When are internet poker earnings taxable income?

[zoomer]

I know you have to pay taxes on poker earnings, but my question is when are those earnings really earnings. You play and win at an online poker site account and the earnings are put into that account when you leave the table. You withdraw the earnings from the poker site account into a neteller account. Then you withdraw earnings fron the neteller account into your local bank account. Right now I'm building up my bankroll so I'm leaving it in the neteller account. My thinking is that until the earnings have been deposited into my local bank account, they are not income. That is where I can get my hands on the earnings. Is this right? Or are they taxable when they are moved into the neteller account? Or are they taxable when they are in the poker site account? Thanks.

[felson]

They are taxable when you drag the pot.

EDIT: well, actually when you stand up from the table. according to most people anyway.

[Greg (FossilMan)]

I doubt the IRS would treat online poker any differently than live poker in this regard. And for live poker, you are supposed to be tracking your results on a session-by-session basis. So, I would say that everytime you finish a session, you have a taxable result. If it's a win, it goes in the win column, and the losses go into the loss column, just like playing in live games.

However, I doubt this issue has been litigated much, if at all, so there is no definitive answer. Plus, I'm not an expert, so if you rely upon my views, you're foolish to do so.

;-)

later, Greg Raymer (FossilMan)

[Yeknom58]

"Plus, I'm not an expert, so if you rely upon my views, you're foolish to do so."

I love disclaimers like this.

I'm thinking once you deposit into the the site that's the start of one long session and once the money leaves the site that's the end of that session...so I'm thinking it's the neteller transactions but I add the same disclaimer as above.

[J.R.]

your disclaimer is very relevant to the advice you gave.

[Yeknom58]

BINGO!!!!

Just a wild guess.

So where is your answer smart guy.

[Thythe]

Everyone always says that you report by a per table/session basis. They all then act high and mighty that they have this knowledge, but my question is do you actually follow through with it? I play pretty often but not full time and I'm sure I have thousands of sessions by this definition. Are you really recording thousands of small wins and deducting thousands of small losses?

[over_c]

I don't know the appropriate legal way, but I can tell you the way I am reporting my internet poker income.

I am reporting only the money that I have withdrawn from internet sites minus money I deposited into them during the year 2004.

[driller]

I think Greg's answer is correct. If you use poker tracker, its easy to export all your sessions to an excel spread sheet, then use an if statement to separate the wins and losses. Remember, you only have to report the total of your winning sessions under miscellaneous income and then subtract the total of your losing sessions (up to the amount of your winnings) on schedule A. What most of you will find, howerver is that if you had a break even or losing year you will pay more taxes than otherwise because your gross income will be higher. It's not fair but it is the law.

[felson]

[ QUOTE ]
I think Greg's answer is correct. If you use poker tracker, its easy to export all your sessions to an excel spread sheet, then use an if statement to separate the wins and losses. Remember, you only have to report the total of your winning sessions under miscellaneous income and then subtract the total of your losing sessions (up to the amount of your winnings) on schedule A. What most of you will find, howerver is that if you had a break even or losing year you will pay more taxes than otherwise because your gross income will be higher. It's not fair but it is the law.

[/ QUOTE ]