Poker-taxes-BS.

[Glenn]

Ok everyone just says keep good records and then you deduct your losses from your wins. YEAH RIGHT! Has anyone ACTUALLY reported poker income correctly? If so how? I imagine that some people do report it, but they just report their net for the year with records to back it up if they are audited. This is apparently fairly illegal, and if you get audited you will be screwed. And reporting a large amount of gambling income without W2's will get you flagged so there is a much higher chance of getting audited than if you didn't report it at all. So I have determined the following:

1. It is basically impossible to report poker income correctly.
2. If you don't you can face charges.
3. If you try, you increase your chances of getting audited.
4. If you do it incorrectly and get audited, you are screwed anyways.

It is an interesting problem. There are two options.

1. Report the income and exchange the taxes I pay and a higher chance of getting audited for probable leniency in sentencing.

2. Don't report the income, keep the money, and take a lesser chance of a worse conviction later.

But felons don't have to do jury duty right? /forums/images/icons/smile.gif

Seriously, can someone point me to a good source on how to do this realistically? And by realistically, I mean not having to idividually report my 1000 sessions with signed documents from witnesses and the floor manager, etc... And if not, would I go to jail for a few thousand in taxes or just get fined /forums/images/icons/smile.gif?

[Easy E]

"It is basically impossible to report poker income correctly"
Glenn, I disagree:
Since we go to the same locale, i assume, this is what i do:
a) Get toll booth receipt going in and out
b) Get parking receipt going out and if I can
c) Pick up a discarded sports bet receipt/racing receipt/MAC receipt with the date on it.

That proves (to the IRS standards, anyway) my location and time. I also keep a record of my buyins per table number and my net gain/loss per table.

That goes into a simple spreadsheet, which I INCLUDE with my tax forms to the IRS. If I would ever get audited, I have the discarded receipts (kept in an envelope with my copy of my tax records) to back up what I put on the spreadsheet.
Better to do that, and have a history of reporting, than to suddenly report only when you have a huge winning year.... or having to deal with a random audit that nails you.

[brad]

ive read that a new law a couple years ago now shifts the burden of proof to the irs to prove you are a criminal. (prior to that it was up to you to prove you were innocent.)

but i could be wrong, and anyway, im sure irs can still screw you.

but it seems to me that if true then any good faith effort will at least keep you out of the criminal irs department.

[Glenn]

Hi easy-

Actually I just moved back to NJ...my play has been spread over the internet and the nation. I do have decent records, but since I do play professionally, there are A LOT of them. When I said 1000 sessions, I meant that literally. I thought it was pretty simple too, until I read the code. There is no way you can reasonably comply with the actual law. If the government wants my money, I shouldn't have to spend 50 hours to pay them. And yes, tax law is BS...as is the fact that you can't deduct gambling loses if you take the standard deduction. At 23, I don't have deductions other than student loan interest. This costs everyone who reports gambling income and would not otherwise itemize around $1000. Think of it this way...if you get $10000 salary or win $10000 in a sweepstakes you only pay taxes on $10000-standard deduction. If you play poker and win $10000, you probably won $20000 and lost $10000 or something and you have to report it as such. So you can either pay taxes on $10000 by deducting your losses, or you can pay taxes on $20000 - the standard deduction. So your taxes are affected by how much money passed through your hands not just how much you made, which is part of the BS I mentioned. This is also a major factor for some advantage players (videopoker and such) that win like $600000 and lose $550000. The fact that they have to report their income as $600000 (even though they later deduct their losses) disqualifies them for some exemptions/deductions.

All this complexity does is discourage people from paying in the first place, and then screws them when they do try to pay.

[Easy E]

"All this complexity does is discourage people from paying in the first place, and then screws them when they do try to pay. "

Granted...

As to your problem- if you have records and can add the table/time details, I don't think you'll have a major problem. Paper copies (receipts....printouts of online games-if that doesn't prove you're illegally gambling, anyway!- etc) are better proof.

Check with I. Nelson Rose's website (http://www.gamblingandthelaw.com/status.html)- there might be some articles that can help you there (stuff he's written is what got me started on my records)