Tax Question. How much to report, how to report, what to report???

[sthief09]

I think I screwed up. I let my friend share my Empire Poker account with me. We're both 20 so we enjoy wasting the money that we make rather than spending it wisely or saving it to pad our bankrolls. unfortunately I'm an idiot and he's been cashing the money out into my Citibank account.

so between the 2 of us I'd say we've probably cashed out $7k since January 1, including one month where he made cashouts of 400, 800, 300, 400, 350, 300, 350, and 500 (3600 total).

so I know I'm going to have to report it, but how much should I report? someone told me anything over $1k for a month sends off a red flag. But Empire is an off-shore company. do they have to report anything to the IRS?

I know most "smart" people will tell me to just report it all. But how much can I not report and still have practically no chance of getting audited. I'm 20, my parents pay my taxes and school tuition, I have no job other than summer jobs, and I haven't bought anything expensive. I just buy big bottles of liquor and expensive food, so I don't think I'd be much of a target for the IRS.

also, what % do I have to pay on it? one person told me the maximum for me would be something like 32% but someone else told me 50% for returns on capital gains.

any help would be very much appreciated.

[cardcounter0]

I'm confused. If your friend cashed it out, did he get the money? Then you owe nothing, he has to worry about it.

32% is the rate for people in the highest tax bracket (like me, for instance.) I don't know where the break point is, but do you make like $100,000 plus a year? Then you pay 32% on your income. You are probably in a lower tax bracket.

50% tax on capital gains? Yes, but I don't think the IRS considers poker an investment vehicle, like it does stocks.

When you fill out your 1040EZ form, or whatever, add your poker winnings into the line called GROSS INCOME.

[sthief09]

[ QUOTE ]
I'm confused. If your friend cashed it out, did he get the money? Then you owe nothing, he has to worry about it.

32% is the rate for people in the highest tax bracket (like me, for instance.) I don't know where the break point is, but do you make like $100,000 plus a year? Then you pay 32% on your income. You are probably in a lower tax bracket.

[/ QUOTE ]


I really do appreciate you taking the time to respond to my post and giving me honest advice, and I don't mean to be an ingrate, but next time please read my post before you respond to it.

Thanks for telling me that you're in the highest tax bracket, though, and I'm assuming sharing that information with everyone is probably the only reason you even posted.

[sublime]

I really do appreciate you taking the time to respond to my post and giving me honest advice, and I don't mean to be an ingrate, but next time please read my post before you respond to it.

Your on a roll tonight Josh /images/graemlins/grin.gif

[jdl22]

Come on maybe he was just not sure what bracket you were in. It's not obvious at all that you make less than 100K based on this
</font><blockquote><font class="small">En respuesta a:</font><hr />
I'm 20, my parents pay my taxes and school tuition, I have no job other than summer jobs, and I haven't bought anything expensive.

[/ QUOTE ]

[cardcounter0]

Okay. I re-read your post. You've listened to a bunch of people who talk out their ass saying things about what sets off red flags, etc. Like they would know what they are talking about.

I think what you are actually asking is "How can I avoid paying taxes on my poker income?" or more simply "How can I cheat the IRS on what is due them?"

Well, I've been paying a guy named Uncle Sam for about 35 years now. Some months taxes are by far my biggest expense. Uncle Sam doesn't always spend the money I give him wisely or exactly the way I want him too, and this country does have a lot of problems, but all and all it is a pretty good country.

If you live in American society, and take advantage of things like Colleges, and fast food joints, and highways, and an internet, you should get used to the idea of paying for it.

You have poker income. You owe taxes. Pay it. It is perfectly legal to find as many loopholes in tax laws and only pay the bare minimum that you owe, but there is no such wiggling you can do on income that is so straight forward as this.

Trying to cheat on your taxes is illegal. You might as well consider holding up a liquor store, and using the money for that to pay this tax. It is just as immoral and illegal.

[Ulysses]

Well, we're about half-way through the year. Let's say you end up making $15k for the whole year. Report it all and after your standard deduction, you'll end up owing very little on taxes (you don't pay tax on the whole amount, and when you make relatively little, the tax on that amount is at a very low rate). My guess is your effective tax rate on $15k in earnings would be in the 10% range. Moral issues aside, I don't recommend fudging on amounts won that are wired into your bank account - very easy to trace if you were ever to get audited (even years from now). Just report it all. It won't be that much in taxes.

[sthief09]

read my post again. 3rd time's a charm.

I wrote:
[ QUOTE ]
I know most "smart" people will tell me to just report it all. But how much can I not report and still have practically no chance of getting audited.

[/ QUOTE ]


my main issue here is that my friend has cashed out the majority of the money. I don't really want to go up to him and tell him he owes me money for taxes. can I just report what I've cashed out?

[sthief09]

that was perfect. thank you.

is there a good site where I can read up on taxes on gambling income? I feel like this is something important that doesn't get brought up all that often.

[cardcounter0]

If it is money that your friend ran thru your account and took, than don't report any of it.

Your chances of an audit are NIL, and even so, it wasn't your income. That is the truth. You don't legally owe money on other people's earnings.

If some one gives me a check to cash, and I deposit it into my bank account and give them the money for it, Do I worry about reporting that to the IRS? NO, it wasn't income.

[sthief09]

I know this isn't a realistic scenario, but I'm curious. say I get audited. I say that the money wasn't mine, it was my friend's. Then wouldn't that screw over my friend?

I should just tell him that whatever he made is his responsibility to report, and if he doesn't want to, then that's his choice.

[joker122]

[ QUOTE ]
32% is the rate for people in the highest tax bracket (like me, for instance.)

[/ QUOTE ]

Lol, what a character!

[cardcounter0]

Not really. An IRS audit agent is interested in the case in front of him, not a fishing expedition tracing every dollar thru society. The quicker he can close your case and move on, the better.

If it wasn't your money, then it wasn't your money. That is the truth.

[BigBaitsim (milo)]

Report it, pay your taxes.

As to how much you can leave off and not get audited, I am not a CPA, but I would suspect that the small increments you are taking out would not result in an audit. My guess is that you could get away with not reporting any of it. But do it anyway. Even if you are a liar and thief by nature, there is an electronic paper trail and at age 20 you really don't need to be engaging in tax evasion. You never know what you might do with your life, and this is not a +EV move in the long run.

[Ulysses]

Do a search on taxes across all the forums and you'll find plenty of info. Definitely quite a few threads in the Internet forum alone.

[Big TR]

I am a CPA.

1. Claim only the amount that relates to your winnings, you don't have to report anything for your friend.

2. If you get audited, you will have to rat out your friend so you don't get beat down by Uncle Sam. As long as you can show a paper trail that the money was moved directly out of your account, you will be fine.

3. If you are a student, you probably don't have a lot of income. So, assuming you are in the 10% bracket, after the standard deduction you are probably talking a net tax rate of something around 5%. This is a pittance to pay to be assured of filing proper taxes. If you have income of less than about $6k per year, you don't even have to file a return. Therefore, your bracket is the 0% bracket. The person who told you 50% is completely wrong.

4. If you choose not to claim the winnings, you will probably never have to worry, since given your income levels, an audit seems unlikely.

5. Empire is not going to report cashouts to the IRS.

[Luv2DriveTT]

Simple. Give your friend a reciept for the ammount cashed out. That amout is now his problem, if he chooses to report it or not it is up to him. This way you have done your civic duty and saved yourself in the event of an audit.

And ignore what everyone else is saying, I read an article recently that said somewhere between 9-11 out of 100 citizens will be audited this year, the IRS has gotten much more advanced thanks to computer databases which makes this possible. Odds are you won't be audited, but as any poker player knows the odds don't always work with you.

[Moyer]

That's about 1 in 10.

I can hear it now.

"good
good
good
good
good
good
good
good
good
goo.... wait... an extra $15K? Oh, from gambling? He he, this guys fu*ked!"

[jrobb83]

Even if you do get audited randomly, I don't think they would do anything but make you pay the taxes and maybe a little in penalties or whatever. The IRS deals with much bigger fishes than an extra $15k in poker winnings for a college student.

The biggest issue for you, though is whether or not your parents claim you as a dependent on their taxes. I would assume that they do from your post. It can make a big difference: mine do and it was the difference between me paying zero dollars and about $150 or so on my $8k in earnings from my part time job last year. What I would do is ask your parents to pay the small amount of tax you would end up owing. They save much more in claiming you than you would ever pay on that amount of income.

[bicyclekick]

[ QUOTE ]
I think I screwed up. I let my friend share my Empire Poker account with me. We're both 20 so we enjoy wasting the money that we make rather than spending it wisely or saving it to pad our bankrolls. unfortunately I'm an idiot and he's been cashing the money out into my Citibank account.

so between the 2 of us I'd say we've probably cashed out $7k since January 1, including one month where he made cashouts of 400, 800, 300, 400, 350, 300, 350, and 500 (3600 total).

so I know I'm going to have to report it, but how much should I report? someone told me anything over $1k for a month sends off a red flag. But Empire is an off-shore company. do they have to report anything to the IRS?

I know most "smart" people will tell me to just report it all. But how much can I not report and still have practically no chance of getting audited. I'm 20, my parents pay my taxes and school tuition, I have no job other than summer jobs, and I haven't bought anything expensive. I just buy big bottles of liquor and expensive food, so I don't think I'd be much of a target for the IRS.

also, what % do I have to pay on it? one person told me the maximum for me would be something like 32% but someone else told me 50% for returns on capital gains.

any help would be very much appreciated.

[/ QUOTE ]

Heh, I'm in a very similar situation to you...21, going to college on parents bill, living at home, don't spend much money on anything...

For the april 15th taxes I wrote a bigger check to the federal government then I've ever spent in one place. And that was just for the first quarter.

For this next quarter I'm gonna have to pay about 4x what i"ve made in the past in an average YEAR.

Just pay your taxes, bitch a little cause it sucks, get over it and move on. /images/graemlins/smile.gif Just look at it this way. You're making a lot of money you wouldn't have had anyway. It's the price you gotta pay for being good at poker.

[Richard Berg]

[ QUOTE ]
32% is the rate for people in the highest tax bracket (like me, for instance.)


[/ QUOTE ]
No. Tax brackets do not apply to people; they are marginal rates. Only the portion of your income above the top threshold is taxed @ 32%.

[FlyWf]

I think this guy got his $1K "report" and "flag" stuff from the cash handling rules, which I do not believe apply to EFTs. Basically, don't try to cheat the system by cashing your checks then depositing, because you might get IDed as a potential money launderer.

But really, pay your taxes. While it's only a small amount, that cuts both ways. Is a .0001% chance of getting a tax fraud mark on your record really worth $100 or whatever you'd save?

[bicyclekick]

100 you'd save?

It's a lot more then that.

[TobDog]

[ QUOTE ]
You might as well consider holding up a liquor store, and using the money for that to pay this tax. It is just as immoral and illegal.

[/ QUOTE ]

The government expects you to report and pay taxes on that $ as well (flame away!)

[astroglide]

the "report it all" people seem to be missing the fact that you have to report all wins and all losses by session SEPARATELY. e.g. "i won $100 and i lost $30", not "i won $70"

[todd_blackmon]

OT, but you're not old enough to be playing anyway, right?

[sthief09]

you only have to be 18 to play on Party/Empire/Intertops/Multi

[sthief09]

I make well under $6k per year. So I really pay nothing if I report it?

[sthief09]

OK, I haven't kept track of session-by-session results (but I do use Poker Tracker). Can I just fabricate session results?

[ChicagoTroy]

This sounds like a BS post to me, frankly. Everytime I've seen you play it's been at $.50/1, which can't account for the winnings you're claiming. Not because you don't play higher limits, but because if you were beating them there wouldn't be any incentive to play in the limits I see you at.

What's going on?

[astroglide]

reconstructing it as best you could would be better than lumping

[sthief09]

I shouldn't even dignify this post with a response, but I'm immature so I will anyway...

I don't play on the account sthief09 because that's on Party and now I use Intertops. I gave it to my friend to start up on. Enough people here have played with me and can attest to that, and I post enough hands at 3/6 and 5/10 that it's pretty clear I'm not full of [censored]. I used to play under duffman09 but I don't even play that anymore. I play under river_monkey now.

nice try though. get a life.

[arkady]

No offense dude, but that has got to be one of the dumbest posts I have seen in a while.

If you have no idea what the hell you are talking about, why make yourself out to look like a complete idiot?

How about you mosey on over the SS forum and check thief's posts. Notice how he posts hands from 5/10? Wow, what a crazy concept!

"Everytime I've seen you play it's been at $.50/1" - lol! Speechless, really.

[Kevroc]

what if thief only played .50/1 ?? Does that mean he cannot win money? It is irrelevant what levels he/she plays, the tax question is one alot of us (myself included) would like to ask. If you hold down a regular job and make extra $$ playing poker, must you report or is it only for the guys playing for a living (only source of income).

Okay, it might seem like a silly question to some but, alot of us enjoy playing as a so-called second job and don't wanna sweat the taxman. /images/graemlins/blush.gif

Oh, and what of the legalities of it all? If gambling is illegal in your area... how can you claim your winnings?!?!

Wild subject guys... thank god i'm a horrible weak/tight player /images/graemlins/grin.gif

[csuf_gambler]

just dont report anything, it'll be fine. anything under 20k = no worry

[jacki]

[ QUOTE ]
just dont report anything, it'll be fine. anything under 20k = no worry

[/ QUOTE ]

Seriously, Mr. IRS Auditor, this one guy on this one website said I didn't have to report this extra $15,000 in income! /images/graemlins/tongue.gif

[jmark]

[ QUOTE ]
I'm 20, my parents pay my taxes and school tuition, I have no job other than summer jobs, and I haven't bought anything expensive. I just buy big bottles of liquor and expensive food... I'd say we've probably cashed out $7k since January 1


[/ QUOTE ]

I think you should focus on the important issue: worry that your parents will stop paying your taxes and tuition when they find this out.

[sthief09]

[ QUOTE ]
I think you should focus on the important issue: worry that your parents will stop paying your taxes and tuition when they find this out.

[/ QUOTE ]


why are you assuming they don't know? they know about it, but they can't say much as long as I'm winning and doing well in school.

[astroglide]

that is terrible advice. for example, audits of people who are eligible for the earned income credit (read: low-income households) are the most-increased audit portion of the usa population in recent years. they do not care about dollars, they care about systemic fraud - especially non-accidental violations.

[Joe826]

how the hell do you only make 6k a year? you need to put in some longer hours heh.

[sthief09]

I only work over the summer.

[ChicagoTroy]

No offense intended. There are enough posers here that it's hard to separate the wheat from the chaff. The "sthief09" I see playing on Party is a loose player who I've seen making bad plays. Since it's a unique enough name to associate with your handle here, deducing you created that PP account didn't seemed a lot more reasonable than the alternatives. That's why it struck me odd when I see the same apparent person trying to figure out what to do with all the money he doesn't appear capable of winning in a game that won't provide it /images/graemlins/wink.gif

Congrats on the success. I hope my confusion was understandable to you.

[ChicagoTroy]

None taken. What I left out was that the player I'd watched looked like a very consistent loser.

I'm not sure where I look the idiot though. He created the account, so a) it's him playing crappy $.50/1 poker, in which case calling BS is appropriate, or b) he gave the account to someone else for some reason, or c) someone conincidentally came up with the same ID. Since he's a stranger to me, option a seemed a lot more likely, hence my question.

I suppose I could have crosschecked all sorts of other forums and postings, but having watched the player using his account for some time, it hardly seemed necessary.

[The Gift Of Gab]

[ QUOTE ]
So, assuming you are in the 10% bracket, after the standard deduction you are probably talking a net tax rate of something around 5%.

[/ QUOTE ]
I was under the impression that if you file as a recreational gambler (i.e. not a professional) that you had to declare gross winnings as income and list total losses as an itemized deduction, so that only net winnings get taxed. Since this means you do not get to take the standard deduction, you do get shat on compared to someone with the same income from a 'real' job.

If I'm wrong I want my money back.

[Ulysses]

[ QUOTE ]
Since this means you do not get to take the standard deduction, you do get shat on compared to someone with the same income from a 'real' job.

[/ QUOTE ]

No, you're right. If he wins $15,000, based on my figures it'll be something more like he wins $45,000 and takes $30,000 in deductions, so you're right, he will indeed get shat on compared to someone who just makes $15,000 and takes the standard deduction. I had forgotten about that part, since my gambling winnings get shat on anyway as incremental income.

[Lost Wages]

If that is the case then wouldn't you have to report every pot that you won? I.e. what constitutes a session?

Lost Wages

[Moyer]

From sifting through old tax posts, it appears everyone considers a session to be each time you sit at a table. Which is actually quite odd, because if you were playing at a B&amp;M it would be when you walked through the door.

Actually though, I don't think the law specifies. That's because it hasn't gotten around to catering to us online gamblers yet.

I think you'd be very safe if you considered all the tables you played at in one day to be the same session (make it a max of 1 session per day). I'm betting that auditors don't put much stock in the whole "it's all one session" theory. So you probably dont' wanna write down your Party Poker session as eight consecutive months.

[bicyclekick]

It's all one big session to me, and that's how the IRS helpline told me to claim it as. Just put your total net profit under 'other income'.

Seems like the general concenses (sp?) on here is I do it wrong, but if the IRS ever gets pissy, I'll point out that's how they told me to do it and I'm doing my best. All that really matters.

[Big TR]

You are correct, gross winnings are taxable as income. If you are lucky enough to itemize, you can include any losses over 2% of your AGI as miscellaneous deductions. These could also include tax software, safe deposit boxes, unreimbursed work expenses, etc.

If you are itemizing, this means that you have the benefit of having more deductions than the standard deduction. This is a good thing, as you do not want to have to take the standard deduction. I'm confused as to why you are shat upon. Except for the 2% floor, you have the same benefit as if you were a working stiff for those monies.

The purpose of the tax bracket statement was to say that even though you are in the 10% bracket, your net tax is significantly less than that. Let's say student earns $12k from working and $3k from gambling. He gets the standard deduction of $6k, so net tax is $15k-6k*.1 = $900. This would give him a net tax rate of 6%.

This is peanuts compared to the hassel of being flagged a tax fraud.

[Big TR]

Right on Bicycle. As long as you are making a good faith effort to report your winnings, that's all they really care about if you are ever audited.

The moral of this whole story is as long as what you are claiming isn't fradulent, nobody will get the gov't beatdown.

[astroglide]

will you also provide them with the date/time of the phone call and the identification number of the individual that advised you? if you get audited, you will be penalized for filing like that. here is the letter of the law, taken from http://www.irs.gov/publications/p529/ar02.html#d0e1682:

Gambling Losses Up to the Amount of Gambling Winnings
You must report the full amount of your gambling winnings for the year on line 21, Form 1040. You deduct your gambling losses for the year on line 27, Schedule A (Form 1040). You cannot deduct gambling losses that are more than your winnings.



You cannot reduce your gambling winnings by your gambling losses and report the difference. You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as an itemized deduction. Therefore, your records should show your winnings separately from your losses.



Diary of winnings and losses. You must keep an accurate diary or similar record of your losses and winnings.

Your diary should contain at least the following information.

The date and type of your specific wager or wagering activity.

The name and address or location of the gambling establishment.

The names of other persons present with you at the gambling establishment.

The amount(s) you won or lost.


Proof of winnings and losses. In addition to your diary, you should also have other documentation. You can generally prove your winnings and losses through Form W–2G, Certain Gambling Winnings, Form 5754, Statement by Person(s) Receiving Gambling Winnings, wagering tickets, canceled checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided to you by the gambling establishment.

For specific wagering transactions, you can use the following items to support your winnings and losses. Keno: Copies of the keno tickets you purchased that were validated by the gambling establishment, copies of your casino credit records, and copies of your casino check cashing records.
Slot machines: A record of the machine number and all winnings by date and time the machine was played.
Table games (twentyone, blackjack, craps, poker, baccarat, roulette, wheel of fortune, etc.): The number of the table at which you were playing. Casino credit card data indicating whether the credit was issued in the pit or at the cashier's cage.
Bingo: A record of the number of games played, cost of tickets purchased, and amounts collected on winning tickets. Supplemental records include any receipts from the casino, parlor, etc.
Racing (horse, harness, dog, etc.): A record of the races, amounts of wagers, amounts collected on winning tickets, and amounts lost on losing tickets. Supplemental records include unredeemed tickets and payment records from the racetrack.
Lotteries: A record of ticket purchases, dates, winnings, and losses. Supplemental records include unredeemed tickets, payment slips, and winnings statements.

[Ulysses]

[ QUOTE ]
I'm confused as to why you are shat upon. Except for the 2% floor, you have the same benefit as if you were a working stiff for those monies.

[/ QUOTE ]

Here's why he's shat upon.

Consider someone w/ out a house, charitable contributions, other itemized deductions.

This guy makes $15k in random other income. He takes his standard deduction (whatever it is, let's call it $5k) and has $10k in taxable income. He pays his taxes on $10k.

Other guy makes $15k from poker. He shows $45k in wins and then has to itemize $30k in losses. This replaces his standard deduction. He pays taxes on $15k in taxable income.

That's the difference.

[Ulysses]

Two points, bicyclekick:

1) It has been written about exhaustively in tax/business writing that the IRS Helpline info is often incorrect and as crazy as it seems even documented evidence that the IRS Helpline told you to do something is not accepted by the IRS as a valid excuse for errors. The IRS will still penalize you for not following their rules even if your info came from the IRS Helpline. I'm sure a net search would come back w/ lots of info on this. I've read plenty of articles which basically went "The IRS helpline told me to do it this way, then the IRS penalized me for doing this wrong!" Messed up, yes.

2) Another poster is correct. If you report all your winnings, your penalities are unlikely to be severe. The IRS is mainly interested in penalizing people who avoid taxes. However, if you have large unexplained cash deposits and improper records, they might decide in an audit that your win amount is much larger than you reported. Without IRS guideline compliant records, that would be tough to fight.

[Warik]

[ QUOTE ]
You cannot reduce your gambling winnings by your gambling losses and report the difference. You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as an itemized deduction. Therefore, your records should show your winnings separately from your losses.

[/ QUOTE ]

That's BULLSHIT! (i.e. it SUCKS... I don't mean it's incorrect - it obviously is)

... and it's precisely why so many people do not report their gambling winnings accurately.

Basically you get screwed out of your standard deduction... it can never work in your favor because you are not allowed to declare a negative.

This also makes no sense. If I buy 100 shares of stock XYZ at $50 a share and the price fluctuates between $100/share and $1/share every day for the whole year, then I finally sell it at the end of the year at $100, don't I only have to pay capital gains tax on the profit? What does all that have to do with your standard deduction.

Bunch of crooks I tell you.

Makes me feel like just cashing out via check and pay a percentage at a check-cashing store and hiding the money in a safe in my closet (along with my brown trout).

I imagine that even if you do declare by the book, you will still have trouble during an audit. I could probably play 50,000-100,000 hands per year. Do they plan to go through my PokerTracker database or do they expect me to do that for them?

I take it you don't have to prove anything unless you are audited, right? Just report and pray?

[OrangeCat]

It used to be that the IRS could not recognize gambling income without a 1099G. But nowadays, they might be looking at credit card deposits. I mean, it’s no secret who the majors are in offshore gambling.

It is legal to deduct gambling losses and expenses but only against the amount you won. You must have records to verify the losses. The losses do not have to take place at the same venue as the winnings but they do have to be in the same year. I was once audited because of gambling income. I had a large amount of 1099G income from the horse races and claimed an equivalent loss. I had impeccable daily records with programs and loosing tickets. Because of these records, my return held up under auditors scrutiny.

Except for really big winners (lottery, pick6, WSOP champions, etc..), the IRS does not have a hard time believing that people have losses exceeding winnings; after all, almost everybody looses more than they win. But you do need to keep records.

[Moyer]

Yeah, you only have to prove it if you get audited. But, since you're recieving an extra 15K (or more) in un documented earnings, there's a fair chance you'll get audited. Especially if you make large deposits.

I don't have a very good understanding of taxes though, especially deductions.

But, what I was thinking... All the IRS sees is your deposit from Neteller to your bank account. If you're audited, they may be able to see your Neteller account too. But, I seriously doubt they would or even could look at your Party Poker account. Basically, you could report all your sessions, or almost all of your sessions, as winning. So you'd really only be paying taxes on your profit. I don't think they would have any way of knowing. Of course your records would also have to back this up.

Or, if you wanted to do it absolutely correctly, you could just play very long sessions of multiple tables. That would reduce your losing sessions quite a bit.


I've never been to one of these check cashing places, or even seen one that I know of. Do they ask for any ID or SS#?

[sin808]

That might bring up an idea (just to be a dick)...if you get audited, print out every hand history broken down by session from PT and give that to them as your records? That would detail each winning and losing session (which is what they want correct?). And be a major pain in the ass for them to sift through.

[pudley4]

[ QUOTE ]
Quote:
--------------------------------------------------------------------------------

You cannot reduce your gambling winnings by your gambling losses and report the difference. You must report the full amount of your winnings as income and claim your losses (up to the amount of winnings) as an itemized deduction. Therefore, your records should show your winnings separately from your losses.


--------------------------------------------------------------------------------



That's BULLSHIT! (i.e. it SUCKS... I don't mean it's incorrect - it obviously is)

... and it's precisely why so many people do not report their gambling winnings accurately.

Basically you get screwed out of your standard deduction... it can never work in your favor because you are not allowed to declare a negative.


[/ QUOTE ]

What's even better is in some states *cough*Minnesota*cough*, you are not even allowed to claim gambling losses as itemized deductions! (when figuring your state income tax)

[dirty moose]

if they dont report to the irs (someone said that up there) then what are you worried about?

[Warik]

[ QUOTE ]
But, since you're recieving an extra 15K (or more) in un documented earnings, there's a fair chance you'll get audited. Especially if you make large deposits.

[/ QUOTE ]

But if the additional deposits are accounted for on my income tax return, then I likely WON'T get audited, right?

i.e. if I make $X working my real job and $Y playing poker and Big Brother says "Interesting... there is $Y extra money going into this bank account from an offshore bank" but my tax return shows me claiming EXACTLY $Y winnings, I'd imagine I'd be OK since it would be a waste of time/money to investigate me for extra money that may not exist.

What if you end up winning the same as you earn working or more, and you work full time?

[ QUOTE ]
I don't have a very good understanding of taxes though, especially deductions.

[/ QUOTE ]

I should have read this part before asking all of those hypothetical scenario questions. /images/graemlins/smile.gif

[ QUOTE ]
Of course your records would also have to back this up.

[/ QUOTE ]

Well, my records would consist of an excel spreadsheet with:
Session start date/time
Session end date/time
Poker site played on
Table name
Amount won or lost

in accordance with what my PokerTracker shows me.... but I imagine this wouldn't be good enough for Uncle Sam?

[ QUOTE ]
I've never been to one of these check cashing places, or even seen one that I know of. Do they ask for any ID or SS#?

[/ QUOTE ]

I'm sure they ask for ID to verify that you are the person the check is payable to and that your endorsement will be valid. I'm not sure about the SSN... but I'm sure that they have to report their transactions to the IRS and that your name will surely appear in the paper trail somewhere. Too bad because I think the service charge percentage is less than what your tax rate would be.

[Warik]

[ QUOTE ]
That might bring up an idea (just to be a dick)...if you get audited, print out every hand history broken down by session from PT and give that to them as your records? That would detail each winning and losing session (which is what they want correct?). And be a major pain in the ass for them to sift through.

[/ QUOTE ]

I would consider that if and only if the paper, ink, and new printer after it dies are all tax deductible.

lol think about printing out 100,000 hands.

1 hand per page x 100,000 hands = 100,000+ pages. That's easily over $2,000 in paper, $5,000 in ink, and $1,000,000 in postage and handling.

Ah... Warik's detailed gambling records... the only document in history longer than the US tax code - LOL.

[pokerraja]

[ QUOTE ]
It used to be that the IRS could not recognize gambling income without a 1099G. But nowadays, they might be looking at credit card deposits. I mean, it’s no secret who the majors are in offshore gambling.

It is legal to deduct gambling losses and expenses but only against the amount you won. You must have records to verify the losses. The losses do not have to take place at the same venue as the winnings but they do have to be in the same year. I was once audited because of gambling income. I had a large amount of 1099G income from the horse races and claimed an equivalent loss. I had impeccable daily records with programs and loosing tickets. Because of these records, my return held up under auditors scrutiny.

Except for really big winners (lottery, pick6, WSOP champions, etc..), the IRS does not have a hard time believing that people have losses exceeding winnings; after all, almost everybody looses more than they win. But you do need to keep records.

[/ QUOTE ]

how exactly would you record your losses from online poker. is it basically just print out your losses and record and date? if this is so, we could just make up our losses? No?

[Lost Wages]

Still sounds to me like you have to pay tax on every pot you win, there is no mention of a session. If you were keeping your horse racing tickets you would have to pay tax on each ticket that won not your net result for a session, no?

Lost Wages

[astroglide]

there's a court precedent for poker specifically which defines it as per-session

[OrangeCat]

&lt;&lt; how exactly would you record your losses from online poker. is it basically just print out your losses and record and date? &gt;&gt;

I'm not an online player so I don't know what sort of records they give you. For sure, you don't want to go to an audit with something that looks like you dummied it up the night before. IMO, all gamblers should keep a log of their bets, even if there are no IRS concerns. I don't think every hand needs to be recorded - a daily log should suffice.


If the IRS has credit card statements that show you cashing out from party for $10K and you try and say you lost it all back, in cash, at a B&amp;M casino, (and therefore had no net gain) they probably won't take your word for it. With the IRS, it's like you are guilty until proven innocent.

[DCasanova]

/images/graemlins/confused.gif It's just like the other poster said. It was just a check. Off shore sites are off shore because they don't want to be involved with the laws of the land here in the United States. They there for, do not report to the IRS, nor are they required to. You make fun of other posters but if you had enough noodle in your head you could have come to this conclusion on your own! But if you really really want to pay taxes to the man because you are such a good Citizen, please feel free. It will be money well spent on your part.

[Moyer]

[ QUOTE ]
[ QUOTE ]
But, since you're recieving an extra 15K (or more) in un documented earnings, there's a fair chance you'll get audited. Especially if you make large deposits.

[/ QUOTE ]

But if the additional deposits are accounted for on my income tax return, then I likely WON'T get audited, right?

[/ QUOTE ]

Right. That's why I said "un documented".

Any time you make large deposits (or even lots of smaller ones) and you don't claim it on your taxes, you run the risk of Uncle Sam bending you over.

I think there is even more risk now, since 911 and the Patriot Act.

[Warik]

[ QUOTE ]
I think there is even more risk now, since 911 and the Patriot Act.

[/ QUOTE ]

Oh no don't worry about that. That has nothing to do with gambling and other private matters. That's to protect us from terrorists!

[dirty moose]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
But, since you're recieving an extra 15K (or more) in un documented earnings, there's a fair chance you'll get audited. Especially if you make large deposits.

[/ QUOTE ]
hide it in the matress? thats the only way around the irs, dont bank it.
But if the additional deposits are accounted for on my income tax return, then I likely WON'T get audited, right?

[/ QUOTE ]

Right. That's why I said "un documented".

Any time you make large deposits (or even lots of smaller ones) and you don't claim it on your taxes, you run the risk of Uncle Sam bending you over.

I think there is even more risk now, since 911 and the Patriot Act.

[/ QUOTE ]

[Moyer]

[ QUOTE ]
hide it in the matress? thats the only way around the irs, dont bank it.

[/ QUOTE ]

If you're playing online(which is what this thread's about), you have to withdraw your winnings. Even if you don't deposit it in your bank account, you still have to cash the check. This is pretty impossible to do without the IRS finding out.

[astroglide]

i trust you're being sarcastic. very clear lines can be drawn between "laundering" and places like neteller.

[Warik]

[ QUOTE ]
i trust you're being sarcastic. very clear lines can be drawn between "laundering" and places like neteller.

[/ QUOTE ]

No no no... I am being totally serious. The Patriot Act would never be used to see how much money we're making playing poker. The government would never do such a thing.

Results in white below:
<font color="white">yes... i'm being sarcastic</font>

[Kevroc]

When you cash a check at a check cashing storefront, the receipt says on the back of it that they do not disclose any information to anyone. The check is honored and they get a percentage, I cash my work paychecks this way (I do not use banks for anything). Just wondering how anyone would know about the checks, poker or otherwise..?

I honestly do not know how this works

[surfdoc]

What is the juice they take from your paychecks?

[Warik]

[ QUOTE ]
When you cash a check at a check cashing storefront, the receipt says on the back of it that they do not disclose any information to anyone.

[/ QUOTE ]

I don't think they would be in business very long if the Federal Government was on their list of "anyone."

[brewmeister6]

If Uncle Sam takes money that I win, shouldn't he pay me win I lose?

That's logical to me

[Kevroc]

they take like 1% out

[Warik]

[ QUOTE ]
That's logical to me

[/ QUOTE ]

We're talking about income tax here. Logic no longer applies.

Where else is success penalized?