Tax question - when do you need to pay taxes on winnings?

[Mano]

I am a recreational player. I have a good job, and have no intention to try and make a living at poker anytime soon. For the past few years I have been driving out to the casino (about 2hrs from where I live) once or twice a month, and I have steadily won modest amounts (usually somewhere from $100 to $500 with occasional small losses thrown in) and have not worried about taxes. I had been very wary of playing for real money online. Well, in the past month I won some money on an online freeroll, and have run that up to around $2000 playing a few hours a night. My question is, do I need to start reporting this money? I know at the casino's they require you to report single jackpot/tournament wins of over $1200, and I also believe that if you are making your living gambling you need to report it, but I am not sure if ( or even how ) I would need to report winnings from the online casinos, or if there is some threshold I need to pass before reporting becomes mandatory. Any info appreciated. Thanks.

[Kurn, son of Mogh]

I believe our "friendly" IRS folks would say this:

You need to report 100% of your winnings as ordinary income. You may not deduct losses.

[Kurn, son of Mogh]

Don't worry about it unless you're making regular 5 figure cash deposits in your bank account.

[nef]

if you read the instructions for the 1040 A and itemized deduction form it somewhat explains this.

if you gamble you are supposed to claim all winning SESSIONS (from that tax year) together as "other" income.

you then may claim all losing sessions as itemized deductions up to the amount of your winnings. Net result is that you may lose your standard deduction if you do not normally itemize, even if you show a net loss at gambling.

[Jimbo]

Actually it is a little more complex than nef outlines in his post. There is this little thing called Estimated Tax that you may be obligated to pay on your winnings throughout the year even if later losses offset your tax obligation on your initial winnings. Failure to pay these in a timely manner (quarterly) may result in additional interest and penalties being assessed as well as a greater likelihood of an shudder AUDIT!

[whiskeytown]

in other words...

We've given tax breaks to the rich and corporations...and to make up for it, we're now going to stick it to you up the ass with a barbed wire and sandpaper condom....

bend over, you sorry bastard

RB