#1
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Taxable: All income or only withdrawn?
I'm going to support myself by playing poker for a while. I plan on hiring a professional that specializes w/ gambling to help me with my taxes, but I've got a quick question while I am still planning things out. I live in the US. (BTW, any recommendations for a professional are welcomed. I have a few already but more can't hurt.)
Am I to pay taxes on ALL money I make playing poker as soon as it I win it, including money that just sits in my bankroll? This is just capital to me, not income. Or am I to pay taxes on only what I remove from my bankroll and put in my checking account to spend? Assume I pay ~33% in taxes (federal income tax + self employment tax, etc) In the first scenario - I might win $10,000 in a month, pay $3,333 in taxes, and I'd have $6,666 left over. I'd withdraw $3,333 to my checking account, and add $3,333 to my bankroll. In the second scenario - I'd win $10,000 in a month, keep $5,000 to my bankroll, and cash out $5,000. Of the $5,000 I cashed out, I'd pay $1650 (this is 33% of $5,000) in taxes and keep $3,350 for myself. It's the first scenario, right? [img]/images/graemlins/frown.gif[/img] |
#2
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Re: Taxable: All income or only withdrawn?
It is taxable income as soon as your poker session ends.
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#3
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Re: Taxable: All income or only withdrawn?
[ QUOTE ]
It is taxable income as soon as your poker session ends. [/ QUOTE ] While I agree with this position and this is how I file my taxes but I have a questions: What if a site closes and takes your funds? Are those gambling losses or criminal losses? In the former, you could declare a loss, in the latter, you really cannot. Vern |
#4
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Re: Taxable: All income or only withdrawn?
Any money you make is taxable. You should just think of your poker bankroll as being in a virtual banking account. It doesn't matter whether you withdraw it or not. People get direct deposit from their jobs, they could say that as long as they don't withdraw it, it isn't income, come on.
As far as you thinking it's "capital." Any increase in capital in your business is either a contribution or a money making endeavor. When the local sandwich shop sells a hoagie, the profit from that can be added to capital, or the owner can withdraw it. Either way it's taxable income. As far as the poker site closing and taking your money, you could probably claim an unexpected casualty/theft loss of the money. The guy you would hire would certainly be able to point you in the right direction should that happen. But I'm sure as long as you didn't lose it as like a fine for criminal activity or something similar you would be able to count that as a loss. |
#5
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Re: Taxable: All income or only withdrawn?
I would assume (aka I don't know and am just guessing) that the IRS would say criminal losses as it gives them more money and it does really seem like gambling loses to me ... assuming the IRS knows about the stolen money.
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#6
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Re: Taxable: All income or only withdrawn?
I think that I would say that putting my money in the poker-site was a 'gamble' in the first place.
So i would report it as a gambling loss. |
#7
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Re: Taxable: All income or only withdrawn?
So wait, what if I win 500$, it's taxable... then I lose 500$, and win 500$ again, do I pay taxes on winning 500 twice even though I only net 500? How does that work.
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#8
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Re: Taxable: All income or only withdrawn?
I'm not sure the IRS would agree with that logic. [img]/images/graemlins/smile.gif[/img]
You would probably be fine if you just never told the IRS that the solen money ever existed - not that I'd ever reccamend tax evasion. |
#9
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Re: Taxable: All income or only withdrawn?
There are about a million threads on this. [img]/images/graemlins/smile.gif[/img] But to put it very simply for the recreational gambler...
You must declare every winning session you have as income and then if you with to deduct loses you must itemize your deductions (therefore you no longer can take the standard deduction). |
#10
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Re: Taxable: All income or only withdrawn?
sounds pretty complicated, maybe i should just stick to not paying taxes.
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