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Old 12-08-2005, 07:26 PM
RiverDood RiverDood is offline
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Join Date: Feb 2005
Location: California
Posts: 113
Default Re: Tax Question : Claim Total Winnings or Cashout?

Everyone's IRS experience is different, and I've never had to deal with them on poker income.

But I did get audited years ago on a different Schedule C source of side income. Here's what I came away with:

-- if you're dealing with a dispute involving more than $1,000 in income, don't expect your auditor to have any sympathy with your arguments that doing the records right was a hassle. Collecting taxes is a hassle. This man is paid to put hassles into your life and make them stay there.

-- if you're dealing with less than $1,000 in income and the rest of your taxes are clean, you may be able to get the auditor to decide that your off-the-cuff presentation is "reasonable." Not perfect, but reasonable enough that they'll let you go with a warning to be more careful next time.

This is not a hard and fast cutoff. There may be auditors who want to put you through the wringer for every penny. There may be auditors who will cut you more slack. And of course only 1% or 2% of all tax returns get audited.

But there's every reason to think that the IRS over the next few years will want to take a close look at poker income. If you're making in the multi-thousands, you're asking for a nasty, nasty audit experience if you don't come in with the kind of records that the IRS wants.
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