Tournament Winnings and Taxable Income

Will Hachem receive the whole $7.5m for winning the ME, or will he have to pay a huge chunk of it back in Taxes to either the US or Aus government?

Also, are big prizes like this paid in one lump sum, or paid in several smaller chunks over a number of years (I'm sure I read somewhere that this is how big lottery wins in the US are paid out, perhaps that's a way to avoid a big tax bill tho?).

I'm assuming that a lot of this depends on your country of residence, but just curious as to what the various regulations would mean to different people. I'm from the UK, and I believe that if you are an amateur player, all winnings from gambling are non taxable, but would this kind of win automatically make you a "pro", and in turn make you liable for a huge tax bill if you were to follow things to the letter?

[sexdrugsmoney]

From what I've heard Binions will take 30% away before they give it to him for the US gov.

[daveymck]

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Will Hachem receive the whole $7.5m for winning the ME, or will he have to pay a huge chunk of it back in Taxes to either the US or Aus government?

Also, are big prizes like this paid in one lump sum, or paid in several smaller chunks over a number of years (I'm sure I read somewhere that this is how big lottery wins in the US are paid out, perhaps that's a way to avoid a big tax bill tho?).

I'm assuming that a lot of this depends on your country of residence, but just curious as to what the various regulations would mean to different people. I'm from the UK, and I believe that if you are an amateur player, all winnings from gambling are non taxable, but would this kind of win automatically make you a "pro", and in turn make you liable for a huge tax bill if you were to follow things to the letter?

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I beleive that if a UK player won the ME it would not be taxed in the US it would be at the UK 0% rate, there is some form to fill in there must be some sort of netting off agreement between the countires, there was a discussion on the hendon mob about an Reb Ireland player being down as England maybe for this reason.

I dont know if this is the case for Aussie players.

Also under UK law there is no defination of pro, gambling winnings are gambling winnings and are non taxable.

[daveymck]

From an article at
Hendon Mob tax article Probably why Mel judah claims to be from UK.

It's a different state of affairs for those poor Americans. If one of them should win The Poker Million, even though it's being played in London in 2002, they will be liable for tax. We are even luckier because should we win The World Series of Poker in Las Vegas we have a tax treaty with the states and all we have to do is sign a form in order to collect our prize money in full. Certain other countries are not so lucky. Players resident in Australia or even Eire do not enjoy such treaties. This is why certain poker players 'claim' to be English when they play in Vegas. I guess dual nationality is worth a few quid ! The other countries to enjoy a similar treaty as us are, Czech Republic, Finland, France, Germany, Hungary, Italy, Malta, Netherlands, Russia, Spain and Tunisia. (Taken from the WSOP brochure 1997)

[Cased Heel]

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Also, are big prizes like this paid in one lump sum, or paid in several smaller chunks over a number of years (I'm sure I read somewhere that this is how big lottery wins in the US are paid out,

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I'm fairly certain it's in a lump sum. This is not a lottery. This is money that you put up already. Heck, if they were going to force a 20-year annuity down your throat, they should allow your buy-in to be paid at a rate of $500/year. Right? [img]/images/graemlins/cool.gif[/img]

Imagine the dead money that this would attract! He.ll I'd pay $500 a year for 20 years but it's a heck of a lot harder to come up with 10 Large up front.

[Fletch46]

In Canada, winnings from poker and things such as lotteries are not taxed. If we win in the US, the tax is deducted but we can recover it. Bit of a pain but we can get it back although I'm not sure if we get back all the tax. Anyone know?