Paying Taxes On Poker?

[aliengenius]

The money derieved from poker winnings is considered by the IRS to be illegally obtained.

uhh, no. In fact, I'm starting to doubt your credentials as a professional.

In Baxter vs. US the courts ruled that it is possible to be a professional gambler, and it is now treated as similar to any other business/self impolyment. Yep, 7x wsop bracelet holder and poker hall of famer Billy Baxter sued the IRS: The Nevada judge who heard the case ruled in favor of Baxter, declaring "I find the government's argument to be ludicrous. I just wish you had some money and could sit down with Mr. Baxter and play some poker."

I really suggest you buy the two books I listed above.

In any case, it DOESN'T matter if your income is illegally obtained: the IRS is (theoretically) prohibited from reporting your illegal income to any other governement branch/law enforcement under what is commenyly known as the "silver platter" law. In other words, if you report and pay taxes on money obtained from dealing drugs the IRS cannot then forward that to the DEA and "serve you up on a silver platter" becasue you obeyed tax law.

 

[tpb221]

Tax Aspects of Online Gambling

This here is a good source of info on taxes and online gambling.

 

[bronx3]

Few people actually do this but legally you have to. If you make a substantial amount of money you have a good chance of being caught. All big transactions catch some form of attention. And attention=audit to this IRS. If they audit you, you're boinked.

 

[zachvac]

In any case, it DOESN'T matter if your income is illegally obtained: the IRS is (theoretically) prohibited from reporting your illegal income to any other governement branch/law enforcement under what is commenyly known as the "silver platter" law. In other words, if you report and pay taxes on money obtained from dealing drugs the IRS cannot then forward that to the DEA and "serve you up on a silver platter" becasue you obeyed tax law.

Yep, heard that if Al Capone had filed his taxes and claimed that he was paying taxes on illegally obtained money, the prosecution would have had no case against him.

 

[leavem]

I would check with a tax accountant and see what is required. Or you could move to canada, any money we win is tax free.

 

[pokerchris]

The way the IRS makes money by taxing individual gamblers is to treat losses unfairly. If losses are treated fairly like losses in the stock market, where people can use their losses to offset their other income, all the IRS can make is about zero sums by taxing individual gamblers.

Maybe that’s why some other countries don’t tax individual gamblers.

 

[shinedown.45]

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.

I understand it's illegal if the US player doesn't claim the winnings, that much I understand, but the Question was, Does the pokersite have to inform the IRS of any substantial winnings made by a US player even if the poker site is based overseas'?

 

[aliengenius]

but the Question was, Does the pokersite have to inform the IRS of any substantial winnings made by a US player even if the poker site is based overseas'?

asked and answered

 

[hornellfred]

uhh, no. In fact, I'm starting to doubt your credentials as a professional.

In Baxter vs. US the courts ruled that it is possible to be a professional gambler, and it is now treated as similar to any other business/self impolyment. Yep, 7x wsop bracelet holder and poker hall of famer Billy Baxter sued the IRS: The Nevada judge who heard the case ruled in favor of Baxter, declaring "I find the government's argument to be ludicrous. I just wish you had some money and could sit down with Mr. Baxter and play some poker."

I really suggest you buy the two books I listed above.

In any case, it DOESN'T matter if your income is illegally obtained: the IRS is (theoretically) prohibited from reporting your illegal income to any other governement branch/law enforcement under what is commenyly known as the "silver platter" law. In other words, if you report and pay taxes on money obtained from dealing drugs the IRS cannot then forward that to the DEA and "serve you up on a silver platter" becasue you obeyed tax law.

I think we are saying the same things, my problem is I forget to keep saying that this involves only "internet poker." It is legal to play poker in casinos and your betting if tracked by the casino. If you make a living at poker then you can be a professinal gambler. This I know. I managed the Liberty Tax Offices in Jamestown, Buffalo, and Olean and casinos are near all three locations. We prepared many returns for gamblers at all three locations. I will get those books you mention.

 

[dumpy620_84]

i just always thought that it depended on how much you win. Like anything under $600 and you don't have to report it. Does anyone have any clarification on this for sure?

 

[zachvac]

i just always thought that it depended on how much you win. Like anything under $600 and you don't have to report it. Does anyone have any clarification on this for sure?

Yes, you have to declare every single penny you win, even if you have a negative net (but then you can just deduct all your winnings so you still don't pay anything). If you are making 200k/year at a real job and win $5 from poker, you have to pay taxes on $200,005. Now I think if your total income is below a certain amount you don't have to pay taxes, but that's not a poker tax question. I don't know what the answer is if you're not working and only making $600/year from poker. Do you still pay income tax on this or is there a minimum for general income?

 

[Pothole]

Ridiculous laws you have in the states, any form of POKER winnings should be tax free. eg. Assuming now were playing in a us casino, Zach, Dakota, Juicy, Nick and me sit down at a poker table and put $5k each on the table, Zach cleans us all out and walks up to the cage with $25k and has to pay 30% tax on it. ALL the money that was played on that table was after tax dollars we earned from our day jobs. So Zach is paying tax on funds that have already been taxed, the US government is double dipping, see what would happen to you if you claimed a deductable twice by mistake, the IRS would audit you for as far back in time as they are legally allowed ( 6 years in Canada ). Different for winning at roulette blackjack slots ect because your reducing the casinos profit which reduces the Govs tax take.:deal:

 

[zachvac]

Ridiculous laws you have in the states, any form of POKER winnings should be tax free. eg. Assuming now were playing in a US casino, Zach, Dakota, Juicy, Nick and me sit down at a poker table and put $5k each on the table, Zach cleans us all out and walks up to the cage with $25k and has to pay 30% tax on it. ALL the money that was played on that table was after tax dollars we earned from our day jobs. So Zach is paying tax on funds that have already been taxed, the US government is double dipping, see what would happen to you if you claimed a deductable twice by mistake, the IRS would audit you for as far back in time as they are legally allowed ( 6 years in Canada ). Different for winning at roulette blackjack slots ect because your reducing the casinos profit which reduces the Govs tax take.:deal:

Oh I definitely agree with you, but that's not the only place it happens. We pay income tax and then sales tax with post-income tax dollars plus there are things like the estate tax, gift tax, etc. that charge for simply transferring wealth. Personally I'm all for lower taxes (although that means lower spending, which neither the Democrats nor Republicans seem to want), but what I want and the cold hard facts are different. Right now if this scenario occurred and I failed to report, I'd end up paying a huge fine for tax fraud or evasion if not jail time.

By the way, you say it's 6 years in Canada, it's infinitely back in the US, tax fraud has NO statute of limitations.

The one good thing is though the taxes will only be on winning players. We assume that if you have a net positive over the year you are a winning player, so technically it is actually income, and not just money going around. If you had to pay taxes on each session and DIDN'T get to deduct your losses, this would be extremely unfair. But as long as the effective taxes paid are the net, the winning players only pay on the part that they make, and unless they have a horrible year where they lose money (in which case there would be some losses that couldn't be deducted) they're only paying on profits, and the others are spending for entertainment.

 

[Pothole]

Oh I understand all the various forms of taxes Zach, as a financial planner I show people every day how to avoid or decrease the governments tax bite, but hell the US rules suck. Should you win the lottery in the states, the lottery official shows up with an IRS guy and 2 cheques, one for you and one for him, any lottery winnings are tax free in Canada and even in the UK, unless they changed the rules since I left.

 

[smd173]

Oh I understand all the various forms of taxes Zach, as a financial planner I show people every day how to avoid or decrease the governments tax bite, but hell the US rules suck. Should you win the lottery in the states, the lottery official shows up with an IRS guy and 2 cheques, one for you and one for him, any lottery winnings are tax free in Canada and even in the UK, unless they changed the rules since I left.

Well, we all live where we live. I have no better chance of winning the lottery in Canada than I do here. And I'd love to have "the problem" of paying taxes on lottery winnings. If I win Powerball for $87 Million and I'm taxed 38%, I don't care because I'm still set for life. Plus prudent investments would get most of that back for you anyway.

 

[t1tpfdc]

... any lottery winnings are tax free in Canada and even in the UK ...

Or does it just appear so on the surface?

In sweden, all taxes and charges are deducted from the lottery prize pool before thé winner is even drawn. Taxes are paid on the winnings! ... just not by the winner.

 

[ncmtngirl79]

first of all I would like to go on the record saying that taxing poker winnings is bull sh@t. Make sure you keep a record of your wins and losses. If your losses equal your wins I htink you get your taxes back. I have a friend who has probably spent over ten thousand dollars gambling, and then wins 15000, to have it taxed, In my opinion all the money you gamble with is allready taxed, why do it some more... England doesn't tax their players, neither does india. just another way our govmt. is sticking us in the bung hole.

 

[rivertapped]

The bottom line is you are legally required to pay taxes on your income in the USA.

Whether your income is derived from digging a ditch, playing poker, or dealing drugs.

 

[matt6781]

taxes

most poker sites dont report because they are not us based. but that does not free you from the law. be wise be informed and obey the law and you'll be ok. remember a guy named al capone he didnt go to jail for murder, rackaterring, or money laundering. he got locked up for tax evasion.

 

[bw07507]

Quick question: Can the IRS or Feds or whatever see your bank account activity?? I have actually won a fair bit this year and I wasn't planning on reporting it, but I have had a ton of withdrawals and deposits between my bank account and pokerstars. If they can see bank transactions I might be inclined to report the winnings, but if they can't and PS doesnt report your winnings to them how would they ever know?

 

[hornellfred]

While working in Buffalo I did a return for a couple from Canada that had to pay US taxes on their winnings at the Niagara Falls US casino. They ended up not being able to deduct any of their losses because they are not citizens and the type of form for foreign citizens has no place to deduct losses. They also owed New York taxes. Lesson, if your Canadian stay in Canada and gamble the US will tax you, Canada won't.

 

[hornellfred]

Just to clear something else up. ALL gambling winnings are taxable. This means ALL: bingo winnings, raffle winnings, daily books in clubs, football pools, etc. etc. The losses must be claimed on Schedule A or itemized deductions. If you can't come up with more than the standard deduction already allowed to you, the losses are not deductible. If an unemployed man wins $4000, and has $10,000 of other income, he will not be able to claim the itemized deduction in most cases and therefore is on the hook for the taxes on the $4,000 even if he can prove he lost more than that. In reality most people will not claim any winnings that the IRS does not know about (1099G). If your tax accountant knows by law he must report it on your return. Not claiming winnings (all not just reported to IRS) is tax evasion. If you do not claim them you are cheating on your taxes. Make your own decisions from there.

 

[hockeyaddict]

In the end u end up paying for a war with ur taxes they say are going to ur roads. The next time i go to a casino should i take a book and write down every hand i play so i don't get screwed paying 10x my yearly income because i didn't get one number right? Reason for 10x is a local guy got caught with tax envasion had to pay 400 grand for failing to report winning 20 grand over the year that was a majority of his income.

 

[donizhere]

Yh i thought in England/ireland/Wales all poker/casino winnings are tax free.. it makes sense since its already taxed money.

 

[donizhere]

One thing i don't believe is that in the USA they tax you excluding your losses.