cashing out on party

[SGS]

I built my party poker account from $200 to $3000 playing ring games, mainly 5-10. When I cash this money out do I have to declare anything or worry about anything to do with taxes? This may be a stupid question, but I am just really unsure and figure better safe than sorry. Thanks in advance.

SGS

[CrackerZack]

Do a search for taxes in "News views and Gossip" and the Internet forum. There is info all over there. Basically, it has to be declared but how its declared is really complicated. 2nd, your chance of being audited are real slim if you're a normal working person.

[CPA]

I haven't taken money out, but I would imagine you should get a 1099G. Report it as other income on your tax return (probably not subject to self employment taxes).

[CPA]

If you get a 1099G, your chance of a "desk audit" is like 95%. In other words, the computers will ask you about that income....therefore you should report it.

[CrackerZack]

To do this you have to declare all you wins by session (a single sitting at a single table) and deduct all your losses by session. So realistically, you could be playing 2 tables, win $100 on one, and lose $200 on the other, and you have to report a $100 win and list the $200 loss on your deductions.

[CrackerZack]

I'll bite, what is a "desk audit"?

And if you don't get a 1099G take your chances?

[CPA]

What I mean by a "desk audit" is the people at the IRS that process the returns. They check certain things before the return is processed...like a signature, or that the W-2's tie to what is in the IRS computer. Almost all W-2's amd 1099's make their way to the computer.

Therefore, the processor of the return will look at the income reported on the return from a 1099. If they don't find it, they will send you a somewhat friendly notice asking you where it is.

If you do not get a 1099, then the service has no way of knowing you made the income.

Hope that helps...

[CPA]

And one more thing....it doesn't matter if you cash out or not. If you win the money, you technically should report it in the year you win.

The theory is that you have control over the money (can withdrawl it at any time) and cannot time your earnings.

[chesspain]

Why would a foreign entity like Party send out 1099s to US citizens?

[CPA]

Good question. Since I haven't ever taken out money from Party, I didn't know if they issued 1099's or not.

I guess if they don't issue 1099's and all of this is a non issue (it is still clearly taxable income, but just not reported as such to the IRS).

[CrackerZack]

I have taken some money out of party, nothing substantial, but money nonetheless and nothing has been submitted.

[MicroBob]

the gambler's guide to taxes is available at some barnes and noble type stores and has some decent advice...although it doesnt specifically address the issue of internet gambling.
the author is walter lewis.

keep accurate records and report your winnings and losses in april.
obviously party does not send out any 1099's. that would be ridiculous since they dont have to.

there are a few decent threads in the archives on this.

[BigEndian]

This reporting winnings and losses seperately is pretty much impossible with online poker. What's the difference between that and just reporting the bottom line?

- Jim

[harboral]

You will not get a 1099 form with a cash-out. I have taken checks from Paradise, Pacific, Stars etc. and they send nothing but a letter and a check. If you want to report any of this as income all you have to do is deduct what you deposited from what you cashed - if your cashout is less than total deposited throughout the year - you do not have to report. If it is more, you report the difference. Pretty simple (line 21 other income). You can also file a schedule C (1040 additional page). I personally set-up a business, with a checking account (in 1984) and registered with the state - and deduct all expenses such as travel - gas - lodging - meals - books - home office etc. and report the remaining profit (this is taxable and employement taxes must be paid).

[CrackerZack]

No clue, just going by what I've read here. They can't bone you as bad if you just report the bottom line and its not how tax laws for gambling work. Check threads in the internet forum for more on this.

[Brain]

Why cash out? Go make more!! /images/graemlins/grin.gif

[GuidoSarducci]

Just to clarify for my own edification, does the casino submit a 1099G or is this a schedule that I submit to declare my winnings? I don't think Party is a US entity, and therefore isn't obligated to report gambling payouts to the IRS... Or am I completely off base?

[MrBlini]

[ QUOTE ]
This reporting winnings and losses seperately is pretty much impossible with online poker. What's the difference between that and just reporting the bottom line?

[/ QUOTE ]Up to a few grand in taxes.

[CPA]

The casino would submit the 1099G if your earnings for one evening were over $600 (the amount could be $400, I would need to look it up).

The difference between reporting the net number could be quite large. This is because gross gambling winnings are reported as income, where gambling losses would be reported on schedule A (itemized deductions) subject to certain limitations. If a person did not itemize deductions, it would be possible that you would not get the benefit of your gambling losses.

The rules would be different if you were a gambling professional (Schedule C).

If anybody would like much more detailed info, let me know and I can look some of it up (yes, I am a tax CPA).

Hope this helps.

[prosh]

YOU EVER FIND A DOLLAR ON THE GROUND... YOU REPORT IT....IN A LEGAL SENSE YOUR OBLIGATED TOO.... THEY WILL NEVER KNOW....CASH OUT TO YOUR CHECKING IN SMALL AMOUNTS JUST IN CASE...