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.

zachvac said:

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.

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only $600 or more though right?

from the IRS site

Reportable Gambling Winnings

Generally, gambling winnings are reportable if the amount paid reduced, at the option of the payer, by the wager is (a) $600 or more and (b) at least 300 times the amount of the wager. However, these requirements do not apply to winnings from bingo, keno, and slot machines. Gambling winnings for these games are reportable if:

The winnings (reduced by the wager) are $1,500 or more from a keno game,

The winnings (not reduced by the wager) are $1,200 or more from a bingo game or slot machine, or

The winnings (reduced by the wager or buy-in) are more than $5,000 from a poker tournament.


If you pay reportable gambling winnings, you must file Form W-2G with the IRS and provide a statement to the winner (Copies B and C of Form W-2G)

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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?

iMaGiN. said:

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

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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....

Sk8surf said:

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

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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.

iMaGiN. said:

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?

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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.

ChuckTs said:

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

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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

ChuckTs said:

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.

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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 stars cheques a month worth a few K each.

ChuckTs said:

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

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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.

Monoxide said:

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 stars cheques a month worth a few K each.

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feitr said:

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.

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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!