koadyawn
Rock Star
Silver Level
Okay I just came to realize that if I cash out a certain amount from my poker site (pokerstars) will I be charged tax on my winnings??
zachvac
Legend
Silver Level
Yes, you have to file your taxes and you have to be honest and declare poker winnings. If you don't and are caught you will be charged with tax evasion or fraud or whatever it's called. Not all people do declare it, but legally in the United States you are required to report poker winnings, both live and online.
daxter70
Visionary
Silver Level
had a buddy who won close to 10k on PS, and he ended up gettin it out by transferring a lot to friends and having them pay him in cash, plus a little juice money.=) i dont know if sites report substantial winnings like that to the gov or not.
anybody??
shinedown.45
Legend
Silver Level
I don't think most would, considering most are based overseas, but being Canadian I may not be correct as I am not familiar with US laws.had a buddy who won close to 10k on PokerStars, and he ended up gettin it out by transferring a lot to friends and having them pay him in cash, plus a little juice money.=) i dont know if sites report substantial winnings like that to the gov or not.
Sheepodog
Legend
Platinum Level
I don't believe any of the poker sites, other than Duplicate, report taxable winnings to the USA. I know Duplicate poker does. I needed to fill out a form allowing them to report my winnings over $600. This is all gonna change when USA figures out how to tax the other winnings from poker rooms...if...and when they allow playing at the now unavailable sites.
H
hornellfred
Enthusiast
Silver Level
I am a tax accountant and any winnings are taxable to the IRS. Any winnings from casino winnings over $1,000 must be reported to the IRS. It is $600 for horse racing and lottery. The catch here is that since it it illegal for American citizens to play online poker most of the sites do not report your winnings to the IRS. My advice to avoid problems in the future is to keep track of winnings vrs losing from all types of gambling and claim the profit as misc. income from gambling. If anyone recieves a 1099G for gambling winnings and is not sure what to do with it I will gladly help you out with it. Every tax situation is unique to the individual taxpayer and must be treated that way. If your total winnings for the year are less than $1,000 minus loses I would not worry about it.
H
hornellfred
Enthusiast
Silver Level
This is illegal and if the IRS ever figured it out all of the participants would be guilty of conspiracy to defraud the IRS a major felony and they do not give up if the choose to go after you.
B
bigjoker66
Visionary
Silver Level
I'm no accountant, but the way I understand it is if you do not file as a professional gambler you need to declare every winning session add that to your income then you can deduct all your loosing sessions on a separate line item.
Thats a lot of work. If you declare as a professional ou can total up all wins and losses and just declare the difference.
Thats a lot of work. If you declare as a professional ou can total up all wins and losses and just declare the difference.
zachvac
Legend
Silver Level
Withdrawing has nothing to do with it, amount of money has nothing to do with it. If you make ANY MONEY in online poker, the money MUST be declared. No exceptions. If you want to try to cheat on your taxes, that is up to you, but not declaring anything is cheating and if you get caught you can be prosecuted for it. It's that simple. Yes this includes freerolls, $1 games, CC private games, etc. Legally every penny you making playing poker must be reported. Period.
C
creatorofYUM
Rising Star
Silver Level
As Joey said, you will have a better chance of being hit by a meteor than experiencing problems with anyone if you don't make and/or withdraw more than $4500. The number may have actually increased slightly since 2007, but as far as I'm informed, this is the "magic" number.
pokerchris
Legend
Silver Level
Since the Federal government considers online gamble is illegal, if you report your online poker winning to the IRS, it would be similar if not the same as reporting your drug selling profit to the IRS.
========================================================
FBI View of Internet casinos
FBI View of Internet Casinos
Is the Federal government’s black-and-white view of the matter reasonable, or even enforceable?
By Michael M | Jul 24, 2008
Adjust font size:
Tags Law, USA, FBI
According to the Federal Bureau of Investigation, it's better not to gamble online. In fact, the FBI states unequivocally that online gambling in the US is simply illegal, no matter what.
This doesn't mean that gambling is illegal in the States, or that it's impossible to gamble online there. It just means that players need to know the rules, regulations, and loopholes before getting started.
The first thing to remember is that, while there are some Federal laws that apply to online gambling, this is an area in which most regulation is left to the states. In some states, like Alabama, gambling is simply illegal altogether. In others, such as Michigan, casino gambling is legal, but only if the casino operator has a state-issued permit to operate the venue. And finally, Nevada and New Jersey have simply legalized casino gambling. In all of the states, Indian reservations can and do set their own gaming regulations, since the tribes are not bound by state or Federal law.
What does this mean for the players?
It means that online gaming is a gray area. Congress passed the Unlawful Internet Gambling Enforcement Act of 2006, forbidding financial servers from processing payments to online casinos, and the founders of neteller were arrested under the Act's provisions in 2007, but for the most part, ordinary citizens who gamble online, while they risk losing their casino account to Federal seizure, generally do not court arrest.
This is because Federal laws against online gambling approach the subject from two directions: from the financial end (UIGEA 2006) and from the service provider end (old wire-transfer regulations are used to prevent online casinos from handling bets in the US). The law hasn't caught up with individual gamblers, yet.
So, while the FBI is right to say that online casino gaming is illegal in the US, they are not completely right. But they are the ones who enforce the laws at the Federal level, making their opinion one that counts.
========================================================
FBI View of Internet casinos
FBI View of Internet Casinos
Is the Federal government’s black-and-white view of the matter reasonable, or even enforceable?
By Michael M | Jul 24, 2008
Adjust font size:
Tags Law, USA, FBI
According to the Federal Bureau of Investigation, it's better not to gamble online. In fact, the FBI states unequivocally that online gambling in the US is simply illegal, no matter what.
This doesn't mean that gambling is illegal in the States, or that it's impossible to gamble online there. It just means that players need to know the rules, regulations, and loopholes before getting started.
The first thing to remember is that, while there are some Federal laws that apply to online gambling, this is an area in which most regulation is left to the states. In some states, like Alabama, gambling is simply illegal altogether. In others, such as Michigan, casino gambling is legal, but only if the casino operator has a state-issued permit to operate the venue. And finally, Nevada and New Jersey have simply legalized casino gambling. In all of the states, Indian reservations can and do set their own gaming regulations, since the tribes are not bound by state or Federal law.
What does this mean for the players?
It means that online gaming is a gray area. Congress passed the Unlawful Internet Gambling Enforcement Act of 2006, forbidding financial servers from processing payments to online casinos, and the founders of neteller were arrested under the Act's provisions in 2007, but for the most part, ordinary citizens who gamble online, while they risk losing their casino account to Federal seizure, generally do not court arrest.
This is because Federal laws against online gambling approach the subject from two directions: from the financial end (UIGEA 2006) and from the service provider end (old wire-transfer regulations are used to prevent online casinos from handling bets in the US). The law hasn't caught up with individual gamblers, yet.
So, while the FBI is right to say that online casino gaming is illegal in the US, they are not completely right. But they are the ones who enforce the laws at the Federal level, making their opinion one that counts.
Last edited:
J
Justboo
Enthusiast
Silver Level
yes, you are suppose to report your gains to the IRS! THere is a miscellaneous gambling section to report your winnings. Conversely, if you aren't winning anything and you are losing a lot you can report your losses too I think.
C
cAPSLOCK
Cardschat Elite
Silver Level
The craziest part is HOW the taxes are calculated.
You do NOT report your net winnings.
Let me clarify.
If you play for a year. End up with $10,000 in december in your account after a 100$ deposit in January (well done by the way) you DO NOT Pay 30% of $9900.
Certainly it seems like you would.. but here is what ACTUALLY happens.
You must pay 30% of ALL YOUR WINNINGS no matter what. Your losses don't figure in (yet).
So lets say you are a tourney player. You won $45,000 at a cost of $35,000 (netting our juicy 10k).
Well you OWE THE IRS 30% of $45k. Period.
So technically, when you bubble in your tourney and crash and burn just ITM... well you are not really ITM If you pay 10k to play a tourney at a casino and win 10k in that tourney, the casino will withhold 3k for taxes! (I know this hurts).
Your losses are reported as "gambling losses" and are part of your deductible. The good thing is you are not limited in the amount you can claim in this regard, so in the end this balances out (sort of although it can screw with your other (medical etc) deductibles).
And you don't have to be one of the ~5% of online poker players who are profitable. You even have to pay taxes (and claim a deductible) when you net a loss. Though it has been correctly noted that the vast majority of online poker companies do NOT report to the US government.
*IF* you make your living FULL TIME as a poker player you can ask to be granted professional status. Then you pay taxes on your net winnings just as you would any other income.
The details of how to calculate your poker taxes might be best left to an accountant who knows the ropes. They can likely save you some money because of the way you do things like define a "session".
You MUST keep your records. Even if you don't use a poker analysis tool you need to hold onto your table histories for the year.
here's to hoping you pay a lot in this year,
cAPS
You do NOT report your net winnings.
Let me clarify.
If you play for a year. End up with $10,000 in december in your account after a 100$ deposit in January (well done by the way) you DO NOT Pay 30% of $9900.
Certainly it seems like you would.. but here is what ACTUALLY happens.
You must pay 30% of ALL YOUR WINNINGS no matter what. Your losses don't figure in (yet).
So lets say you are a tourney player. You won $45,000 at a cost of $35,000 (netting our juicy 10k).
Well you OWE THE IRS 30% of $45k. Period.
So technically, when you bubble in your tourney and crash and burn just ITM... well you are not really ITM
If you pay 10k to play a tourney at a casino and win 10k in that tourney, the casino will withhold 3k for taxes! (I know this hurts).Your losses are reported as "gambling losses" and are part of your deductible. The good thing is you are not limited in the amount you can claim in this regard, so in the end this balances out (sort of although it can screw with your other (medical etc) deductibles).
And you don't have to be one of the ~5% of online poker players who are profitable. You even have to pay taxes (and claim a deductible) when you net a loss. Though it has been correctly noted that the vast majority of online poker companies do NOT report to the US government.
*IF* you make your living FULL TIME as a poker player you can ask to be granted professional status. Then you pay taxes on your net winnings just as you would any other income.
The details of how to calculate your poker taxes might be best left to an accountant who knows the ropes. They can likely save you some money because of the way you do things like define a "session".
You MUST keep your records. Even if you don't use a poker analysis tool you need to hold onto your table histories for the year.
here's to hoping you pay a lot in this year,
cAPS
Last edited:
B
ButtonDog
Rock Star
Silver Level
Yes, and in light of the Feds seizing 24 million dollars from bodog accounts in the U.S you had better do it. They may be able to use what they seized to get a hold of records concerning those winnings of yours. If it has happened to Bodog then poker stars and Full Tilt may not be far behind.
Last edited by a moderator:
zachvac
Legend
Silver Level
Wrong. Withdrawing has nothing to do with it. No matter where the money is, if you make money you must report it on your taxes. It's that simple.
aliengenius
Cardschat Elite
Silver Level
This thread is so full of errors and falsehoods I don't even know where to start, but here goes:
As pointed out by other posters, the sites themselves to NOT take out taxes, nor do they report your winnings in any way. It is up to YOU to report your income from all sources at tax time.
This is simple ignorance. It is NOT illegal for US players to play online poker (although some local and state jurisdictions have passed laws making it so). Never has been. I suggest you educate yourself and stop spreading this unfortunately still common myth.
"while the US Justice Department recently stated that the Wire Act covers casino games in addition to sports wagering, the Federal Appeals Court has directly ruled that that interpretation is not correct."
The recent UIGA that the Republicans sneakily hid in a Safe Ports Act makes it unlawful for financial institutions to process transactions from online gaming sites. It does NOT make it illegal for an individual to play poker, or to make said transactions themselves.
See here and get more depth and updates and info on other laws and developments here.
One more time, playing poker online is NOT illegal. Not paying your income taxes is illegal.
As stated above, it has ALWAYS been your responsibility to declare ALL your winnings, regardless of amount. It's income, you have to play taxes on it.
There was a recent move to try to collect taxes at the time of the winning but it was rescinded. Now casinos are only reporting the winnings, not taking the taxes out at the time. It remains, as, again it always has been, the responsibility of the individual to play their required taxes at the appropriate time.
False. You do not have to withdraw-- any WINNINGS are taxable and must be declared. It is similar to interest earned in your bank account, or dividends paid on your stocks: just because you don't remove it from your bank or brokerage account doesn't mean you don't have to pay taxes on it. It's income that you have access to and it is taxable.
Lots of half truth and misconceptions.
The IRS wants you to be able to document all your gambling "sessions", one line for wins, one for losses, and you play tax on the difference. However, it is VERY important to understand that you can NOT simply net the difference: you have to declare ALL your winnings, then are allowed to deduct your losses (in a separate place). Please note that the effect is that you pay tax on the net winnings only, although you have to document it in a somewhat convoluted way.
Both professional and recreational/amateur gamblers end up paying taxes on the NET win, although they go about it differently and file different forms.
You can deduct your losses in so far as they offset your winnings only. Say, however, that you NEVER won a single session, or that you gambled only once and lost: you can't deduct that loss as an offset to your regular income (only your gambling win income).
Anyone interested in not cheating on their taxes should buy these books (and an extra copy for their CPA too):
How to Turn Your Poker Playing into A Business : Knowing What to Deduct to Improve your Odds With the IRS by Ann-Margaret Johnston
and
As pointed out by other posters, the sites themselves to NOT take out taxes, nor do they report your winnings in any way. It is up to YOU to report your income from all sources at tax time.
This is simple ignorance. It is NOT illegal for US players to play online poker (although some local and state jurisdictions have passed laws making it so). Never has been. I suggest you educate yourself and stop spreading this unfortunately still common myth.
"while the US Justice Department recently stated that the Wire Act covers casino games in addition to sports wagering, the Federal Appeals Court has directly ruled that that interpretation is not correct."
The recent UIGA that the Republicans sneakily hid in a Safe Ports Act makes it unlawful for financial institutions to process transactions from online gaming sites. It does NOT make it illegal for an individual to play poker, or to make said transactions themselves.
See here and get more depth and updates and info on other laws and developments here.
i heard on the radio station the other day starting after april 09' next year that if you win or make or wd anythingg over 4500.00 $ you have to declare it,thats so lame , so i'm ok w/freerolls lol
One more time, playing poker online is NOT illegal. Not paying your income taxes is illegal.
As stated above, it has ALWAYS been your responsibility to declare ALL your winnings, regardless of amount. It's income, you have to play taxes on it.
There was a recent move to try to collect taxes at the time of the winning but it was rescinded. Now casinos are only reporting the winnings, not taking the taxes out at the time. It remains, as, again it always has been, the responsibility of the individual to play their required taxes at the appropriate time.
False. You do not have to withdraw-- any WINNINGS are taxable and must be declared. It is similar to interest earned in your bank account, or dividends paid on your stocks: just because you don't remove it from your bank or brokerage account doesn't mean you don't have to pay taxes on it. It's income that you have access to and it is taxable.
The craziest part is HOW the taxes are calculated.
You do NOT report your net winnings.
Let me clarify.
If you play for a year. End up with $10,000 in december in your account after a 100$ deposit in January (well done by the way) you DO NOT Pay 30% of $9900.
Certainly it seems like you would.. but here is what ACTUALLY happens.
You must pay 30% of ALL YOUR WINNINGS no matter what. Your losses don't figure in (yet).
So lets say you are a tourney player. You won $45,000 at a cost of $35,000 (netting our juicy 10k).
Well you OWE THE IRS 30% of $45k. Period.
So technically, when you bubble in your tourney and crash and burn just ITM... well you are not really ITM
Your losses are reported as "gambling losses" and are part of your deductible. The good thing is you are not limited in the amount you can claim in this regard, so in the end this balances out (sort of although it can screw with your other (medical etc) deductibles).
And you don't have to be one of the ~5% of online poker players who are profitable. You even have to pay taxes (and claim a deductible) when you net a loss. Though it has been correctly noted that the vast majority of online poker companies do NOT report to the US government.
*IF* you make your living FULL TIME as a poker player you can ask to be granted professional status. Then you pay taxes on your net winnings just as you would any other income.
The details of how to calculate your poker taxes might be best left to an accountant who knows the ropes. They can likely save you some money because of the way you do things like define a "session".
You MUST keep your records. Even if you don't use a poker analysis tool you need to hold onto your table histories for the year.
here's to hoping you pay a lot in this year,
cAPS
Lots of half truth and misconceptions.
The IRS wants you to be able to document all your gambling "sessions", one line for wins, one for losses, and you play tax on the difference. However, it is VERY important to understand that you can NOT simply net the difference: you have to declare ALL your winnings, then are allowed to deduct your losses (in a separate place). Please note that the effect is that you pay tax on the net winnings only, although you have to document it in a somewhat convoluted way.
Both professional and recreational/amateur gamblers end up paying taxes on the NET win, although they go about it differently and file different forms.
You can deduct your losses in so far as they offset your winnings only. Say, however, that you NEVER won a single session, or that you gambled only once and lost: you can't deduct that loss as an offset to your regular income (only your gambling win income).
Anyone interested in not cheating on their taxes should buy these books (and an extra copy for their CPA too):
How to Turn Your Poker Playing into A Business : Knowing What to Deduct to Improve your Odds With the IRS by Ann-Margaret Johnston
and
smd173
Cardschat Elite
Silver Level
Everything AG said is layed out very well. But I do want to focus on this part of what he said, because I think it's where people are getting mixed up.
The analogy to interest is good but banks and brokerages report your interest earnings to the IRS. Online sites do NOT report your winnings to the IRS.
So this is where the difference lies. AG, Zach, etc. are correct in saying that you should report your winnings online even if you don't withdrawl. Most people figure they only have to do it if they withdrawl because the IRS has no record (from the online site) that you played and won. And if the money isn't in your bank account and you get audited, how will they know you won?
There are two easy things you can do to avoid all of this. 1) Just be a losing player.
2) Win big and you'll have enough to hire a nice tax attorney and/or accountant that can help you out.
C
cAPSLOCK
Cardschat Elite
Silver Level
Well I think we said pretty much the same thing. I assume you only glossed over my post. It was too long.
You report you TOTAL winnings. And declare your TOTAL losses as a deductible.
But as I said. This is not really the same as a tax NET gains.
But the sort of fine detail we are arguing about is the type of thing I think a knowledgeable accountant should be used to clarify.
Wonder how much business hornellfred wants?
shrtstakatak
Rock Star
Silver Level
How is this at all doable when most sites don't afford you any reasonable way to do this. Results documentation is way too tedious to do correctly. Fulltilt has tourney history which is easy to paste into excel, but even most tracker programs can't handle all the sites.
B
bigjoker66
Visionary
Silver Level
The IRS requires you to do this for B&M Casinos too. What software are you going to rely on to track that? the IRS doesn't care if its easy or not, the just require you to do it. Use a notepad and track your sessions.
If you think you can convince an IRS lawyer that a session lasts from the time you deposit until you withdraw more power too you, and good luck.
itlegacy
Rock Star
Silver Level
And be kind to our US institutions, perhaps, by depositing in overseas accounts only?? After all, one would not like to get them in trouble with online gambling transactions; they have enough woes of their own, given all the gobble-D-gook and confusion going on today, e.g., all the sub-prime rate shenanigans. Just a thought that comes to me reading this very useful thread.
H
hornellfred
Enthusiast
Silver Level
I have done many returns for gamblers before, but never for poker players and I know the laws are different as far as this goes. The problem with winning say $1500 on a slot machine is that you have to itemize your losses and if you do not have enough other deductions in reality you do not get to write of the $1500 even if you lost way more than that (which most do). The money derieved from poker winnings is considered by the IRS to be illegally obtained. I got this from an IRS bulletin in the 2006 tax season and am trying to find it. You still must pay taxes on your winnings as you are on any illegally obtained money. Playing poker online is not illegal but the winnings are condidered illegally obtained. If a tax court has changed this I am not aware of it. The LAW says you must claim ALL gambling winnings, even the fifty bucks won at the church raffle. The reality is that almost no one does this and only claim the amounts reported as winnings to the IRS. With the government so against internet poker, I would agree with alien genius that you do want to be extra careful. Also what I said was it is illegal to give the money to friends as dexters post stated I quoted the wrong message.