Poker and taxes?

[jamestownguy]

Hello:

I've been a follower of the boards for a while now and have finally signed up in hopes someone out there has some creativity off the poker table.

Online poker play allows for tax free distributions of funds which can be sent to the recipient via electronic transfer or checks. I've been told that typically these transactions go unnoticed as far as IRS issues are concerned (regardless of check or electronic transfer amounts). Cash transactions from ring games are another issue. What would someone do if they were taking down $50K to $100K per year online, and another $50K to $100K per year in ring games (all cash) to minimize or avoid the taxes? Assuming you're not on ESPN or the Travel Channel and you're quietly picking up a decent buck what are the best alternatives to keeping what you've earned? Aside from groceries, utility bills, and miscellaneous expenses, what can one do with the rest of the money to avoid/minimize taxes? Any and all input would be very educational. Please include resources and/or websites for further investigation. Many thanks.

[Freakin]

I would hope that most of the full-time players on here woudl encourage others to pay taxes. Easiest way to avoid taxes would be to use the Neteller debit card (or a similar service's debit card) and do all of your withdrawls. Also, you could check out check-cashing operations and straightforwardly say that you do not want to provide any personal information. It's possible they will allow you to cash a check without this information at the cost of waiting for the check to clear (and paying fees, obviously). No financial institution is required to report a cash transaction to the IRS unless the amount exceeds $10,000USD. It is unlikely a steady streams of $1k withdrawls from the ATM would even be noticed. In general I would avoid running any of the funds through my bank account that I don't want the IRS to see.

Pay taxes. It just gives the US gov't one more reason to want to "shut down" internet poker.

Freakin

[jwombles]

I would say that regarding the $10,000 transaction amount, having worked at Merrill Lynch, you will find that if you go to any reputable financial institution and do a cash transaction for say $9999 or even somewhere near that amount, and then go back and do it again, even if it's not for the same amount but for an amount that looks suspiciously close to the $10,000 amount, you are just asking to get busted.

Financial institutions are VERY AWARE of the $10,000 amount and even MORE AWARE that a customer coming in with cash under this amount to deposit is aware as well.

Bottom line, DON"T RISK IT. If you play cash games at a casino, you are better off hiding your piles of cash under your bed! And as far as I see it, if you play online and you are winning bundles of cash on PP or PS or any other place, when you transfer that money into your bank account, it's going to leave a paper trail.

The only time you won't get busted is if you are never audited. So do you really want to take the risk of jail time for that?! PAY THE TAX MAN. The only way you might not get busted for it is if you win it at a casino and hide it. But there again, if you are audited and you are spending this cash on nice things yet aren't reporting any income, you are going to get busted anyway. IMHO, the risk is not worth it in any large amounts.

Wombles

[eastbay]

[ QUOTE ]
Hello:

I've been a follower of the boards for a while now and have finally signed up in hopes someone out there has some creativity off the poker table.


[/ QUOTE ]

There is no "creativity" here, unless you mean of the criminal variety.

Your gambling winnings are income, and you must pay taxes on them, or be willing to do jail time.

eastbay

[Rick Diesel]

First of all, the $10,000 amount was reduced to $5,000 in the wake of the September 11th crackdown in trying to identify and freeze up the accounts of potential terrorists.

Second, that is not for one transaction, but for cash transactions aggregating $5,000 in any 21 day period.

Third, banks are also required to report any suspicious looking activity.

Fourth, ACL and IDEA are used by banks and the IRS alike to identify patterns of deposit. For those that are not auditors or technologically advanced, this means that making a deposit between the amounts of say, 4,000 and 4,999 every 21 days is extremely likely to be noticed.

Fifth, it is illegal to evade taxes.

Okay, now flame away.

Rick Diesel, CPA (currently working for a national CPA firm and auditing financial service institutions primarily)

[jamestownguy]

Hello:

Thank you all for the input. It's a good problem to have. Thanks again!!!

[edpsu92]

On a another note, Netteller charged me a fee to deposit funds with them. Do they also charge another fee if I want to "cash out" through them? How do most of you cash out your winnings? Please advise.

[mntbikr15]

Well lets see Ive recently been going through a similar thing in my mind.

U seem to have figured out that you can get the cash without leaving a trail, or at least one that anyone would notice.

U were asking what to do with all that cash? Only thing Ive come up with so far is to have various friends/family "gift" u amounts that they can spend in cash and u give it to them. The gifts are tax free and then u can deposit the money into a bank account, checking account, etc.

And to those who are saying that its wrong to not pay them. Look at it this way. The govt is trying to shutdown online poker, therefore they cant be for it, yet they still want the benefits that they would get from it. Cant have it both ways guys....

[binions]

[ QUOTE ]
First of all, the $10,000 amount was reduced to $5,000 in the wake of the September 11th crackdown in trying to identify and freeze up the accounts of potential terrorists.

Second, that is not for one transaction, but for cash transactions aggregating $5,000 in any 21 day period.

Third, banks are also required to report any suspicious looking activity.

Fourth, ACL and IDEA are used by banks and the IRS alike to identify patterns of deposit. For those that are not auditors or technologically advanced, this means that making a deposit between the amounts of say, 4,000 and 4,999 every 21 days is extremely likely to be noticed.

Fifth, it is illegal to evade taxes.

Okay, now flame away.

Rick Diesel, CPA (currently working for a national CPA firm and auditing financial service institutions primarily)

[/ QUOTE ]

Any single transaction over $3,000 can raise a flag and be reportable after the Patriot Act, right Rick?

[binions]

Move out of the country, and your first $80K of income is tax free. This is why Matthew Hilger moved to New Zealand.