Poker and Taxes....This is why there is so much confusion

[MicroBob]

I think they probably have 'kind of' a clue since I believe this actually IS how it 'literally' is supposed to be done...even though it's unrealistic and pretty impossible.

Actually...I think it is technically on each individual 'bet placed'. So if you pay the BB...and then raise and re-raise etc are you supposed to pay taxes based on each of those 'bets'?


As has been said on many aspects of the tax-code...it simply makes no sense.


Now...a tax-preparer who INSISTS on doing it that way is just not being terribly flexible nor practical and seems to be following some really bad all-encompassing 'how-to' guide for how to pay one's taxes on gambling winnings.


For the individual who won $4k and is trying to pay taxes on it.
Just go ahead and pay the taxes on the $4k....you will already be in the minority as there are thousands of BJ and poker (and other) players each year who probably win more than that at the live casinos and don't report it at all (for many it's simply because it never occured to them).


Again...I'm hardly one that should be spewing out advice on this stuff...so if anyone really thinks there is a reasonable chance that he can get in trouble for paing his taxes on his $4k this way then go ahead and correct me.

[Kellon]

[ QUOTE ]
I think they probably have 'kind of' a clue since I believe this actually IS how it 'literally' is supposed to be done...even though it's unrealistic and pretty impossible.

Actually...I think it is technically on each individual 'bet placed'. So if you pay the BB...and then raise and re-raise etc are you supposed to pay taxes based on each of those 'bets'?


[/ QUOTE ]

I'm going to have to disagree with you here. There really is no basis for defining "session" as each bet placed or each hand. The best discussion is in the link I provided above. You are not going to report W&L based on each hand or each bet in poker any more than you report your W or L on each spin of the roulette wheel or throw of the dice.

[MicroBob]

Well......I know I have hear that 'each bet' thing somewhere (in regards to blackjack, craps and other games) no matter how unrealistic it is.

I don't remember where I saw/heard it though but I know it wasn't just in one place.

I think it might just be a very literal interpretation of one sentence of the tax-code perhaps.
Something like that. Don't know.

I think it was also referenced in Gambler's Guide to Taxes by Walter Lewis...but again, I don't remember and don't claim to know what the hell I'm talking about on this one.

Either way...whether it's somewhere in there or not I'm hardly going to worry about it and I'm certainly not going to go looking for it just to say 'there it is!!' (especially since it might not be there at all).

you might be right...I don't recall where I heard it.
If I do happen to stumble upon it I'll post it here...but that's not very likely to happen if I'm not trying to find it of course.


It would be nice if the IRS got their act together and made the tax-code actually make sense...but that would be asking for a lot I guess.

[Matty]

Okay, so apparently I'm going to be filing as a professional gambler next year. Does that mean I get to itemize my internet connection, any poker books I buy, a second LCD screen, stuff like that?

And what exactly does itemize mean? I [censored] hate taxes. I had to miss all my classes today just dealing with this [censored] preparer.

[ QUOTE ]
For the individual who won $4k and is trying to pay taxes on it.
Just go ahead and pay the taxes on the $4k....you will already be in the minority as there are thousands of BJ and poker (and other) players each year who probably win more than that at the live casinos and don't report it at all (for many it's simply because it never occured to them).

[/ QUOTE ]I ended up paying taxes on 22k, and itemized 18k. :-/

[Kellon]

[ QUOTE ]
It would be nice if the IRS got their act together and made the tax-code actually make sense...but that would be asking for a lot I guess.

[/ QUOTE ]

The tax code actually does make a lot of sense in this instance if you keep in mind one of the fundamental purposes to which Congress puts the tax code: social engineering. This a rather moralistic society, and getting more so every day it seems. The puritanical principles on which this county was founded and developed say that gambling is a sin, and is bad for you, your family, and society at large. Congress has thus used to tax code to inhibit our interest in gambling to the extent possible, without making it outright illegal. At the least, they don't want to do anything to make it a more attractive means for the citizenry to make money, cuz that would send all of us straight to hell.

[bblock99]

I am a college student and claimed as a dependent by my parents. I pretty much only have a summer job as other means of income. What does this mean for the deductions i can make? I'm under the impression that I can't deduct my tuition even though i pay it because i'm a dependent, is this right?

I only made one $500 withdrawal last year (which was to buy an LCD monitor for poker), what would happen if i don't claim any income from poker and just say that i sold something online for $500 -or- should i just report everything as to try and avoid the possible penalties. I did make like $4000 last year, but didn't really start withdrawing till this year, how does that work? Do you know what effect this will have on getting financial aid? I don't get much already, and don't think that it will have much of an effect because my parents income dwarfs mine, but was posing it as a general question for others.

My fear is that congress will eventually require the poker sites to turn over their records so that the IRS knows exactly how much everyone made and getting audited 5 years down the road.

[kenberman]

[ QUOTE ]
My fear is that congress will eventually require the poker sites to turn over their records so that the IRS knows exactly how much everyone made and getting audited 5 years down the road.

[/ QUOTE ]

There's not too much the US congress can force offshore sites to do.

[rerazor]

People just don't get this. The IRS isn't going to ask the offshore sites for the records, they're going to ask YOU to ask the site.



My fear is that congress will eventually require the poker sites to turn over their records so that the IRS knows exactly how much everyone made and getting audited 5 years down the road.


There's not too much the US congress can force offshore sites to do.

[Kellon]

[ QUOTE ]

People just don't get this. The IRS isn't going to ask the offshore sites for the records, they're going to ask YOU to ask the site.


[/ QUOTE ]

No they're not. This isn't the way it works.

An interesting scenario, though, is what happens if, say, in 5 years North Dakota actually "wins" and opens up Internet poker, and many of the off-shore sites flock to open business in ND. Now they are doing business, legally, w/in the US and are subject to federal reporting laws. Think about that while you're pushing for legalization of online poker.

[chesterp]

so i just started playing poker in sept 04- was only up $2850 in 04. my total difference on deposits/withdrawels to neteller for 04 was +$50. makes me wonder if i should just wait til 05 to declare winnings (planning on sched. c most likely). but instead of neteller totals, i guess i could use pokercharts (and now switching to pokerdominator), as i started with pokercharts from day one. if so, then i do sched. c for 04 already, earning 2850.
i've never done sched. c, but thinking i may do it for my main career, singing (which hasn't seen much income either cause i've been in school). only made 4400 singing in 04. for 05 i expect both poker and singing to bring in around 15,000. so, anyone do schedule c's for 2 completely different careers? just wondering if that is weird or will set of red lights for the IRS to audit me. i could easily just do one (or none) of the two as schedule c. form 2106 (i think that's it) also good for singers as long as i'm under 16,000 or so.
thanks