[moondogg]

Here's a quick rundown (based on my understanding, I ain't no tax lawyer):
- Generally speaking, you are required to pay either quarterly estimated tax or tax withholding on all income. If you get a salaried paycheck, they already withhold taxes; if you generate any other income that is not already withheld, you are expected to pay estimated taxes on it (because the government wants its money now instead of next year). However, if you fail to pay your estimated taxes, there is an allowable margin of error when you file your taxes next year, but if you fall outside this margin (i.e you made TOO much money gambling) you will have to pay an estimated tax penalty; see the instructions for the IRS 1040 for more info (the estimated tax penalty is at the bottom of the second page). Personnally, I just bought a house this year and my real-job income has stayed constant, so my resulting deductions will offset my gambling winnings, so I will not have to pay an estimated tax penalty.
- You reporting your gambling winnings for federal taxes, you are required to report all winning sessions as income on the Gambling Winnings line of the 1040, and then deduct all of your winning sessions as itemized deductions on 1040 Schedule A. If you do not itemize your deductions, you will be screwed; basically you have to report all winning sessions, but cannot report any offsetting losing sessions without itemizing.
- The term "session" has been heavily debated. The strictest interpretation is when you sit down at a table with chips, gamble to some extent, and then get up and leave the table (if you multitable online, this can get a little nuts). A somewhat looser interpretaion is to count anytime you site down at your computer, and play. Still looser, your net total in a day. Some have suggested anytime you cashout from a poker site, and some have even suggested anytime you withdraw from Neteller to your bank account (these last approaches are a little crazy, IMHO, and I don't think the IRS would buy them). Poker around the General and Internet forums for messages with the subject of "Taxes" for more info on sessions.
- You are allowed to deduct gambling losses, but only up to the amount of your winnings. In other words, if you win 1K gambling, and then lose 2K gambling, you are only allowed to declare losses of 1K, making a net of zero. In this case, you cannot declare the full 2K loss and apply it deduct it against your other income.