View Full Version : Poker as Taxable Income
Namdrahsirhc
02-23-2005, 09:30 AM
Ive been thinking about how professional poker players deal with the IRS. Is gambling taxable income? If so how does one go about proving how much one made (or didnt make) in any given year. Looking for responses from anyone who has poker as their main source of income. Any comments appreciated
Seijuro
02-23-2005, 12:53 PM
It doesn't count as taxable income in the UK. God knows if it's taxable for yanky doodle dandys though. I too would be interested in finding out.
Tournament winnings are taxable (they give you a W2G).
Cash game winnings are usually not taxable. If you win over 10k they'll probably ask for your numbers.
bobbyi
02-23-2005, 01:49 PM
[ QUOTE ]
Tournament winnings are taxable (they give you a W2G).
Cash game winnings are usually not taxable. If you win over 10k they'll probably ask for your numbers.
[/ QUOTE ]
You seem to be confusing things for which you are required to fill out forms with things that are taxable. If you make money playing poker, it is income and you are legally obligated to pay taxes on it (in the US).
Niediam
02-23-2005, 08:11 PM
Yes gambling income is without a doubt taxible in the US.
The IRS requires a professional gambler to keep an up to date book with various information such as addresses, amount won/lost, people who you were with, etc.
There are literally dozens of threads in the 'Internet Gambling' forum about this.
Maybe you internet players have to pay taxes on your cash game winnings becuase you have an audit trail.
In live B&M cash games, there is no audit trail. You cash in and cash out. End of story. Only if you win more than 10k in a 24 hour period cumulaative in the same casino do you have an audit trail.
And as I said before, live poker tourneys will W2G you for any amount you win at the final table.
BugsBunny
02-24-2005, 01:33 PM
You're confusing an audit trail with "is it legally taxable income". It's true that there's no audit trail. It's also true that it's still legally taxable income. Now will you get caught if you don't report it? That's another issue altogether.
defyodds
02-24-2005, 05:58 PM
all gambling income is taxable. you can file gambling losses up to the amount of your winnings. You must keep accurate records. There is some confusion about what is a session (such as if you change tables, or limits, or games on one visit to a casino). You should do a search on this forum and maybe some others to get more info. Whether you report your winnings or not, does not exclude them from being subject to taxes.
Niediam
02-24-2005, 06:08 PM
Please note though that you cannot deduct your losses unless you itemize your deductions.
The IRS has made fairly clear rulings as to what constitutes a session for casino play. However, the definition of a session for online play is ambiguous at best.
defyodds
02-24-2005, 06:29 PM
--what is the "fairly clear" definition of a session. you are correct about the itemized deduction.
Niediam
02-24-2005, 06:47 PM
I don't have any IRS rulings or regulations in front of me, but some things off the top of my head...
It is two sessions if you play for three hours, take a two hour lunch break, and then play for three more hours.
It is one session if you play 3/6 holdem for a hour while waiting for a 10/20 holdem table to open and then play 10/20 holdem for two hours.
It is two sessions if you play 3/6 holdem for an hour while waiting for a 10/20 omaha table to open and then play 10/20 omaha for two hours.
Kurn, son of Mogh
02-24-2005, 11:43 PM
*All* gambling winnings are taxable regardless of whether or not the casino gives you a W2G (Foxwoods, which adds money to the prize pool, does not).
Deorum
02-25-2005, 12:42 AM
Well, as most people have mentioned, gambling winnings are
indeed taxable income. However, something which has not yet
been mentioned is that if you file as a professional
gambler, then you would pay quarterly estimates, like a
writer does, as opposed to one large lump sum at the end of
the year.
Tacjedi
02-25-2005, 01:38 AM
IRS topic - Gambling Income and Expenses (http://www.irs.gov/newsroom/article/0,,id=108277,00.html)
Schwartzy61
02-25-2005, 04:07 AM
All income from whatever source is taxable except for certain tax exempt investments and things.
To put it another way, if you sell drugs and make a profit that profit is taxable income. There isn't an audit trail and you earned it through illegal methods but the income is still taxable. The IRS really doesn't care how you made the money it just wants some of it.
[ QUOTE ]
*All* gambling winnings are taxable regardless of whether or not the casino gives you a W2G (Foxwoods, which adds money to the prize pool, does not).
[/ QUOTE ]
OK. /images/graemlins/wink.gif
JonLines
02-25-2005, 01:32 PM
[ QUOTE ]
It doesn't count as taxable income in the UK. God knows if it's taxable for yanky doodle dandys though. I too would be interested in finding out.
[/ QUOTE ]
Yeah living in the UK rules! Plus you can leave as many trails as you like in a holiday in Vegas, come home and be free from the IRS.
I think the USA might be the only country that actually taxes gambling winnings. Anyone know of any others?
Deorum
02-25-2005, 07:43 PM
[ QUOTE ]
All income from whatever source is taxable except for certain tax exempt investments and things.
To put it another way, if you sell drugs and make a profit that profit is taxable income. There isn't an audit trail and you earned it through illegal methods but the income is still taxable. The IRS really doesn't care how you made the money it just wants some of it.
[/ QUOTE ]
In a related story, Benny Binion was once arrested for not
paying taxes on a bribe.
Kurn, son of Mogh
02-26-2005, 01:00 AM
You are correct that there's no audit trail for B&M income. However, if your winnings get big enough that your spending patterns are out of line with your reported income, that tends to attract attention.
Kurn, son of Mogh
02-26-2005, 01:03 AM
One reality about the US is that, while we have the lowest tax rates of any industrialized country, we also have the most draconian tax enforcement.
Excellent use of the word Draconian, Mogh.
You have got to love the American catch 22s......
Anything above 1200 dollars in a fiscal year is taxable... and up to 600 dollars are tax deductable, for some of you newbies...
Kurn, son of Mogh
02-26-2005, 03:37 PM
Not true, Technically, if you win $1, it must be reported. Whether or not it is taxable, depends on how much you make overall.
You are correct sir.
For some reason I feel like yelling "Kahn!!!"
Good talk.
Ez
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