Why we don't have to pay taxes ...

It's my first post, so hello everyone; great forum with terrific info!

Anyhow, take this for what it's worth, but a friend who works for the IRS (he actually audits people) told me that I shouldn't worry about claiming taxes on my internet winnings. He said that they don't worry about 'that stuff' yet ... this is when I was around the 10-20K mark in overall profit, now I'm a little over 30K and quickly increasing as I have just moved up stakes.

I know there will be those who respond and say that it is wrong not to pay taxes or that I am incriminating myself by posting this (if the IRS really wants to track me down off a message board, so be it. I'd hope they'd have more important fish to fry).

The tips given were to keep the money in a non-interest baring account (that way the IRS can't track the money) ... no savings accounts, CDs, mutual funds, etc. .... also he said to keep the cash outs under 1K each and don't have anything too large that will draw attention to it.

With my increase in limits (playing as high as 30/60 limit and $50 sitNgos) and increased time playing (I just graduated college and have a part-time job in my 'college profession' as a writer/journalist) leaving me to play an insane 10 or more hours to play each day for the last month, I expect to be in the six-figures range by tax time.

I'm at a crossroads myself if it is right to claim or not. Right now I'm thinking to just save it all (I have it all in a checking account right now) and use it for a huge downpayment in a year or so when I will be looking to buy a house. I think this whole tax discussion is very interesting and I've talked to several people who have polar-opposite opinions on this, so anyone who wants to give their two cents is appreciated.

There are those who have told me they claim all of their live winnings, but have never claimed any online profits and never will. But some on this board feel it is a deadly sin not to claim every cent won everywhere.

I think the best, and funniest, point I heard on here was that it's funny how the IRS would tax winnings to something illegal; are they going to start taxing drug dealers next?

[TStoneMBD]

http://forumserver.twoplustwo.com/search.php?Cat=

[Jimbo]

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Anyhow, take this for what it's worth

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Done, $0.00

[pudley4]

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I think the best, and funniest, point I heard on here was that it's funny how the IRS would tax winnings to something illegal; are they going to start taxing drug dealers next?

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They already do.

Ever heard of Al Capone?

You are stupid. Go away.

[ QUOTE ]
[ QUOTE ]
I think the best, and funniest, point I heard on here was that it's funny how the IRS would tax winnings to something illegal; are they going to start taxing drug dealers next?

[/ QUOTE ]

They already do.

Ever heard of Al Capone?

You are stupid. Go away.

[/ QUOTE ]

im no expert on Al Capone but i did see The Untouchables so i think i can talk with a degree of expertise on the matter....

did they actually tax his drug money?


{Edit-my apologies.....i just saw that u have 3000+ posts so ur allowed to be a jackass....sorry}

[MicroBob]

I believe that Capone never got nailed for any of his other illegal activities.

He only got nailed for failing to pay taxes ON those activities.



If you are making income it is taxable.
Your friend at the IRS is trying to help you cheat the system.

There's a very good chance that not paying would work out just fine and dandy and that you wouldn't get caught (although it's difficult to accurately dertermine what those chances are).
Obviously though, the reprecussions if you DO get caught can be quite severe.


I guess it's not surprising that a bunch of poker-players would be willing to just 'take a gamble' and hope it all works out allright.
But I believe the better EV play is to pay one's taxes.

I'm willing to pay a few thousand dollars per year to keep my chances of being shipped off to federal prison to as close to zero as possible.

[TheNoodleMan]

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I believe that Capone never got nailed for any of his other illegal activities.

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That depends entirely on if you count contracting syphilis as getting nailed for running a brothel.

[TheNoodleMan]

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I think the best, and funniest, point I heard on here was that it's funny how the IRS would tax winnings to something illegal; are they going to start taxing drug dealers next?

[/ QUOTE ]
they already tax drug dealers (http://www.ksrevenue.org/perstaxtypesdrug.htm)

[TStoneMBD]

alcapone was arrested and prosecuted for tax evasion. they couldnt prove any illegal activities.

[steveyz]

Remember what Al Capone was sent to jail for ..... Tax Evasion. You think his money was made through clearly legal means?

[Corey]

Apparently the BadAdviceGuy gimmick account has a new identity.

[Shoe]

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There are those who have told me they claim all of their live winnings, but have never claimed any online profits and never will. But some on this board feel it is a deadly sin not to claim every cent won everywhere.



[/ QUOTE ]

Makes perfect sense, considering that cash you win in a casino leaves a paper trail and bank transfers to your account do not...

[_Kevin_]

You are a fool if you don't pay taxes on your internet winnings. Your friends advice boils down to you may not get caught right now. This is NOT the same as not reporting is legal. Not reporting internet winnings is TAX EVASION.

I personally don't like the way we have to report gambling earnings and losses (the losses can only come off as itemized deductions, they aren't deducted directly from the winnings) but I'm NOT about to consider not reporting it. If the majority of your income comes from gambling, you can declare yourself a professional gambler and then the laws make more sense (you do deduct all losses and expense from your winnings).

Below are two links that talk about how the IRS is going to try and get a handle on internet poker winnings.
Link 1 (http://www.billingsgazette.com/index.php?id=1&display=rednews/2005/09/03/build/business/40-on-money.inc)
Link 2 (http://pokergazette.com/simpnews/singlenews.php?lang=en&layout=def&category=1&newsn r=1321)

[Innocentius]

A friend of mine works for the police (he actually investigates car thefts). He gave me a great tip. Don't let anyone see you when you steal cars. If you follow this advice the police won't bother to investigate the cars you steal.

[jwvdcw]

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With my increase in limits (playing as high as 30/60 limit and $50 sitNgos)

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If you're playing 30/60 limit, then why don't you play higher SnGs?? I mean you lose more on one single bet than you would on an entire tourney.

[Guthrie]

Well that settles it.

You and your friend should start giving "don't pay taxes on internet poker winnings" seminars in Holiday Inn ballrooms around the country. You'll get rich, plus you won't have to pay taxes on that income either.

[_Kevin_]

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Well that settles it.

You and your friend should start giving "don't pay taxes on internet poker winnings" seminars in Holiday Inn ballrooms around the country. You'll get rich, plus you won't have to pay taxes on that income either.


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Priceless!

[FlFishOn]

"But I believe the better EV play is to pay one's taxes."

On a strictly money basis, cheating on your taxes is very much +EV.

"I'm willing to pay a few thousand dollars per year to keep my chances of being shipped off to federal prison to as close to zero as possible. "

Richard Hatch is going to the gray bar hotel as an example. Guaranteed. You, as a poker player, will not. The IRS will squeeze your nuts til you scream if you're caught but they want the money, not another prisoner.

[MicroBob]

I have no other source of income but poker.

Are you really saying that it would be +EV to simply not report it and take my chances?

I know there's still a good chance that i would get away with it.

But if I didn't report my gambling winnings then that would mean I'm not reporting anything at all....and I think that would likely send up some red-flags at the IRS.

[wall_st]

[ QUOTE ]
I have no other source of income but poker.

Are you really saying that it would be +EV to simply not report it and take my chances?

I know there's still a good chance that i would get away with it.

But if I didn't report my gambling winnings then that would mean I'm not reporting anything at all....and I think that would likely send up some red-flags at the IRS.

[/ QUOTE ]

This sounds stupid but this is what my accountant actually told me. I am sure I am make far less than you however.

[MicroBob]

1. Get a new accountant (or at least consult one). This seems like really sketchy advice to me.

2. consider getting Gamblers Guide to Taxes by Walter L. Lewis. It does not cover internet-gambling specifically but does cover gambling as a professional. You can even bring it with you to the accountant to see what he thinks.

3. If you play full-time then the chances are very slim that I make more than you. I'm lazy.

[AcmeSalesRep]

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I think the best, and funniest, point I heard on here was that it's funny how the IRS would tax winnings to something illegal; are they going to start taxing drug dealers next?

[/ QUOTE ]

I think the funniest part is how stupid you need to be to even ask this question...and yet here we have someone asking...

Yes, they tax drug dealers. And they tax mob activities (do a little research on a guy named Gotti sometime). And they tax all other income. The IRS does not give a [bleep] where the money comes from, they want their share.

Acme

[FlFishOn]

"I have no other source of income but poker."

This is a familiar situation. Report a portion.

"Are you really saying that it would be +EV to simply not report it and take my chances?"

Yeah, maybe so. There is no way that the IRS collects more fines and penalties and unreported taxes than the sum of taxes people cheat them out of. That makes cheating +EV. My guess is that for every $1 you cheat them out of you can expect to pay $1/4 or less.

Almost no one goes to jail. They bust balls but that's $ only, not time.

Richard Hatch will do time. You can see why.

[Jimbo]

We should take tax advice from a player like you that believes online poker is rigged? Get real.

[FlFishOn]

Why would you even open my post? You must be insane. Then you comment on it? WTF?