Jesse Kidd
12-29-2004, 03:10 AM
Hello, long-time lurker, rare poster. I've read everything I can find on this subject online, and still have a number of questions. I know the proper answer is to "seek the help of a professional", but I'd really love to be able to figure this out on my own.
I started playing full-time around September of this year, after playing 8 months as a hobby. My winnings for the year are approximately $20,000 before September, and $40,000 from September through the end of the year. (Note: Before I started playing full-time, I did not keep detailed records of my play. This may make a difference in the decision.) I plan to play full-time next year, and to continue the detailed session logs I have kept since September.
I have a number of questions:
1.) I plan on filing as a recreational gambler this year, and as a professional next year(estimated around $100-$120K income). I didn't really have any other income this year, as I was travelling and basically just screwing around. Would it make sense to file as a pro this year, or to wait until next year?
2.) I plan to open an online SEP-IRA at the first of the year, and contribute heavily to it during the year. Will this be a problem? Do I need to get a business license or anything to avoid problems with the creation of a SEP-IRA, or is it no big deal?
3.) Estimated Taxes - I want to do this for income and self-employment tax for the coming year, but everything I've read seems to base off of the previous year. If I haven't done this before, what sort of numbers should I use for the quarterly payments?
4.) I largely want to file as a professional because it seems like the right thing to do. I'm not interested in being sneaky with my return or anything, although I would of course like to keep my taxes to the minimum. Will my sudden change to "professional" status be a problem as long as I can back everything up? I saw the landmark case typically cited noted that gambling needed to show a profit 3 of the last five years. I can't imagine this is a strict requirement, but has anyone had any problems with it?
Thanks a ton,
Jesse
I started playing full-time around September of this year, after playing 8 months as a hobby. My winnings for the year are approximately $20,000 before September, and $40,000 from September through the end of the year. (Note: Before I started playing full-time, I did not keep detailed records of my play. This may make a difference in the decision.) I plan to play full-time next year, and to continue the detailed session logs I have kept since September.
I have a number of questions:
1.) I plan on filing as a recreational gambler this year, and as a professional next year(estimated around $100-$120K income). I didn't really have any other income this year, as I was travelling and basically just screwing around. Would it make sense to file as a pro this year, or to wait until next year?
2.) I plan to open an online SEP-IRA at the first of the year, and contribute heavily to it during the year. Will this be a problem? Do I need to get a business license or anything to avoid problems with the creation of a SEP-IRA, or is it no big deal?
3.) Estimated Taxes - I want to do this for income and self-employment tax for the coming year, but everything I've read seems to base off of the previous year. If I haven't done this before, what sort of numbers should I use for the quarterly payments?
4.) I largely want to file as a professional because it seems like the right thing to do. I'm not interested in being sneaky with my return or anything, although I would of course like to keep my taxes to the minimum. Will my sudden change to "professional" status be a problem as long as I can back everything up? I saw the landmark case typically cited noted that gambling needed to show a profit 3 of the last five years. I can't imagine this is a strict requirement, but has anyone had any problems with it?
Thanks a ton,
Jesse