I need tax advice

[Cactus Cactus]

I have been looking at what I have made for the year. I understand that there are 2 ways to file the taxes and I only understand 1 way. The first way is to figure out your net of your wins and losses subtract expenses and then pay a 15% self employment tax.

The other way I am a little grey on. I understand you have to add up all your wins and then all your losses, and somehow you end up paying a little more.

The thing is I don't have any records of my individual wins and losses. With the 1st way, I don't have that many deductions. Can someone explain to me the 2nd way of filing taxes. And what should I do about filing taxes?

[Altaslim]

Here's a simplified explanation:

Your first option is the best, even if you don't have many expenses to deduct. This is also known as filing as a professional gambler and it allows you to pay taxes on your earnings. However, if you do not have detailed records you can almost forget about filing this way.

The second option REALLY sucks. Winnings are added to your income. Losses can only be claimed as a deduction and even then you can only claim up to the amount of winnings you claim.

As for your final line...if you make money playing poker and don't want to be faced with stiff penalties and payments of back taxes, do yourself a favor and report your income.

[BigBiceps]

method 1: file as an individual
- total session wins go on 1040 as "other income"
- total session losses to the extent of wins go as deduction on Sch A

drawbacks to this method: 1)losing deductions if you normally take the standard deduction, 2) phaseout of exemptions if the numbers get large.

method 2: file as a professional gambler
-You put the stuff on schedule C including expenses (like home office, ISP etc.)
Drawbacks to this method:
- self employment tax on top of regular tax
- increased auditor scrutiny, especially if they don't define you as a professional gambler

method 3: don't file
- possible civil and criminal penalties

[Copernicus]

Apart from the ethics of it, not declaring this income is extremely low risk. Do sites even withhold or report big tourney wins?

The government has made a decision not to regulate internet gaming, taking the position that its illegal. I don't see them spending one dime on trying to collect taxes on it until they decide to regulate it.

The downside if you dont report it and the IRS somehow found out would be interest and penalties that a decent accountant could get reduced or waived.

Of course online legal and tax advice is worth exactly what you paid for it.

[Swedebubba]

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Of course online legal and tax advice is worth exactly what you paid for it.

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Well I didn't pay anything for it /images/graemlins/confused.gifWAA WAA WAA

though it wouldnt get a ton of traffic does anyone think a seperate tax forum would be a good idea. at least it would keep the experts and information all together and could serve as a pretty good guide.

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Do sites even withhold or report big tourney wins?

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No they don't report anything, but why would that matter? The only safe way to not report it is if you can find a way to never let your gambling winnings get in your bank accounts or credit card statements.

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Do sites even withhold or report big tourney wins?

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ROFL. Sure, the IRS just hates wasting time trying to get people to pay the full taxes they owe.

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Of course online legal and tax advice is worth exactly what you paid for it.

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I guess your post isn't totally wrong.

[tonypaladino]

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I need tax advice

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I strongly suggest you post on an internet forum rather than asking a qualified accountant.