Taxes and Deducting the Rake?

[digdeep]

Can you deduct the rake from an Internet site against your winnings? Anybody know? With PT it keeps track of the rake you have paid, so you have records to support your duduction?

Any insights?

[Neil Stevens]

Unless you're counting as your income the full, unraked pots you take in, dedicting the rake would seem to be double counting that expense.

[digdeep]

Neil,

So the amount won from your playing is net of the rake. And therefore, already deducted. Didn't even think about that, just trying to get creative with taxes.

Thanks

[tek]

You could deduct all the sports and horse bets that sap all your poker winnings [img]/images/graemlins/grin.gif[/img]

[dakine]

Excerpt from an earlier post by me. "Gambling and Taxes"

Quote: There is another general IRS rule that says anyone paying anyone else $600 in one year is supposed to file a report. The IRS has been going after casinos and cardrooms that run tournaments, forcing them to file tax reporting forms on grand prize winners. Here the IRS has the very good argument that the operator knows exactly how much a player has paid to enter the tournament and how much the finalists are given.

Is there anything a winning player can do to lower the bite of the income tax? And what about those who gamble and lose? Which is everybody, occasionally. The law does allow players to take gambling losses off their taxes, but only up to the amounts of their winnings.(Unquote)

Did that answer your your question?

[Neil Stevens]

I think the only way you really can save tax money as a gambler is if you do it enough to make it a business, in which case you can write off all sorts of expenses.

Woe to the player who plays enough to win a lot, but not enough to make it a running business.

[digdeep]

Yes, your insights have answered my question about the rake. I am currently taking a tax class in college, and having researched the topic a little more, Neil is correct about the line between poker as a hobby and a profession. As a hobby, there is not much to deduct, but as a business, you can start deducting lots of things.

Thanks for the replies everyone.

[Glenn]

I always read this advice, but it it silly. If you are a "professional", then you have to pay 15% self-employment tax, in addition to income tax (on the 1st 90k or so). There is no way most people can take enough (legitimate) deductions to make up for this.