New Tax Law

Crummy

Crummy

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I got this from Card Player Magazine...This sucks!!! The government is screwing us poker players in anyway they can.



New Tax Law Takes Bite Out of Tournament Winnings

Law Will Require casinos to Take 25 Percent of $5,000 or More
A new tax code has been released that spells out just how much money the government will take from those who are lucky enough to cash for $5,000 or more in poker tournaments.

Starting March 4, 2008, casinos and cardrooms are supposed to start withholding 25 percent of any poker tournament winnings of $5,000 or more. This will particularly affect the poker hobbyists who go deep in tournaments with buy-ins that range from $100 to $550, and of course those who make their living humping the tournament poker trail.

Language in the new tax code pointed to a tax court ruling that took place earlier this year. The ruling held that tournament poker is not a skillful competition and should be considered a gambling activity, at least for the purposes of taxation.

The law requires casinos and cardrooms to withhold and report the winnings from a player if it amounts to $5,000 or more in a tax year. The code does not address winnings from online poker sites or from casinos off U.S. soil.

Here’s an example of how much money the government will be making off of poker tournaments after March 4, 2008. If the law was in effect earlier this month, the top seven finishers of the $500 event that took place Aug. 7, at the Legends of Poker would have paid a total of $40,221 in taxes.

The runner-up of this tournament, which attracted a healthy 460 entrants, would have taken home $27,972 after taxes ($37,295 before). The winner received $74,585. If the law was in place, that amount would’ve been $18,646 less.

The notice that was released to accounting firms this week follows:

Under Code Sec. 3402(q)(3)(C)(i), payers must withhold 25% on proceeds of more than $5,000 from a sweepstakes, wagering pool, or lottery (other than a state-conducted lottery, covered by another withholding rule). Proceeds from a wager are determined by reducing the amount received by the amount of the wager. (Code Sec. 3402(q)(4)(A))
 
mrrigel

mrrigel

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Win loss statements are lovely if used correctly. A refund come tax time would be possible with the proper preperation if the money is withheld at payout.
 
buckster436

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yup were getting screwed again, i guess it dont effect online poker YET, as they say thats illegal, guess they cant tax something thats not legal. all they want is there share, if the Gov. dont get anything then they outlaw it, 25% seems awfull high, dont you think??? buck:(
 
Stick66

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Win loss statements are lovely if used correctly. A refund come tax time would be possible with the proper preperation if the money is withheld at payout.
Exactly! They just take 25% with the win so you don't have to pay it later with your tax return (some don't bother at all). If you apply your deductions correctly, you can get a lot of this back in the form of a refund. Study up on what is deductable and what isn't. You'd be surprised.
 
KMC1828

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wouldnt this still fall under the gambling luxury taxes or something? (im not sure how much that tax is compared to the new law one) i know that there is a gambling tax on big wins (lottery etc), so why would a poker tournament be anything different? the government considers poker gambling, so why should their laws show otherwise?
 
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MississippiMud

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I got this from Card Player Magazine...This sucks!!! The government is screwing us poker players in anyway they can.


Poker players are getting screwed? Or is it everyone else who pays their taxes has been getting screwed because poker players are not paying their fair share on earnings?

Look at the bright side... if you had to claim it as self employed income you would be paying self employment tax which is around 16% and THEN be taxed on the rest as income at whatever tax bracket rate you are in.
 
bubbasbestbabe

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All your poker losses are deductable. So if you play online with all of its rigged sites there should be no problem getting your money back.:D
 
Debi

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All your poker losses are deductable. So if you play online with all of its rigged sites there should be no problem getting your money back.:D

They are only deductible as far as offsetting wins. For example if you have won $1000 you can deduct up to $1000 in losses. However if you have won nothing you can deduct nothing.
 
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tigertight

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I'm moving from usa because of this reason I'm going to germany.so the government can't take my money
 
Crummy

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Exactly! They just take 25% with the win so you don't have to pay it later with your tax return (some don't bother at all). If you apply your deductions correctly, you can get a lot of this back in the form of a refund. Study up on what is deductable and what isn't. You'd be surprised.

I didn't relize how much stuff could be written off until I owned my own business. I have an "Office" in my house so I can write off 40% of my morgate, 40% of all of my bills, including electric, internet, cable ect.... I write off my car, my cell phone, any clothing purchase, all of my lunches, and most of my dinners.....lets see what else....obviously all of my business stuff....My actual office space rent and the cable, water, electric, ect. in my office. Its GREAT!!!!!

Only downfall is that I have to pay my sales tax three months, and the rest of my taxes at the end of the year. And the more you make, the more you pay!!!!!!!

Maybe since I have to pay a crap load more taxes than the everage person that is why I think this is high.....As a business owner you get a lot of write off's and so called "tax breaks" but you don't really see them.
 
Monoxide

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Wow, the government will find any way to get their fat grubby hands into your pockets and steal your money.

Pfft, so gay, I hate politics. Im glad I live in canada.... but its not like I win over $5000 at poker anyway.....
 
quazar66

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Its funny how the government says that a tournament is a not skill game. I have a felling that however is making these laws doesnt play poker and most likely has a very bad poker player in the family saying everything is rigged.
 
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Monoxide

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yeah they just lump poker in there under "gambling" its ****ing ridiculous.
 
quazar66

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As a forum we all should sign something and send it to the idiot that came up with this bill.
 
quazar66

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yeah they just lump poker in there under "gambling" its ****ing ridiculous.


This is just another example on how the Government makes laws for things without having a clue on the subject.
 
OzExorcist

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They are only deductible as far as offsetting wins. For example if you have won $1000 you can deduct up to $1000 in losses. However if you have won nothing you can deduct nothing.

Correct me if I'm wrong (I'm Australian, after all, and this ain't my tax system we're talking about), but wouldn't you only be deducting from the amount of tax you paid on your winnings, not your total winnings? ie: to deduct a full $1000 of losses, you'd need to have won $4000 and had $1000 of that witheld as tax.
 
smd173

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I don't know why everyone is cry about this. The only thing new they'll be doing is taking the 25% out when you win. You are always required to pay the applicable taxes on ANY win over $601. So if you were winning $5000 before, you still owed it to Uncle Sam, it just wasn't taken immediately.

Any lottery winnings are taken immediately. Really this rule change is not too much different, unless you have been a tax cheat. In which case, you potentially could have much bigger issues.
 
OzExorcist

OzExorcist

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they shound'nt be allowed its part a skill game so luck is only half totaley unfair

As has been pointed out though - it's a tax witheld on income, like lots of other taxes, and I'd imagine you can claim deductions against it and/or get part of it back on your tax return*

(* this is how it'd work in Australia - I'd be surprised if y'all were that different)
 
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