about online gambling being illegal
 

Hey All,
If the U.S. government says online gambling is illegal, then are we supposed to declare it as income, and pay taxes on it?
I'm sure alot of you have paid taxes on your winnings.
But paying taxes on something that's illegal doesn't make any sense.
Isn't that that like a drug dealer paying taxes on his profits?LOL [img]/images/graemlins/laugh.gif[/img]

Re: about online gambling being illegal
 

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Isn't that that like a drug dealer paying taxes on his profits?LOL [img]/images/graemlins/laugh.gif[/img]

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How do you think many of the biggest crime bosses were finally brought to justice?

Re: about online gambling being illegal
 

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But paying taxes on something that's illegal doesn't make any sense.

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Huh? So it would make sense if the government rewarded you for breaking the law by charging you no tax on your income while the rest of us who have legal jobs have to pay through the nose for what we earn? That's an interesting perspective.

Re: about online gambling being illegal
 

The government got these criminals because they didn't pay taxes on the money they earned. Drug dealers do have to pay taxes, if the gov't suspects someone of doing illegal activities but has no proof there is nothing they can do. Not paying taxes is illegal and opens the door to further investigation and prosecution

Re: about online gambling being illegal
 

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Isn't that that like a drug dealer paying taxes on his profits?LOL [img]/images/graemlins/laugh.gif[/img]

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How do you think many of the biggest crime bosses were finally brought to justice?

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Then they "invented" money laundering to try to avoid tax evasion. At least that's what I saw on The Sopranos.

Re: about online gambling being illegal
 

[ QUOTE ]
Hey All,
If the U.S. government says online gambling is illegal, then are we supposed to declare it as income, and pay taxes on it?
I'm sure alot of you have paid taxes on your winnings.
But paying taxes on something that's illegal doesn't make any sense.
Isn't that that like a drug dealer paying taxes on his profits?LOL [img]/images/graemlins/laugh.gif[/img]

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Heidi Fleiss thought so. and she went to jail for it. if she had just payed taxes on her "business" she'd still be in operation today

Re: about online gambling being illegal
 

Drug dealers are required to pay taxes on their illegal profits. I'm sure most don't.

Re: about online gambling being illegal
 

What I meant was, that if someone declared their winnings from an illegal source, they are admitting that they participated in a crime. Should't they be arrested?LOL
Shooby

Re: about online gambling being illegal
 

Gambling is legal in the United States. Just because you declare that you won money gambling doesn't mean that you won it gambling illegally. You could have won it in Vegas.

Re: about online gambling being illegal
 

A couple factoids from the IRS Website:

Gambling winnings. You must include your gambling winnings in your income on Form1040, line 21. If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings.

Illegal income. Illegal income, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.

Re: about online gambling being illegal
 

[ QUOTE ]
What I meant was, that if someone declared their winnings from an illegal source, they are admitting that they participated in a crime. Should't they be arrested?LOL
Shooby

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The IRS doesn't care what illegal things you do to get your money, as long as they get their cut. They do not report or share any information with other government agencies.

Re: about online gambling being illegal
 

haha just thinking about taxes and poker and drugs makes me go LOL [img]/images/graemlins/laugh.gif[/img]

Re: about online gambling being illegal
 

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Isn't that that like a drug dealer paying taxes on his profits?LOL [img]/images/graemlins/laugh.gif[/img]

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Yep.
And in Kansas they are actually able to pay:

http://www.ksrevenue.org/perstaxtypesdrug.htm

Re: about online gambling being illegal
 

[ QUOTE ]
What I meant was, that if someone declared their winnings from an illegal source, they are admitting that they participated in a crime. Should't they be arrested?LOL
Shooby

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No because if a tax return were able to be used in this way, people could use the 5th ammendment to not file one.

Re: paying taxes on online gambling
 

For all you taxpayers out there:

Can someone pay taxes on winnings by simply writing the dollar amount in the blank for "income from business, investments, etc" which is usually used for 1099 earnings? Or are you required to attach a log of dates played, locations, winnings, etc?

This brings me to my next question, if you know how much you have made in the calendar year but do not have specific logs, what would be the best way to proceed?

Thanks for any comments or suggestions.

Re: about online gambling being illegal
 

[ QUOTE ]
A couple factoids from the IRS Website:

Gambling winnings. You must include your gambling winnings in your income on Form1040, line 21. If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings.

Illegal income. Illegal income, such as money from dealing illegal drugs, must be included in your income on Form 1040, line 21, or on Schedule C or Schedule C-EZ (Form 1040) if from your self-employment activity.

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This sounds like a solution for the deductible problem or for people who know how much they've won but don't have specific logs or total win/loss figures. You can just treat it as illegal income since, well, it is.