Question about taxes....
 

So I just won 10k for first in the party poker 40k. My question is do you guys claim this on your tax return???
I was talking to my brother who is a CPA and he told me they tax like 40% on it. So to anyone who has won a big tourney what do you do for taxes?

Re: Question about taxes....
 

I would say that 40% sounds steep in terms of the tax rate for that win. Of course, I say that without knowing what your income tax situation is. My initial thought is always in the 25-33% range.

Your tournament win is gambling income, just like any other poker winnings that you have for the rest of the year. The only thing that I would add is that with a $10k win, your Party account has more than $10k in it and now you have a foreign account that must be reported. No tax is due for reporting the foreign account, but there are penalties for not reporting and getting caught.

Re: Question about taxes....
 

Report it to who? Report it now or when i do my taxes next year?

Re: Question about taxes....
 

Move to the UK-NO TAX on winnings woohoo

Re: Question about taxes....
 

The foreign account gets reported to thr Treasury and it isn't due until June 15. Most people just do it at the same time as their taxes for the year.

Re: Question about taxes....
 

thanks for the quick reply broiler. much appreciated.

Re: Question about taxes....
 

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thanks for the quick reply broiler. much appreciated.

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Yeah this is something that gets argued about a lot. Personally, I wouldn't report anything until you actually cash it out. What if over the next month you play a bunch of high end tourneys and lose it all? Reporting it as income would just be silly. Reporting what you cash out (and don't cash back in) makes the most sense. I'd also count it as "gambling" the same way as if I went to the casino.

I do *not* believe the account counts the same way as a foriegn bank account, as I'm pretty sure party says in their TOS that money in your account has no actual cash value, and they can take it at any time. If they can take it at any time, it's definatly not a bank account. It's the same way in casinos, the chips have no cash value and the casino can take them at any time. They just usually dont b/c it looks really bad if you go to the media.

Re: Question about taxes....
 

from what i understand you only have to report what you cash out. it goes in some column marked internet gambling ro something.

right now, as longa sthe moneyh is in your account, it's working capitol or something, not income.

Re: Question about taxes....
 

Don't cash out more than 17,000 in a year and you are considered under poverty level and wont get audited by the IRS. Don't move more than $999.99 a week into US bank accounts and it does not get logged by the bank and sent to the IRS. And when transferring to offshore account, use check and not wire transfer. There are all tips I got from a lawyer friend I was talking to about taxes yesterday >< If you do move 10,000 into your bank account however, you are going to be responsible for taxes on that, if it is still in your partypoker account it is NOT YET liable, I think partypoker operates under the government of Gibraltar, and if you read their privacy policy, the money in your account on party actually still belongs to them, and they have the right to not pay you out if you do not meet certain criteria they specified when you made the account (very rare, but wrong information, age, other fraudulent situations, etc)

BOTTOM LINE: Leak it a little at a time.

Re: Question about taxes....
 

There really isn't much argument about tournament winnings and reporting. Gambling income is supposed to be reported by session. There is no correct justification for considering a different tournament on a different day as part of the same session. I would love to say that netting is ok, but the rules just don't work that way.

The foreign reporting rules apply to more than just foreign bank accounts. If you read the rules, it clearly says any account in which you have a financial interest. Party's TOS do not matter, their actions in regards to your account are what matter. You have the ability to withdraw your funds at any time, therefore you own the account.

Finally, chips are cash. The IRS has won this case against gamblers who used to keep their chips in safety deposit boxes at the casino. The gamblers tried to use your cash out theory and lost with full penalties for their efforts.