Online Poker and Taxes

lautzutao · #1 09-13-2005, 09:28 PM

Are taxes applicable on withdrawls from online poker sites? I'm not really sure and haven't been able to find any info about it...

If you do, can anyone tell me where to find the proper documentation to prepare filing? I haven't cashed out yet but plan to do so by year end if I continue in the black

EDIT: The withdrawl would be in excess of $1000 if that means anything.

BottlesOf · #2 09-13-2005, 10:07 PM

Keep records of everything. Yes it is taxable in the US. You owe not on withdrawls, but on earn. It doesn't matter how much you have taken out, if it's in your acct., you owe on it.

randomstumbl · #3 09-13-2005, 10:22 PM

If 2+2 made a book on this, I swear they'd make a fortune.

Swedebubba · #4 09-14-2005, 12:29 AM

[ QUOTE ]
If 2+2 made a book on this, I swear they'd make a fortune.

[/ QUOTE ]
I wish they would.

smb394 · #5 09-14-2005, 01:31 AM

I'm sure these quesitons would still get posted 5 times per week.

broiler · #6 09-14-2005, 09:16 AM

The correct answer has been given that income is based on what you earn at the tables, but I would like to add one thing. If the IRS was to ever look at your records, you would want to show how the withdrawal relates to that income. They will ask the question when looking through your records. I would always suggest that "session income" and a running total of your bankroll, either by site or in total, should be maintained. The more evidence that you have that you maintain proper records is always a good thing against the IRS.

I would also agree with the sentiment that 2+2 should have a guide to taxes. There really hasn't been a good book on the subject published recently and none of the books have a good section on tax planning.

Tk79 · #7 09-14-2005, 10:56 AM

I think most 2+2 books are timeless(to an extent). A tax book would not only need to be updated quite frequently, it would only apply to US customers. On top of that I believe that state taxes are different from state to state. Finally, i think that the 2+2 authors are poker experts, not tax experts.

lautzutao · #8 09-14-2005, 11:26 AM

Thank you for all the info. I did a search on this site for 'taxes' and only found off-topic stuff...sorry if this question's asked a million times.

Hellmouth · #9 09-14-2005, 11:50 AM

Why is that? You don't owe on stocks until you cash them in. Why is poker different? You could pay taxes on it this year and then lose it all Jan 1.

Greg

bozlax · #10 09-14-2005, 12:09 PM

[ QUOTE ]
Why is that? You don't owe on stocks until you cash them in. Why is poker different? You could pay taxes on it this year and then lose it all Jan 1.

Greg

[/ QUOTE ]

And then you get to deduct the loss next year.