[Ed Miller]

[ QUOTE ]
True, but it isnt likely they are going to audit you. Ive had a couple different lawyers advise me that the IRS will quite likely just leave internet poker players alone. Plus its hard show how much money youve made playing poker (considering you can go to a casino and lose it).

[/ QUOTE ]

This is $#@!ing terrible advice, and both the advice giver and seeker need to know it. Report ALL of your income. If you are an online player, and you fail to report all of your winnings, you set yourself up for big penalties and possibly jailtime.

If you get audited, when they say, "Why didn't you report this online poker income?" you can't answer, "I lost it at a casino."

1. Even if that were true, you'd have to report your winnings as income and your losses as deductible losses. So you still underreported.

2. Then they'd ask to see documenatation (like a daily log) of exactly where and how you lost that money. Can't show it? Well, you didn't lose it then, and you're on the hook for all of the taxes on it.

3. Want to falsify records to "show" that you lost it? Get caught (and you wouldn't be the first one they caught doing something like that) and you go to jail.

#1 on the list of audit triggers is trying to hide income by keeping it offshore. That's their top trigger. So just because Joe Q. Public only gets audited 0.5% of the time doesn't mean that you will.

For instance, if you declare that you made very little this year, but you also declare thousands in capital gains or dividends or other interest, and someone goes looking and sees transfers from Neteller, you're cooked, and prepare to be audited.

I don't want to be an alarmist, but anyone advising you NOT to report income, particularly documented offshore income like poker winnings, is telling you the wrong thing.