taxes

[mistrpug]

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id really love to hear from u guys about this bc my dad is buggin over the money i am making and the tax issue.


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Online Poker Tax Info

Be particularly careful about documenting each session you play and don't be tempted to subtract your losses from your winnings--you have to take your losses as itemized deductions!

If you look closely, I'm sure that you'll find that though you are cashing out $1k a month, you are actually seriously in the red if you do your taxes correctly.

Your Dad is very right to be concerned about the tax implications of your online poker play. It is very very hard to do your taxes according to the law as a non professional and make any money.

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How is this possible? It seems pretty ridiculous.

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That's because it is ridiculous. You will only lose out on the standard deduction. Since you will be able to have other deductions like state and local taxes, by the time you're done you might end up losing a little bit of money you would have had from your other income, but that's more than compensated by the $1000 a month you're bringing in.

[PuertoKid]

Well, I guess I did overstate it and didn't qualify what I meant by "in the red". What I mean is that for a 1k a month player who has a job and takes the standard deduction, you will be taxed on approx 16k of additional income instead of the 12k of income you really made. If you already make $30k/yr and take the standard deduction, your tax liability will be about $1200 more than it would be if you took a 2nd job and made 12k of additional income. That's a 10% gross penalty for poker, which is a big financial hit--particularly if extended over time. If you wind up having a break-even year, you may pay taxes on income you never received.

[mistrpug]

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Well, I guess I did overstate it and didn't qualify what I meant by "in the red". What I mean is that for a 1k a month player who has a job and takes the standard deduction, you will be taxed on approx 16k of additional income instead of the 12k of income you really made. If you already make $30k/yr and take the standard deduction, your tax liability will be about $1200 more than it would be if you took a 2nd job and made 12k of additional income. That's a 10% gross penalty for poker, which is a big financial hit--particularly if extended over time. If you wind up having a break-even year, you may pay taxes on income you never received.

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All that is correct, but one thing you left out is that if you itemize deductions, there are some other deductions you may be able to make that you would not have otherwise. This can go a long way towards making up for the loss of the standard deduction. I know in my case, my state and local taxes (which you can deduct if you itemize) are so high that I'll barely have to take a hit for losing my standard deduction. I don't know if that's a good thing or a bad thing. :-)

[PuertoKid]

true. I live in WA and there is no state income tax, so I naturally miss that kind of thing.

[winker]

Can't you just have Neteller send you several checks and cash it at a check clearing place instead. They don't report to the IRS do they?

[PuertoKid]

Are you asking if this is a good way to evade paying taxes?

[good2cu]

I'm asking what the best way to evade taxes is, for my friend of course.

[VegasVixen]

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Can't you just have Neteller send you several checks and cash it at a check clearing place instead. They don't report to the IRS do they?

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Al Capone didn't go to prison for his illegal activities, he went for failure to pay taxes on the money he made doing them.

If you are at all serious about continuing to play & cash online, whether full-time. part-time, etc., I very strongly suggest you meet with a CPA soon to make sure you are reporting your earnings correctly. The taxes you incur now will seem minimal compared to the fines & penalties you will face later.

[Shaun]

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Can't you just have Neteller send you several checks and cash it at a check clearing place instead. They don't report to the IRS do they?

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Al Capone didn't go to prison for his illegal activities, he went for failure to pay taxes on the money he made doing them.

If you are at all serious about continuing to play & cash online, whether full-time. part-time, etc., I very strongly suggest you meet with a CPA soon to make sure you are reporting your earnings correctly. The taxes you incur now will seem minimal compared to the fines & penalties you will face later.

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Al Capone was not an intenet poker player making 1200 a month. He was the leader of a huge organized crime operation that commited multiple counts of murder on his behalf. Let's have some perspective.