USA Tournament player tax question?

[joeyvegasboi]

Hello, I am a USA tournament player in Vegas and will be playing numerous events this upcoming month. I was trying to understand more how taxes work for USA players with tournaments mainly in regards to staking!



To start, I hear that any net win over $5000 triggers getting taxed 33%? Is any of this able to be deducted if filing as professional? And if so how is this calculated vs your other winnings that are less than $5k.



The main reason I am trying to understand this is though I have a positive ROI even with taxes (which obviously drops dramatically) how would I calculate this with people buying percents of my action?

Thanks!

 

[Emily Trott]

Hello, I am a USA tournament player in Vegas and will be playing numerous events this upcoming month. I was trying to understand more how taxes work for USA players with tournaments mainly in regards to staking!



To start, I hear that any net win over $5000 triggers getting taxed 33%? Is any of this able to be deducted if filing as professional? And if so how is this calculated vs your other winnings that are less than $5k.

I'm not a tax professional, but first off you should save all of your receipts from your tournament entries so that you can subtract them from your winnings. The 33% is most likely the percentage that the casino/card room is required to withhold if you win over $5000 in a tournament. Same thing would happen if you hit a slot machine for a big win. I don't know if the percentage withheld is 33%, but you will find out if you do win that much. The net amount won, along with the withholding will all be entered on your tax return, just like your wages and what is withheld from your wages are.

The main reason I am trying to understand this is though I have a positive ROI even with taxes (which obviously drops dramatically) how would I calculate this with people buying percents of my action?


Thanks!

If you want to know for sure, you should contact an income tax professional. My personal guess is that you would be liable for the full amount, unless you gathered tax information from your investors and issued the correct 1099, or some other, tax form to them and the Internal Revenue Service.

Talk to a professional.

 

[Andyreas]

Neither am I in the USA, nor familiar with taxes but I've seen people getting staked for live events here on CC and including those taxes in the staking terms, see here for example:

https://www.cardschat.com/forum/poker-staking-64/debi-selling-action-wsop-circuit-cherokee-512617/post-6495853

 

[Debi]

Hello, I am a USA tournament player in Vegas and will be playing numerous events this upcoming month. I was trying to understand more how taxes work for USA players with tournaments mainly in regards to staking!



To start, I hear that any net win over $5000 triggers getting taxed 33%? Is any of this able to be deducted if filing as professional? And if so how is this calculated vs your other winnings that are less than $5k.



The main reason I am trying to understand this is though I have a positive ROI even with taxes (which obviously drops dramatically) how would I calculate this with people buying percents of my action?

Thanks!

They don't withhold any money at all - but they do report it to the IRS if you win more than $5000 in a single tournament. Your tax rate depends on your income level.

Since my tax rate is 24% that is what I would deduct from my backers but only if I cashed in a single tournament for over $5000. My lower cashes I can offset by losses and pay no taxes on them. Everyone does it differently.

 

[markdias]

I thought prizes from continental level poker tournaments are already deducted.

 

[Emily Trott]

They don't withhold any money at all - but they do report it to the IRS if you win more than $5000 in a single tournament. Your tax rate depends on your income level.

Since my tax rate is 24% that is what I would deduct from my backers but only if I cashed in a single tournament for over $5000. My lower cashes I can offset by losses and pay no taxes on them. Everyone does it differently.

Do you give them your Social Security number (SS#) for amounts over $5000? I know that decades ago at Foxwoods I was next to a woman who won a big prize on a slot machine. The casino official told her that they could take her SS#, or they would have to withhold. I know that is how the banking business works, and unless something has changed I'd assume that the casinos still do it that way.

 

[Debi]

Do you give them your Social Security number (SS#) for amounts over $5000? I know that decades ago at Foxwoods I was next to a woman who won a big prize on a slot machine. The casino official told her that they could take her SS#, or they would have to withhold. I know that is how the banking business works, and unless something has changed I'd assume that the casinos still do it that way.

They don't give you an option in Las Vegas.

 

[Emily Trott]

They don't give you an option in Las Vegas.

They should be giving you the option because they aren't required to obtain your Social Security number. This is from the wsop, but it would be the same for any casino since it deals with the US Tax Code. Personally I wouldn't give it to anyone. Since they never told you that you had an option, which brings up red flags for me, I definitely wouldn't give it to them. That's me though, and everyone has to make decisions for themselves.

"What must I provide to collect Tournament Winnings?–
Winners must show their current valid picture identification (driver’s license, state identification card, military identification card, U.S. passport or U.S. passport card) acceptable to Caesars Entertainment in order to collect prizes. Any ID without an address will require a secondary unexpired government ID that can verify the physical address. If a participant is not a U.S. citizen, a current passport, consular identification, or alien registration card is required. Additionally, non-U.S. citizens must provide documentation verifying their current physical address.

For prizes exceeding $5,000 net the event buy-in, winners must also provide:

U.S. Residents: A Social Security Number.
U.S. residents not providing a Social Security Number will be subject to 28% tax withholding."

World Series of Poker - Official Tournament Coverage and Results

www.wsop.com

 

[LouK]

Hello, I am a USA tournament player in Vegas and will be playing numerous events this upcoming month. I was trying to understand more how taxes work for USA players with tournaments mainly in regards to staking!



To start, I hear that any net win over $5000 triggers getting taxed 33%? Is any of this able to be deducted if filing as professional? And if so how is this calculated vs your other winnings that are less than $5k.



The main reason I am trying to understand this is though I have a positive ROI even with taxes (which obviously drops dramatically) how would I calculate this with people buying percents of my action?

Thanks!

Will you be at the wsop?

 

[Debi]

They should be giving you the option because they aren't required to obtain your Social Security number. This is from the WSOP, but it would be the same for any casino since it deals with the US Tax Code. Personally I wouldn't give it to anyone. Since they never told you that you had an option, which brings up red flags for me, I definitely wouldn't give it to them. That's me though, and everyone has to make decisions for themselves.

"What must I provide to collect Tournament Winnings?–
Winners must show their current valid picture identification (driver’s license, state identification card, military identification card, U.S. passport or U.S. passport card) acceptable to Caesars Entertainment in order to collect prizes. Any ID without an address will require a secondary unexpired government ID that can verify the physical address. If a participant is not a U.S. citizen, a current passport, consular identification, or alien registration card is required. Additionally, non-U.S. citizens must provide documentation verifying their current physical address.

For prizes exceeding $5,000 net the event buy-in, winners must also provide:

U.S. Residents: A Social Security Number.
U.S. residents not providing a Social Security Number will be subject to 28% tax withholding."

World Series of Poker - Official Tournament Coverage and Results

www.wsop.com

I wish they had told me that because I would have much rather paid it up front. I won $2000 on a slot machine last summer and I had to fill out a form that required it. This was at Bally's. Maybe it is different for poker. It is not a trust issue for me though - I have no problem providing it - I just wish I could have had taxes withheld up front.