sngs and gross income (taxes)

[Profit]

quick question regarding claiming taxes with sng's (tourneys for that matter).

If using aleo's spreadsheet, "total prizes" would be entered in gross income and "total entries" would then be itemized as expenses (correct?)

Basically the questions is: do you count your entry fee as winnings as well. (u win a $11 sng and claim 50 or 39.If u claim 50, which i assume u do, isnt that synonomous with sitting down with $50 in a cash game and walking away with $55 and then marking down a $55 win?

IF that is the case, it really doesn't take long for that gross income value to become quite large. For instance a college kid who plays 2000 $22 tourneys in the summer for a 20% roi would have a gross income of $52800 while profit actually was only 8800. Said kid now loses education credit eligibility for a "good" summer job income.

I checked out this website which was informative:
beginners guide (http://http://www.onlinepokerfaq.com/guide/tax-professional.html)

[Maulik]

your profit is your profit. in the case you outlined the profit was actually only $8800 and if you paid taxes you'd pay them at whatever your marginal tax rate is equal to.

brilliant.

[Profit]

i wasn't questioning taxable income, but gross income calculation. Many credits one can deduct are based on adjusted gross income, not on net or taxable income (profit)

[Maulik]

I suspect I'm not in accord with your train of thought. but one only needs to count the buyin+rake once.

brilliant

[hummusx]

Your income is not measured on a game to game basis, at least not your taxable income. You'd probably find it simpler to figure your gross income based on what you take OUT of your poker account. Just think of your session as being when you deposit money to when you cash out money. So your gross profit is whatever you cashed out minus whatever you deposited.

[Phil Van Sexton]

My interpretation is that you add up all your wins and count that as profit. As a 10/1 player, these "wins" would be recorded as either $39, $19, or $9.

All your loses would be $11.

Yes, you are getting screwed if you gross income matters to you or if you wanted to use the standard deduction.

I believe true professionals will incorporate themselves. By doing this, the "corporation" will have income and expenses, and then pay you the net as a salary. On your personal income tax, you simply list the net as your income.

Talk to an accountant if you want real answers.

[Nottom]

You are overcounting your losses here. This would basically be the equivalent of a ring player counting every bet he makes as an expense and whenever he wins a pot as income.

It is generally accepted that for tax purposes you should just keep track of each session (what exactly constitutes a session is still a bit unclear, but I think most would agree that a series of SNGs played without any major breaks would qualify) you play. So if you sit down and play 10 50+5s and get 2 1sts, a 2nd, and 2 3rds. You would just record this as a $300 profit instead of $850 in profit with $550 in loses.

[Phil Van Sexton]

[ QUOTE ]
Your income is not measured on a game to game basis, at least not your taxable income. You'd probably find it simpler to figure your gross income based on what you take OUT of your poker account. Just think of your session as being when you deposit money to when you cash out money. So your gross profit is whatever you cashed out minus whatever you deposited.

[/ QUOTE ]

This is much simpler, but it is also wrong according to many knowledgeable people on these boards. You can try this if you want, but the consensus is that the IRS will not agree with this method. Of course, it's better than not paying taxes at all. How much weight that carries during an audit, I have no idea.

There were many discussions of this in the Internet Gambling forum over the last few months. Do a search, it has been covered dozens of times. Do not post a question about this in the zoo unless you want to be flamed mercilessly.

[Apathy]

Just move to canada.

[dfscott]

[ QUOTE ]
Just move to canada.

[/ QUOTE ]For numerous reasons (most not tax-related), this option is looking better and better.Just for the helluvit, what are the rules on gambling winnings in Canada?

[Apathy]

[ QUOTE ]
[ QUOTE ]
Just move to canada.

[/ QUOTE ]For numerous reasons (most not tax-related), this option is looking better and better.Just for the helluvit, what are the rules on gambling winnings in Canada?

[/ QUOTE ]

Lotto and gambling (including poker) winnings are not taxed in Ontario (I'm fairly certain the same goes for the other provinces), unless the profit comes from hosting those games (like a casino). Same goes for gameshow winnings etc.

[Tilt]

[ QUOTE ]
[ QUOTE ]
Just move to canada.

[/ QUOTE ]For numerous reasons (most not tax-related), this option is looking better and better.Just for the helluvit, what are the rules on gambling winnings in Canada?

[/ QUOTE ]

You'll have to renounce citizenship in the US to cease being subject to US taxes.

[johnny005]

I'm from canada and I've just started to look into the tax that I will have to pay... Its the same... if it is a business or if they consider u a profesional then u have to pay taxes on your winings.
The one thing I'm wondering about though is can you count the rake that you pay as an expense?

[dfscott]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Just move to canada.

[/ QUOTE ]For numerous reasons (most not tax-related), this option is looking better and better.Just for the helluvit, what are the rules on gambling winnings in Canada?

[/ QUOTE ]You'll have to renounce citizenship in the US to cease being subject to US taxes.

[/ QUOTE ]And this would be bad because...???

[Big Limpin']

I am Canadian. Poker income is not taxed...UNLESS it is you're primary source of income. Pros have to pay taxes just like in the US. Apparently, if you make more from poker than you do from your day job, then you must declare it.

This is 2nd hand though, dont take it as gospel.

[Big Limpin']

Also, for you guys thinking of defecting, let me warn you, you will have to accept the full package. You will be forced to take free healthcare and stronger beer. No free rides.

[Maulik]

[ QUOTE ]
My interpretation is that you add up all your wins and count that as profit. As a 10/1 player, these "wins" would be recorded as either $39, $19, or $9.

All your loses would be $11.

Yes, you are getting screwed if you gross income matters to you or if you wanted to use the standard deduction.

I believe true professionals will incorporate themselves. By doing this, the "corporation" will have income and expenses, and then pay you the net as a salary. On your personal income tax, you simply list the net as your income.

Talk to an accountant if you want real answers.

[/ QUOTE ]

if I'm in college should I consider inc'ing or just wait until I'm out?

brilliant

[Phil Van Sexton]

[ QUOTE ]
[ QUOTE ]
My interpretation is that you add up all your wins and count that as profit. As a 10/1 player, these "wins" would be recorded as either $39, $19, or $9.

All your loses would be $11.

Yes, you are getting screwed if you gross income matters to you or if you wanted to use the standard deduction.

I believe true professionals will incorporate themselves. By doing this, the "corporation" will have income and expenses, and then pay you the net as a salary. On your personal income tax, you simply list the net as your income.

Talk to an accountant if you want real answers.

[/ QUOTE ]

if I'm in college should I consider inc'ing or just wait until I'm out?

brilliant

[/ QUOTE ]

I'm already beyond my knowledge. You should talk to a CPA.

[Profit]

so in short the answer to my question is NO, and now i understand what was wrong with my calculations that caused the gross to be inflated as much as it was. thanks for the responses

[Poker Junkie]

Classic! /images/graemlins/grin.gif