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#1
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Rakeback, taxes, and an argument for the IRS
This is not a post for those of you who intend to break the law. Trolls and your stupid comments are not appreciated here.
I have been thinking about rakeback, and I think it is not taxable income. I believe it is arguably a purchase price adjustment, much like a mail-in rebate. A discount on goods and services if reasonable and still within the boundaries of fair market value for that good or service is not taxable income. I am not a CPA, but I did consult a tax attorney on this point. I suggest to those of you that try to comply that you account separately for your rakeback and exclude it. Even if the IRS audits you and calls it income, the argument is reasonable enough to avert penalties in my opinion. This does not apply to bonuses, which are pretty clearly income IMO. |
#2
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Re: Rakeback, taxes, and an argument for the IRS
Believe whatever you want, and pay your taxes accordingly.
I consider it income - I pay on everything I take from Neteller to my checking account. Makes it pretty simple for me. Dogmeat [img]/images/graemlins/spade.gif[/img] |
#3
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Re: Rakeback, taxes, and an argument for the IRS
[ QUOTE ]
I consider it income - I pay on everything I take from Neteller to my checking account. Makes it pretty simple for me. Dogmeat [img]/images/graemlins/spade.gif[/img] [/ QUOTE ] |
#4
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Re: Rakeback, taxes, and an argument for the IRS
[ QUOTE ]
[ QUOTE ] I consider it income - I pay on everything I take from Neteller to my checking account. Makes it pretty simple for me. Dogmeat [img]/images/graemlins/spade.gif[/img] [/ QUOTE ] [/ QUOTE ] Me too... makes it easier, and my accountant agreed with me on this method. (I'm in Canada, though) |
#5
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Re: Rakeback, taxes, and an argument for the IRS
[ QUOTE ]
Believe whatever you want, and pay your taxes accordingly. I consider it income - I pay on everything I take from Neteller to my checking account. Makes it pretty simple for me. Dogmeat [img]/images/graemlins/spade.gif[/img] [/ QUOTE ] That surely does make it simpler for you, but it doesn't make it correct. Whether your income (winnings, bonuses, rakeback) is kept at a poker site, at Neteller, or in your checking account doesn't affect its categorization as taxable income. |
#6
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Re: Rakeback, taxes, and an argument for the IRS
[ QUOTE ]
[ QUOTE ] Believe whatever you want, and pay your taxes accordingly. I consider it income - I pay on everything I take from Neteller to my checking account. Makes it pretty simple for me. Dogmeat [img]/images/graemlins/spade.gif[/img] [/ QUOTE ] That surely does make it simpler for you, but it doesn't make it correct. Whether your income (winnings, bonuses, rakeback) is kept at a poker site, at Neteller, or in your checking account doesn't affect its categorization as taxable income. [/ QUOTE ] I hope this isn't a dumb question but how does a tax auditor know about your neteller account? It's not like neteller sends a form reporting what you have every year. I probably will not pay taxes until I make a decent amount. I work and goto school full time so what I make isn't much. |
#7
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Re: Rakeback, taxes, and an argument for the IRS
They may or may not know about Neteller. Neteller, essentially being an offshore bank account is not required to give your information to the US government and by keeping that money in your Neteller account you may be able to avoid paying taxes on that money since the IRS would have no idea how much money is in question.
As soon as you bring that money into your US bank account your auditor will know all about it. It seems to me that if you ever wanted to access that money in the US it would show up in an audit. If you leave it in Neteller you might be able to get access to this using your Neteller debit card, but since I am not sure what information the banking systems record the IRS may be able to track your purchases and withdrawals with that as well. |
#8
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Re: Rakeback, taxes, and an argument for the IRS
Rake has already been deducted from your income. Rake back is income.
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#9
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Re: Rakeback, taxes, and an argument for the IRS
[ QUOTE ]
Rake has already been deducted from your income. Rake back is income. [/ QUOTE ] I did not say that my proposed position was internally consistent with the spirit of the tax code. There are many instances where the treatment of income is inconsistent. Take the treatment of gambling winnings as income vs. gambling losses as an itemized deduction subject to the phaseout. That makes no sense from a transactional perspective. I think its possible that the transaction doctrine does not apply here. |
#10
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Re: Rakeback, taxes, and an argument for the IRS
If rakeback doesn't count as income, then rake doesn't count as a deduction, and you should pay tax on the full amount you made.
That is to say, if you win $10,000, but pay $6000 in rake, then your account balance only goes up by $4000. Feel free to pay tax on the full $10,000, since you think rake doesn't count. |
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