Tax thought to ponder

[SamJack]

[ QUOTE ]
Is something like Quicken and Turbo-Tax adequate, do you think, for someone who just wanted to go that route instead of finding a CPA?

[/ QUOTE ]
I use quicken to keep a "detailed" record of poker 'sessions'. This you need to do whether you are planning on using a CPA to prepare your taxes or do it yourself using Turbo-Tax or whatever.

I personally prepare my own tax returns. Poker earnings/losses are not the most complicated part of my returns. (although it requires the most amount of manual record keeping).

SamJack

[mistrpug]

Sorry Deuces, I misread that. You're right.

I for one am not affected all that much by having to itemize. The standard deduction is about $4500 or so, but the fact that I can now deduct state and local taxes I paid makes up for that a lot, since that total is over $3000 in itself. Just wish I had more to write off.

[aggie01]

Well, I won't add much to this thread except some confirmation on what's being said by DeucesUp. I was having this exact conversation with my dad. He is an ex-CPA and had a few gambling clients (not online) and he said the exact same thing. Essentially, if you don't already itemize, you're screwed, if you do, everything should be fine. As far as sessions go, that is a gray area.

I know I didn't say much but at least this is from some one with experience in this area.

[MrDannimal]

It's much less than $5k for the casino to file a 1040-G. I was a pre-flop fold on a hand that hit the BBJ at Greektown, won $1350, and they handed me the 1040-G with my payout.

[LinusKS]

The best guide to gambling & taxes I've seen is here:

http://www.onlinepokerfaq.com/guide/tax-sessions.html

Basically, they punish you by making you pay more taxes and by requiring you to keep obscenely detailed records.

[ QUOTE ]
Diary of winnings and losses. You must keep an accurate diary or similar record of your losses and winnings. Your diary should contain at least the following information.

1) The date and type of your specific wager or wagering activity.

2) The name and address or location of the gambling establishment.

3) The names of other persons present with you at the gambling establishment.

4) The amount(s) you won or lost.

[/ QUOTE ]

The only good news is - if gambling is your main income - you can file a Schedule C instead. That won't help you with the record keeping, but it may save you money.

The real question is, does "eno2bluff" count as a "name of a person present with you" at the "gambling establishment"?

[MicroBob]

We've been covering this quite a bit in different threads lately.

I think I'm the only one who has routinely mentioned the book Gambler's Guide to Taxes by Walter Lewis.
It's good stuff that should be able to help you out. Doesn't specifically refer to internet-gambling....but does have a chapter or two on professional gamblers and on a couple of the precedent-setting cases.

you DO have choices in there.
If you're a pro you should be filing as a schedule-C.
If you are playing enough poker where you can legitimately refer to it as a second job you should be filing a schedule-C. My understanding is that as long as you are playing a reasonable amount of hours per week, keeping records, and trying to make income off of it you should be filing a schedule-C.

So, in other words, if I played poker 20-25 hours a week and was making decent money on it....and still had a regular 40-hour a week job....I would try to get away with calling poker my 2nd 'job' and file a schedule-C on it.


There is some language in there that makes it look like you have to keep track of every bet that you make. I suspect this stems from cases that involved horse-racing or sports-handicapping. Obviously if I'm playing blackjack or poker for a living it would be ridiculous to have to log every bet and there's very few IRS agents who would think that you should do so.

In Gambler's Guide to Taxes....the basic gist that I got out of it is that if I am recording my daily wins and losses and making a good-faith effort to dutifully report my income then there's very very little chance that I will ever get in much trouble if audited.
They will see that I'm not trying to 'dodge' anything in my income reporting and will likely accept it.

I'm not about to waste my time AND hurt my taxes by logging how much I win on each of the 6 online tables I'm constantly jumping in and out of....and I don't think there's a judge or IRS agent that would insist that you do so.
I play 2 hours a day or 10 hours a day sometimes (or zero hours a day) and log the balances in each of my online account each day on my poor excuse of an excel-sheet. Since I'm usually playing 1-3 rooms a day I really don't have much updating to do.

Additionally, anyone filing a schedule-C this year should be looking into their various deductions. This is your 'job' afterall. Other business-dudes get to write-off all kinds of crap so you should too. These are ideas generated mostly by the Walter Lewis book as well as my Dad who dabbles in tax-type stuff (in his retirement days he took a couple of accounting classes at a good university, then went on to ace the H&R Block course and then works for them occasionally because he 'enjoys' it which I think is very weird).

Anyway....my write-offs will include
- new laptop
- 2nd monitor
- dial-up phone monthly bill
- ISP monthly bill
- poker-tracker and stat-king
- 2+2 books
- mileage to B&M poker trips when my purpose of trip is primarily poker (job-related). this is $0.36/mile i think. this also means i can deduct trips to new orleans or vegas if it's primarily poker related. I've had a couple of new orleans trips this year but don't think I'll count them because I didn't play enough poker to make it really legitimate.
- iced-latte's at the internet-coffee place where I sometimes play or give poker-lessons to friends (this is called "the flop"...now you have what's called "the nuts", etc etc). Will probably charge my friends $1 for the lessons I've been giving to make them more legitimate. Not $1 PER lesson mind you....just $1 to cover all the lessons I've given.
- My office-style chair for my desk ($35 at Wal-mart I think)

In a previous thread someone even mentioned deducting the cost of your cable-TV bill if watching WSOP and WPT was THAT important from an instruction standpoint. I get my cable for free anyway....and I think that's really pushing the bounds.
But it goes to the general idea of really looking hard at what you think you can deduct.


I think I might be forgetting a couple.
I am a bit gun-shy so I will be writing-off stuff fairly conservatively this year. Next year I'll be sure to keep receipts on EVERYTHING. So I'm going to have some manilla folder or something with a zillion iced-latte receipts in it.

Mind you, I'm not an expert on this stuff so copy my plan at your own risk. If we all end up in jail it's not my fault!! [img]/images/graemlins/smile.gif[/img]
What I'm doing might be fairly aggressive. But it's not exactly like I'm getting millions of dollars on insider stock-tips....and as best I can determine and have been told, it is pretty much within the bounds of the law.

[Chipr777]

Quote
"When you begin a question with a faulty premise it is probable that all that follows will be flawed as well."

Ok, It is illigal in MY area to gamble on-line. Like someone else said, it could be described as a "grey" area. I'm still don't believe what I said was a "faulty premise". Is there anything you can show me that says that on-line poker is legal in the U.S.?

[MicroBob]

You are still incorrect.
It's in a legal 'grey-area' in Mississippi too.
Even Southaven. LOL

[mistrpug]

Does anyone know if you need to pay state taxes on gamling winnings?

[sprmario]

Thanks for the info Bob. I'll try and pick up that book next time I order from amazon.

Honestly at this point, I think that what Bob says is right. You need to be making a good faith effort to report your earnings. Given the nature of online poker it is unreasonable in my opinon to expect every table to be recorded and logged as a session. I have had over 100 sessions this week alone under that criteria, and frankly I doubt any auditor would want to even look at 4000 sessions of information over a year.

My plan is the following for this year. I plan on just reporting a few thousand $ in winnings and not deducting any losses. I expect to actually make a few thousand this year and will report the majority of it with just one entry. If audited I won't have a ton of extra money to account for and i doubt I'll have any problems.

Next year I am hoping to make much more. My plan will be to aggregate my winnings on a weekly basis and keep good records on that basis. I realize this is fibbing but I doubt it will matter. How could the IRS possibly understand the difference between playing 15 hrs of 4 tables of 3/6 a week and a 5 hour weekend session of 15/30? honestly I doubt they will care at all and will probably just be happy that I reported my gambling winnings and have decent records vs. trying to avoid paying taxes and have no records.