And I believe they ask for ID and send/give you a 1099 or something if you cash out over a certain amount. I thought it was $500 but could be wrong. But I believe this info is reported to the IRS by the casinos/track, so you better report it. But this is why serious pony gamblers will make a lot of small bets on the same horse - better to have 10 wins at $100 each, than a single one for $1000.

But with online poker earnings not being reported to the IRS, I'd think you'd be nuts to just hand it over to them unless you could make a good case for any likelihood of getting caught.

taxing on poker would suck really, really bad.

No taxes in Canada on winnings.

In the US, if you keep proof of your loses you can claim this as a deduction from income.The only 'benefit' of paying taxes on winnings. I'm not sure of what the minimums are for this to take effect but I had a tax recovery firm up here get taxes I paid on US winnings back for me. Mind you this was in the thousands so I don't know the minimum.

Would suck? We're talking does suck, because it's true.

In my mind paying taxes on poker ONLINE, would be classified as a LEAK. My suggestion is as always ""PLUG THAT LEAK!!""
Peace,
FLOW

I am US and this is my take of US filing law.
Getting away from the ethical and moral implications of whether or not you should pay taxes, MY understanding is this....any income derived from any gambling activity has a mandatory filing obligation. As stated earlier you would file a form 1040. If your winnings is over $600 (in any single year) the paying party poker is obligated to report your winnings to the IRS and send you a Form 1099G for filing purposes.(http://www.irs.gov/newsroom/article/...172190,00.html). If you itemize, you may deduct any losses that were incurred on the road to your winnings. As far as Pro or hobby is concerned, ANY business endeavor that LOSES money for 3 of past 5 years (including current) is considered by the IRS as a hobby(http://www.irs.gov/newsroom/article/...169490,00.html). Now whats the difference? If you are pro....ALL business deductions apply. If hobby ONLY provable losses to gain the taxable winnings apply. Check out included links.
Zippy

I play on one site that is just for US and Canada players and because I won over $300 they sent me a tax form that I had to fill out and mail to them in order to receive a check.

If youre a citizen i EU and play at a casino or poker site with a license within the EU, all winnings are taxfree, otherwise You have to pay tax. Seems like most of You guys arent from Europe, but now you know anyway

THats why high hand are generally 599 and not 600.

Looking at this from a banking standpoint, if you deposit more than $10,000 it will get flagged by the bank to report to the IRS. I recommend if you had a big winning in a tournament, dont deposit anything greater than $10,000. Even in the casino's they do this if they are paying out more than $10,000. If you really want to make sure just go the IRS website I suppose.

i dont know about any of you but in the usa this government loves to screw its citizens out of money. why would you report to them any poker winnings. they cannot track it unless you deposit into your bank account a sum of 10k or more then it will send up a red flag to the irs and u will have to explain the source of the funds then you WILL be taxed. so i say screw the gov. im keeping all my winnings.

i actually just learned about this in my business class you are supposed to report anykind of income that would include poker winnings

Wrong! It does not matter if you were paid out or not. The IRS still counts it as winnings no matter if you cashed out or not. As long as you have access to the money it's considered winnings at the end of the year.
All poker winnings are considered income and you have to pay taxes no matter if it was won online or live. Yes, even $20 in winnings are taxable. The $300/600 your talking about has to do with casinos/lotterys reporting it. By the way, if you declare yourself a pro, you are also liable for the full amount of SS taxes.(normally, you pay half,employer other half) And best of all, state and local taxes.

For those of you who think that the only way the IRS can find out about your gambling income is if you deposit $10,000 or more, you aren't thinking it through very carefully. The IRS has a lot more ways of discovering your deceit than that. Proceed at your own risk.

Also, breaking payment or deposits into amounts less than $10,000 to avoid banking laws is a crime called "structuring." The IRS goes after that, too. http://en.wikipedia.org/wiki/Smurfing_(crime). The penalty is a fine and/or up to 5 years in prison.

See also http://www.forbes.com/forbes/2008/0407/038.html.

I thought that currently it is illegal in the U.S. Maybe I am mistaken but I thought I read something on that.

To play or to tax? The first is open to interpretation, even my fellow lawyers don't agree on the legality of online poker in the US. It's really going to depend on how the first big challenge case goes.

But, whether it is legal or not has no effect on whether it is taxable. You are supposed to pay tax on all income. Whether it is from a legal or an illegal source. As to those who think it can't be found out...never underestimate the ingenuity of the IRS. Many people who never kept their money in the bank have been charged with tax evasion. The temptation to spend more than your income can explain trips up many, many people. And if you can't spend it, what good is it. You are better off reporting and actually being able to do what you want with the rest.

Excellent examples. Trust me, tax evasion has brought down people who thought they were untouchable. And I'm not just talking about Capone.

For those who are interested here is at least one lawyer's opinion on the legality of online poker in the us.

http://www.keepplayingpoker.com/legal.html

I work with a guy who won $90,000 in a bad beat jackpot in '08. He did that strutcuring deal thejuanupsman mentioned . Waiting to see how long it takes for some one who does'nt like him to dime him out.

I "accidently" failed to declare a bunch of 1099 type money in 1995 ..... 9 years later with the fines and interest I owed more than 12 times what I could have paid , and if the amount I didn't report was just a little larger I was told prosicution was a real possability .

Pay your taxxes ..... the Government hates cheaters , they really can't stand the compition !