C
corey333bd
Rising Star
Bronze Level
If someone makes about 20,000$ in profit from online poker cashed out in checks cashed at his bank and then doesn't report this to the IRS does this person have real chance of getting busted?
RoyalFish
Rock Star
Silver Level
There are reporting threshholds, for example, interest you're paid is at least sometimes reported to the IRS. Large cash transactions are as well. I *think* the limit used to be $10,000 or so. No idea what it is now.
I know this isn't the question you're asking, but IMO I'd just pay the taxes on it. I'm reminded of the Survivor guy who won $1,000,000 and 3 years in jail for not paying taxes on it. I only reply because I've wondered the same thing. What will I do when I withdraw. So far I haven't won enough for it to really matter, but I decided when I do, I'd rather suck it up and pay taxes on it than spend the rest of my life wondering if a letter (or worse) is going to show up in the mail.
RF
I know this isn't the question you're asking, but IMO I'd just pay the taxes on it. I'm reminded of the Survivor guy who won $1,000,000 and 3 years in jail for not paying taxes on it. I only reply because I've wondered the same thing. What will I do when I withdraw. So far I haven't won enough for it to really matter, but I decided when I do, I'd rather suck it up and pay taxes on it than spend the rest of my life wondering if a letter (or worse) is going to show up in the mail.
RF
L
LukeSilver
Rock Star
Silver Level
This isn't an issue for me yet as we do not have to pay tax on poker winnings in the Uk. However you can sign checks over to people, and most poker sites offer the option of sending you a check. If you went into a pawn broker or such and signed over the check for cash, they would take a % I think like 5-10% and you would have cash with no way of tracing your financial earnings. Would be very hard for the IRS to track that. of course if they got info direct from the poker sites or such then you would be busted and busted hard.
There is a way to be completely untraceable even if they got info from the poker sites and no this does not involve money transfer to other players or chip dumping involves how you sign up etc. However I am just commenting on an intellectual level and do not intend to give people education on tax evasion. You live in a community that offers a service to you, the police to protect you the fire brigade etc and street maintenance and all other national services. These are what your taxes supposedly pay for, thus when you try tax evasion you are trying to get this for nothing without paying your fair share. It is theft and not much different to shop lifting or not buying a ticket for the train.
But yes if done properly you can cash out large amounts without the IRS been able to trace it but I won't educate people fully on how to do this, and if you get caught you deserve the jail time.
There is a way to be completely untraceable even if they got info from the poker sites and no this does not involve money transfer to other players or chip dumping involves how you sign up etc. However I am just commenting on an intellectual level and do not intend to give people education on tax evasion. You live in a community that offers a service to you, the police to protect you the fire brigade etc and street maintenance and all other national services. These are what your taxes supposedly pay for, thus when you try tax evasion you are trying to get this for nothing without paying your fair share. It is theft and not much different to shop lifting or not buying a ticket for the train.
But yes if done properly you can cash out large amounts without the IRS been able to trace it but I won't educate people fully on how to do this, and if you get caught you deserve the jail time.
Stu_Ungar
Legend
Silver Level
There is virtually no way you are walking out of a pawn broker with $20,000 after presenting a cheque from an institution the pawnbroker is unlikely to have even heard of. This is one of those 'works in theory' ideas but has slim to no chance of working in real life.
L
LukeSilver
Rock Star
Silver Level
They normally take security deposits such as Cars TV's stereos etc until the check clears then you can come collect your items again I assumed we was thinking several hundred a week etc. Obviously if your talking about one big cash in one go then thats another ball game there is still people you can go to but at that point your talking stuff the IRS might be tracing anyway because your talking big time full scale professional money laundering.
tpb221
Chasing Gutshots
Silver Level
One-any transaction over $10,000 MUST be reported to the IRS.
Two-Your bank keeps records of the checks you cash, even if you don't deposit the funds.
Three-breaking up a transaction so it is under the $10,000 rule, say two 5,000 checks still must be report as a 10,000 dollar transaction plus it is also illegal to break up a transaction to get under the $10,000 rule. So not only will you get in trouble for not paying taxes but also go to jail for trying to hide it by breaking it up. Your more likely to go to jail for trying to hide it then not paying the taxes.
Fourth-and this is a BIG one-If/when congress passes a internet gambling bill, anyone who gets a license-Stars,FT,etc.- would most likely have to turn over there records of players from previous years and the IRS will have a field day with the people who did not report there winnings.
Report your winning or keep looking over your shoulder-that simple.
Two-Your bank keeps records of the checks you cash, even if you don't deposit the funds.
Three-breaking up a transaction so it is under the $10,000 rule, say two 5,000 checks still must be report as a 10,000 dollar transaction plus it is also illegal to break up a transaction to get under the $10,000 rule. So not only will you get in trouble for not paying taxes but also go to jail for trying to hide it by breaking it up. Your more likely to go to jail for trying to hide it then not paying the taxes.
Fourth-and this is a BIG one-If/when congress passes a internet gambling bill, anyone who gets a license-Stars,FT,etc.- would most likely have to turn over there records of players from previous years and the IRS will have a field day with the people who did not report there winnings.
Report your winning or keep looking over your shoulder-that simple.
bazerk
Legend
Silver Level
corey333bd, unsure if you're in the US or not. In the US, tax evasion is illegal but tax avoidance is not...I suggest contacting a tax professional to determine if the poker income is:
It is best for one to report all income & pay the corresponding taxes; the potential fines, penalties, & interest generally exceed the income (just ask Floyd Mayweather Jr...it was rumored IRS agents attended the Mayweather/Marquez fight in Sept to collect more than 1/2 his $10M purse to pay back taxes).
- gambling winnings (= gross income with limited loss deductions)
- business income (ie: you're a professional...with the IRS determining whether you're a professional or recreational player) with allowable business deductions.
It is best for one to report all income & pay the corresponding taxes; the potential fines, penalties, & interest generally exceed the income (just ask Floyd Mayweather Jr...it was rumored IRS agents attended the Mayweather/Marquez fight in Sept to collect more than 1/2 his $10M purse to pay back taxes).
Grossberger
Cardschat Elite
Silver Level
Depending where you are, I suggest save all your gambling receipts, if you buy a losing lottery ticket throw it in a bag and save it til the end of the year. If you goto a casino and buyin to a tournament save your receipt save your records of deposits to online poker rooms. That way if you do hit for say $12,000 and you have receipts and the like for say $5,000 you would only have to pay taxes on $7,000 not $12,000. Here is a article i found kinda on the subject.
Big Brother (The IRS) Is Watching
9 January 2002
By I. Nelson Rose
The Internal Revenue Code is unkind to winners -- and it doesn't much like losers, either. The federal government taxes gambling winnings at the highest rates allowed. So do the many states and even cities that impose income taxes on their residents. If you make enough money in a high-tax state like California or New York, the top tax bracket is about 50 percent. Out of every additional dollar you take in, through work or play, governments take 50 cents.
Of course, the tax-collector first has to find out that you have won. Congress and the Internal Revenue Service know gambling is an all-cash business and few winners indeed would voluntarily report their good luck. So, statutes and regulations turn the gambling businesses, casinos, state lotteries, race tracks and even bingo halls, into agents for the IRS.
Big winners are reported to the IRS on a special Form W-2G. If winnings are to be split, as with a lottery pool, winners are reported on a Form 5754.
Pooling money to buy lottery tickets is common among employees and friends. But whether there are two or 200 in the pool, there is going to be only one winning ticket, and somebody has to turn it in. If you are that someone, make sure you fill out a Form 5754. If your share of a $5 million prize is $1 million, you do not want to be stuck with paying income tax on the entire $5 million.
Gambling has become such big business that the IRS receives nearly four million Forms W-2G and 5754 each year. This tells the tax-collectors that nearly four million big winners are out there, waiting to be taxed.
But the IRS does not always wait. The government wants to make sure it gets paid. What good does a W-2G do if the winner is a foreigner who is going to be in his own foreign country when April 15th rolls around?
So, the IRS not only wants reports filed, but often requires that a part of the winnings be withheld. As anyone who has a salary knows, withholding also allows the government to use taxpayers' money for many months, without having to pay interest.
The withholding rate for nonresident aliens is 30%. Not coincidentally, the tax rate for nonresident aliens is also 30%. So, if a citizen of a foreign country wins $1 million cash at a slot machine in Las Vegas, he will find he is paid only $700,000. The remaining $300,000 is sent to the IRS. The foreign citizen is unlikely to ever file an income tax return, but the IRS gets paid in full anyway.
Citizens of foreign countries are also, of course, usually taxed by their own governments. So some countries have treaties with the U.S. that protects those foreigners from having to pay the 30% withholding to the IRS.
U.S. citizens and resident aliens have it both better and worse than nonresident aliens. The withholding rate for gamblers living in American is only 28% (it was 20%, up to 1992). Having the IRS take $28,000 out of a jackpot of $100,000 is painful. But, it can hurt even more when tax forms are filled out. There is no 30% maximum tax for people living in the U.S., and really big winners often end up paying a lot more than 28% or 30%.
The one good news is Nevada casinos were also able to convince the IRS that they could not keep track of players at table games. They said that when a player cashes out for $7,000, they do not know whether he started with $25 or $25,000. So it is actually written into the law that there is no withholding or even reporting of big winnings to the IRS for blackjack, baccarat, craps, roulette or the big-6 wheel.
There is another general IRS rule that says anyone paying anyone else $600 in one year is supposed to file a report. The IRS has been going after casinos and cardrooms that run tournaments, forcing them to file tax reporting forms on grand prize winners. Here the IRS has the very good argument that the operator knows exactly how much a player has paid to enter the tournament and how much the finalists are given.
Is there anything a winning player can do to lower the bite of the income tax? And what about those who gamble and lose? Which is everybody, occasionally. The law does allow players to take gambling losses off their taxes, but only up to the amounts of their winnings.
Of course, if you win, say $135,000, you can take off all gambling losses, up to that amount. If you gambled away, say $65,000, you would only have to pay taxes on the remaining: $135,000 minus $65,000 equals $70,000. The tax on $70,000 is a lot less than the tax on $135,000.
Of course, you have the small problem of proving that you actually lost $65,000. Large winnings may be required to be reported to the IRS; large losses are not.
One former IRS Revenue Officer, who quit government to open his own small tax preparation firm, thought he found the answer. One of his clients won a share in a state lottery: $2.7 million, paid out over 20 years in installments of about $135,000, before taxes. The winnings were reported, but the tax return claimed gambling losses of $65,000. The IRS decided that $65,000 was a lot to lose, and it sent an agent to conduct an audit.
The tax preparer found a man with an extremely large collection of losing lottery tickets and made a deal: he would borrow 200,000 losing tickets for a month for $500. The losing tickets were bound in stacks of 100 and shown to the IRS auditor: 45,000 instant scratch tickets, 5,000 other Massachusetts lottery tickets, and 16,000 losing tickets from racetracks throughout New England. So many losing tickets, that it would have been physically impossible for one man to have made these bets. The New York Times called it "one of the more visibly inept efforts at tax fraud." They pleaded guilty eight days after being indicted.
By the way, the man who rented the tickets was not charged. It's not a crime to collect losing lottery tickets, only to use them to try and cheat the IRS.
SIDEBAR: Rules for Tax Reports and Withholdings on Winnings
Big Brother (The IRS) Is Watching
9 January 2002
By I. Nelson Rose
The Internal Revenue Code is unkind to winners -- and it doesn't much like losers, either. The federal government taxes gambling winnings at the highest rates allowed. So do the many states and even cities that impose income taxes on their residents. If you make enough money in a high-tax state like California or New York, the top tax bracket is about 50 percent. Out of every additional dollar you take in, through work or play, governments take 50 cents.
Of course, the tax-collector first has to find out that you have won. Congress and the Internal Revenue Service know gambling is an all-cash business and few winners indeed would voluntarily report their good luck. So, statutes and regulations turn the gambling businesses, casinos, state lotteries, race tracks and even bingo halls, into agents for the IRS.
Big winners are reported to the IRS on a special Form W-2G. If winnings are to be split, as with a lottery pool, winners are reported on a Form 5754.
Pooling money to buy lottery tickets is common among employees and friends. But whether there are two or 200 in the pool, there is going to be only one winning ticket, and somebody has to turn it in. If you are that someone, make sure you fill out a Form 5754. If your share of a $5 million prize is $1 million, you do not want to be stuck with paying income tax on the entire $5 million.
Gambling has become such big business that the IRS receives nearly four million Forms W-2G and 5754 each year. This tells the tax-collectors that nearly four million big winners are out there, waiting to be taxed.
But the IRS does not always wait. The government wants to make sure it gets paid. What good does a W-2G do if the winner is a foreigner who is going to be in his own foreign country when April 15th rolls around?
So, the IRS not only wants reports filed, but often requires that a part of the winnings be withheld. As anyone who has a salary knows, withholding also allows the government to use taxpayers' money for many months, without having to pay interest.
The withholding rate for nonresident aliens is 30%. Not coincidentally, the tax rate for nonresident aliens is also 30%. So, if a citizen of a foreign country wins $1 million cash at a slot machine in Las Vegas, he will find he is paid only $700,000. The remaining $300,000 is sent to the IRS. The foreign citizen is unlikely to ever file an income tax return, but the IRS gets paid in full anyway.
Citizens of foreign countries are also, of course, usually taxed by their own governments. So some countries have treaties with the U.S. that protects those foreigners from having to pay the 30% withholding to the IRS.
U.S. citizens and resident aliens have it both better and worse than nonresident aliens. The withholding rate for gamblers living in American is only 28% (it was 20%, up to 1992). Having the IRS take $28,000 out of a jackpot of $100,000 is painful. But, it can hurt even more when tax forms are filled out. There is no 30% maximum tax for people living in the U.S., and really big winners often end up paying a lot more than 28% or 30%.
The one good news is Nevada casinos were also able to convince the IRS that they could not keep track of players at table games. They said that when a player cashes out for $7,000, they do not know whether he started with $25 or $25,000. So it is actually written into the law that there is no withholding or even reporting of big winnings to the IRS for blackjack, baccarat, craps, roulette or the big-6 wheel.
There is another general IRS rule that says anyone paying anyone else $600 in one year is supposed to file a report. The IRS has been going after casinos and cardrooms that run tournaments, forcing them to file tax reporting forms on grand prize winners. Here the IRS has the very good argument that the operator knows exactly how much a player has paid to enter the tournament and how much the finalists are given.
Is there anything a winning player can do to lower the bite of the income tax? And what about those who gamble and lose? Which is everybody, occasionally. The law does allow players to take gambling losses off their taxes, but only up to the amounts of their winnings.
Of course, if you win, say $135,000, you can take off all gambling losses, up to that amount. If you gambled away, say $65,000, you would only have to pay taxes on the remaining: $135,000 minus $65,000 equals $70,000. The tax on $70,000 is a lot less than the tax on $135,000.
Of course, you have the small problem of proving that you actually lost $65,000. Large winnings may be required to be reported to the IRS; large losses are not.
One former IRS Revenue Officer, who quit government to open his own small tax preparation firm, thought he found the answer. One of his clients won a share in a state lottery: $2.7 million, paid out over 20 years in installments of about $135,000, before taxes. The winnings were reported, but the tax return claimed gambling losses of $65,000. The IRS decided that $65,000 was a lot to lose, and it sent an agent to conduct an audit.
The tax preparer found a man with an extremely large collection of losing lottery tickets and made a deal: he would borrow 200,000 losing tickets for a month for $500. The losing tickets were bound in stacks of 100 and shown to the IRS auditor: 45,000 instant scratch tickets, 5,000 other Massachusetts lottery tickets, and 16,000 losing tickets from racetracks throughout New England. So many losing tickets, that it would have been physically impossible for one man to have made these bets. The New York Times called it "one of the more visibly inept efforts at tax fraud." They pleaded guilty eight days after being indicted.
By the way, the man who rented the tickets was not charged. It's not a crime to collect losing lottery tickets, only to use them to try and cheat the IRS.
SIDEBAR: Rules for Tax Reports and Withholdings on Winnings
- Slot machines and bingo: Payouts of $1,200 or more are reported to the IRS, but there is no withholding taken out.
- Keno: Similar to slot machines, but the amount won must be at least $1,500.
- State lotteries and sweepstakes: Withholding is taken out of all winnings of more than $5,000.
- Parimutuel pools, including horse and dog races: Subject to withholding, but only if the winnings are both more than $5,000 and at least 300 times as large as the amount bet.