Taxes and On-line Gambling

[Thythe]

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Just report your net profit on the "Other Income" line and be done with it. If you get audited, which is extremely unlikely, you've shown a good faith effort to do the right thing. You may face a small penalty or you may not. That's what I did last year and that's what I'm doing this year. If it's technically wrong, oh well. In my mind, it's +EV versus the alternatives. Besides, the numbers we're talking, $10K, $25K, etc., aren't even on the radar screen for the IRS.

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This is exactly what I plan to do. So many people here say that you must declare every single session, but I doubt that they are actually doing it themselves. I made about $20K last year net. If I reported it as a $150K gain and a $130K loss, I'd probably lose all of the $20K profit both in terms of lost standard deductions and in other calculations that use gross income in them. Somebody should start a tax poll to see if people are paying taxes, and if they are, in what way they are declaring profit...I'm too lazy for this effort, though.

[Mangatang]

You mean like this?

Tax Poll

[bxpeter]

What constitutes a professional gambler? One whose majority (over 50%?) of income comes from gambling?

If I file as a pro gambler, do I just pay tax on my net profit?

Would my filing as a pro gambler affect my credit score at all - if I want to get a mortgage, I would think that the banks wouldn't take my income streams seriously. How about if my poker income and my work income are approximately the same?

[Luv2DriveTT]

The loophole for us all (if you only play online) may actualy be what qualifies as a session. I intend to track a session as each time I deposit or withdraw from the casino. Each time the $$$$ hits Neteller, or leaves Neteller. While the money is at the casino, it is technically considered "spent" since a casino is not a bank.

TT [img]/images/graemlins/club.gif[/img]

[slickpoppa]

[ QUOTE ]
The loophole for us all (if you only play online) may actualy be what qualifies as a session. I intend to track a session as each time I deposit or withdraw from the casino. Each time the $$$$ hits Neteller, or leaves Neteller. While the money is at the casino, it is technically considered "spent" since a casino is not a bank.

TT [img]/images/graemlins/club.gif[/img]

[/ QUOTE ]
I'm not sure if that interpretation is necessarily correct, or that there is even a correct interpretation of what constitues an online "session"; the IRS rules were clearly written with B&M in mind and all that matters in the end is what some judge says if the issue ever comes up in court. However, I think that I will also use the deposit/withdrawl model as my definition of a session for this years taxes.

[Kellon]

Dumbest poll in 2004. Think about all of the possible ramifications of internet gamblers stating publicly that they intend not to pay taxes, or not to pay them properly.

[Nekura]

Here's a question for you: I live in a state where on-line gambling is specifically against the law. Which is worse - getting caught for not decalring winnings or admitting in writing that I'm breaking state law?

(Not that I am - I only play for entertainment with free money unless I'm in a state-licensed casino. [The government here hates competition...])

[mistrpug]

[ QUOTE ]
Here's a question for you: I live in a state where on-line gambling is specifically against the law. Which is worse - getting caught for not decalring winnings or admitting in writing that I'm breaking state law?

[/ QUOTE ]

Not paying taxes is worse by far.

[moondogg]

[ QUOTE ]
Here's a question for you: I live in a state where on-line gambling is specifically against the law. Which is worse - getting caught for not decalring winnings or admitting in writing that I'm breaking state law?

(Not that I am - I only play for entertainment with free money unless I'm in a state-licensed casino. [The government here hates competition...])

[/ QUOTE ]

I don't know the laws of your state, but it is probably just a fine if they actually cared enough to pursue it.

If the IRS finds intentionally undeclared income it could involve jail time (depending on the amounts involved), and they DO care enough to pursure it. They care a lot. Much like the mob, they don't care about fairness, rationalizations, stories, or ethics; they just want their f'n money.

[Nekura]

[ QUOTE ]
[ QUOTE ]
Here's a question for you: I live in a state where on-line gambling is specifically against the law. Which is worse - getting caught for not decalring winnings or admitting in writing that I'm breaking state law?

[/ QUOTE ]

Not paying taxes is worse by far.

[/ QUOTE ]

I figured as much, but can't see how to declare without putting my neck in the noose. (It's like trying to declare the profits from a hydroponic pot farm in your basement).