Tax question

Say I was earning a significant portion of my income playing cards, and intend to pay taxes on my poker income. What % should I be saving to pay said taxes? Is it determined by total income, or is it taxed at some flat rate like capital gains? For what it's worth, I think gambling winnings should be capital gains, but...


Thanks,


Glenn

Glenn:


As a former IRS agent I offer the following:


If gambling is your trade or business, which by the way has a specific definition under the Tax Code, the income is treated like any other trade or business reportable on Schedule C, subject to a list of qualifying business deductions including transportation, health insurance, etc. The income is taxed at ordinary rates we all pay and is also subject to self employment tax of about 15% in addition to the regular tax rate.


If gambling is not your trade or business the income is subject to only the regular tax rate and of course no self employment tax.


Gambling has no special rules equated with it under the tax law except for the deduction for losses. If you are in the business of selling shoes treat gambling the same way.


Frank Donnelly

For what it is worth, I do not think gambling income should be tax at all, as it is not in the rest of the industrialized world, since so much tax is paid up front based upon total handle.


Frank Donnelly

So you're saying I can write off that gutshot you pulled on me Thursday night for 3 bets on the flop?


What about your kids? I'm sure at least one of them is going to college on me. Can I take on an additional dependent? Just asking...

Frank, I concur with your feelings that income tax on winnings from gambling is unfair and unnecessary. In order to avoid this problem, my special advice to you is to do what I have chosen to do which is the following:


1) Play like I do


2) Pick out the rock in the game and raise


and stradle their big blind every time


ie: "the chairmen's big blind" and


3) most importantly "LOSE"