I am a losing poker player (gambler), what can I do with TAXES?

[nykenny]

So I lose on poker. And I lose on playing Blackjack, Roulette and Craps. I only have a rough idea of how much I loss totally over the year(s).

What should I do about it when I file my income taxes?

Also, I make good salary on W-2?

[astroglide]

if you want to be legal about it, i'm pretty sure you get screwed. you could try filing as a professional because you did play regularly and did have an expectation to win, which would allow you to lump your wins/losses. i would think in that case it would be less than the alternative. doing something like winning 100k and then losing 100k hurts if you file recreationally.

[Enon]

[ QUOTE ]
So I lose on poker. And I lose on playing Blackjack, Roulette and Craps. I only have a rough idea of how much I loss totally over the year(s).

What should I do about it when I file my income taxes?

Also, I make good salary on W-2?

[/ QUOTE ]

Wait a second.

This is the same Kenny who plays 6-10 tables of PP 15/30 at the same time?? /images/graemlins/confused.gif

[BigBaitsim (milo)]

Might I respectfully suggest either:

1) taking up a new hobby; or

2) adding me to your buddy list.

[jasonHoldEm]

I'm not an accountant, but I'm reasonably sure you can't deduct gambling losses in excess of gambling winnings.

J

[Moonsugar]

Astro,

Love most of your posts. However, your posts on taxes and legality of internet poker are not accurate. Since this is the tax thread I will just stick to that here.

The following is taken from the IRS website (and is the first link to a google search of 'gambling income tax'):

Topic 419 - Gambling Income and Expenses

Gambling winnings are fully taxable and must be reported on your tax return. You must file Form 1040 (PDF) and include all of your winnings on line 21. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and also the fair market value of prizes such as cars and trips. For additional information, refer to Publication 525, Taxable and Nontaxable Income.

If you receive $600 or more in gambling winnings, the payer generally is required to issue you a Form W-2G (PDF). If you have won more than $5,000, the payer generally is required to withhold 25% of the proceeds for Federal Income Tax. If you did not provide your social security number the payer may have to withhold 28%. For more information on withholding, refer to Publication 505, Tax Withholding and Estimated Tax.

You can deduct gambling losses only if you itemize deductions. Claim your gambling losses as a miscellaneous deduction on Schedule A Form 1040, line 27. However, the amount of losses you deduct cannot be more than the amount of gambling income you have reported on your return. It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to Publication 529, Miscellaneous Deductions, for more information.


Hope this clears up some misconceptions.

I do not know if one can carryforward losses into a new tax year. But I am sure that a competent CPA can find the answer.

[astroglide]

i have not said anything contrary to that, and i am 100% correct about the legal issues.

[Moonsugar]

Ok. Well, since you post so often and are respected I think it would be helpful to change your wording. Because, when you say things like you can only 'lump' wins and losses as a professional, some people may construe that as: If you do not report as a professional gambler then you have to report winnings but cant deduct losses.

Bottom line is this: If anyone on this board needs tax or legal advice, it is best to seek qualified tax and legal counsel.

[astroglide]

'lumping', To put together in a single group without discrimination, is the correct term for reporting the sum difference between a profit and a loss as it pertains to taxes as opposed to listing the profit and the loss separately (as is done when filing recreationally). i learned the use of it by discussing gaming taxes with multiple professionals.

what i said was not at all false, but i am willing to concede that i may be misleading in a vacuum. however, these topics have been covered at length in many other threads. if somebody uses any one of them as their sole source for professional tax advice, they deserve whatever bad things happen to them as a result of it.

[ThorGoT]

I'm sure it's been discussed before. End of year, you have won (overall) $5,000 on party poker -- i.e., you went up $1,000, down $500, up $3,000, down $xxxx, etc., etc., etc. -- end of year you have $5,000 more than you deposited. Can you just report that as a $5,000 winning?

[astroglide]

only if you file as a professional (and then you'll be subject to self-employment taxes). recreational gamblers are expected to list all wins together, deduct all losses separately, and be able to provide proof of all of it.

[Ulysses]

Kenny,

Cheating on your taxes after doing a number of cashouts from online is asking for big trouble.

[Luv2DriveTT]

Isn't the term "hobby" not recreational?

TT

[Kurn, son of Mogh]

You are out of luck if you're a net loser. You must claim all winnings as ordinary income on form 1040, and all losses (not to exceed winnings) as an itemized deduction on Schedule A.

[Kurn, son of Mogh]

No. IRS Publication 529 expressly forbids that.

[Luv2DriveTT]

The reason why I ask, is that (if I recall correctly) any self employed individual who files 1040 + schedule C cannot operate at a loss for 4 years in a row. In the event this occurs, the business is now considered a "Hobby".

Its been some time since I have operated at a loss, so things might have change from the way it was first described to me.

TT /images/graemlins/club.gif

[Sponger15SB]

I know that a lot of people like to inflated their winrates but usually they do that in the positive direction and have not been so incredibly negative.

[Paul2432]

So what do you do if you simply do not have the records? I have won a lot more money than I ever felt possible on-line. I know how much I have won and intend to report it, but have no idea of my individual session results.

Paul

[alekhine8]

If you dont have the records - just file showing income for your net winnings (basically, what you cash out plus any increase in your bankroll for the year).

In the 0.01% chance you get audited, you'll probably have to explain that to them and show bank records or something to prove your winnings. They'll probably scold you for not having accurate records but if you claim the income and pay the tax in good faith, that would probably be the end of it.

[Kurn, son of Mogh]

The problem with filing a schedule C for purposes of reporting gambling wins/losses is that the IRS is very strict about who they do and do not allow to file that way.

For example, if you tried it the first time this year and were reporting a loss, I can virtually guarantee they will deny it on the grounds that since you never reported gambling wins in excess of losses over the past few years, you did not have an "expectation of winning" and thus could not call yourself a professional gambler.

They treat gambling much different than any other side business you run from home.

[Kurn, son of Mogh]

In your case do one of two things.

1) just report the net and if you get audited, fall back on the ignorance defense. The IRS can be actually fairly reasonable with setting up payment plans.

2) Report cashouts as wins and deposits as losses.

One way or the other, consult a tax accountant.

[namknils]

[ QUOTE ]
Wait a second.

This is the same Kenny who plays 6-10 tables of PP 15/30 at the same time?? /images/graemlins/confused.gif

[/ QUOTE ]

Heh, yeah it is. This is also the same Kenny who used to claim all the time that he never loses (jokingly). I don't think Kenny is actually losing, I think it's more to put some useful info up on the boards, because some of us have to be losing. But I really have no clue what's the truth.

[Nightwish]

[ QUOTE ]
[ QUOTE ]
So I lose on poker. And I lose on playing Blackjack, Roulette and Craps. I only have a rough idea of how much I loss totally over the year(s).

What should I do about it when I file my income taxes?

Also, I make good salary on W-2?

[/ QUOTE ]

Wait a second.

This is the same Kenny who plays 6-10 tables of PP 15/30 at the same time?? /images/graemlins/confused.gif

[/ QUOTE ]
You've seen his individual hand posts though, right?

[dakine]

[ QUOTE ]
So I lose on poker. And I lose on playing Blackjack, Roulette and Craps. I only have a rough idea of how much I loss totally over the year(s).

What should I do about it when I file my income taxes?

Also, I make good salary on W-2?

[/ QUOTE ]

I posted a thread (10/22/04) about "Gambling and Taxes," on "News,Views and Gossip," Here is a link that may answer some of your questions. After you open the link, browse in the column section. You will find, "Big Brothers- The IRS is Watching." Hope this will answer some of your questions.

http://www.gamblingandthelaw.com/

[joker122]

[ QUOTE ]
You are out of luck if you're a net loser. You must claim all winnings as ordinary income on form 1040, and all losses (not to exceed winnings) as an itemized deduction on Schedule A.


[/ QUOTE ]

What if you don't keep track of these figures?

[riverhunter]

Kind of related question:

If you buy some poker books/softwares, can you deduct the cost from you poker winning? What about a new-bought computer for you pokergames? Anybody knows the answer?

[goofball]

if you are a pro: yes

[nykenny]

[ QUOTE ]
[ QUOTE ]
Wait a second.

This is the same Kenny who plays 6-10 tables of PP 15/30 at the same time?? /images/graemlins/confused.gif

[/ QUOTE ]

Heh, yeah it is. This is also the same Kenny who used to claim all the time that he never loses (jokingly). I don't think Kenny is actually losing, I think it's more to put some useful info up on the boards, because some of us have to be losing. But I really have no clue what's the truth.

[/ QUOTE ]

yes, same Kenny /images/graemlins/smile.gif

[nykenny]

[ QUOTE ]
Might I respectfully suggest either:

1) taking up a new hobby; or

2) adding me to your buddy list.

[/ QUOTE ]

i only add to my b-list who are even worse than me /images/graemlins/grin.gif

[nykenny]

[ QUOTE ]
[ QUOTE ]
So I lose on poker. And I lose on playing Blackjack, Roulette and Craps. I only have a rough idea of how much I loss totally over the year(s).

What should I do about it when I file my income taxes?

Also, I make good salary on W-2?

[/ QUOTE ]

I posted a thread (10/22/04) about "Gambling and Taxes," on "News,Views and Gossip," Here is a link that may answer some of your questions. After you open the link, browse in the column section. You will find, "Big Brothers- The IRS is Watching." Hope this will answer some of your questions.

http://www.gamblingandthelaw.com/

[/ QUOTE ]

Thanks! this is very good information.

Kenny

[BigBaitsim (milo)]

[quote

i only add to my b-list who are even worse than me /images/graemlins/grin.gif

[/ QUOTE ]

You're in luck, I qualify!