#31
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Re: Anyone over 6 figures actually filing as a Pro?
[ QUOTE ]
So filing as a pro you face an additional 15% self employment tax, but you get to write-off all business-related expenses. [/ QUOTE ] Actually, it ends up being about 7% extra. Soc. Security and meidcare are now your full responsiblity, whereas before your employer would pay half. SS caps out around upper 80Ks , but medicare doesn't have a cap (I believe). The difference b/n filing as a pro and rec. gambler/player, is that you have to report your net wins as gross; this means taking all your "session" wins (ie, one table session) and add them up. Your "session" losses could then be used as a deduction. |
#32
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Re: Anyone over 6 figures actually filing as a Pro?
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I understand this distinction, and I wish I could just report my net winnings for a year, but as someone who isn't a pro, I understand I cannot. However, can you explain why (financially) its better to just pay taxes on the net? I only see the advantadges from a record keeping perspective. [/ QUOTE ] The problem is for people who would normally use the standard deduction. When claiming gambling income and then writing off losses as miscellaneous deductions, you then give up your standard deduction. Generally if you own a home and itemize other deductions already then you're not losing out, but for many young people without homes it can hurt to lose the standard deduction. -ActionBob (NOT a CPA, but just explaining things as I understand them) |
#33
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Re: Anyone over 6 figures actually filing as a Pro?
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So filing as a pro you face an additional 15% self employment tax, but you get to write-off all business-related expenses. [/ QUOTE ] There's actually a maximum you can pay in self employment tax. I think its 15% on the first 87k. [ QUOTE ] But if you're making $100K+, that means you would have to have more than $15K in expenses for it to be worth it. Right? I don't see why anyone pulling significant dough would file as a pro. [/ QUOTE ] Actually you'd have to have about $45k or so in expenses (depending on your bracket) to make it worthwhile from a straight cash angle. But remember its not just money thats thrown away. It pays into social security and medicare, plus you can now put money away into a SEP. -ActionBob |
#34
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Re: Anyone over 6 figures actually filing as a Pro?
Hi,
[ QUOTE ] In years past gabbling had to be your primary income. Since at least one person has won that challenge in a tax court, however the IRS does not consider this a precedence and must be challenged on a case by case basis. [/ QUOTE ] So this makes it very hard for someone to be a 'part time professional gambler', but someone sued and won this discintion, but the IRS digs in their heels and makes you prove it? Or you can only be a 'part time professional gambler' if at one time you were a 'full time professional gambler'? Or is there no way to be classifed as a 'part time professional gambler'? Thanks, MarkV. |
#35
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Re: I wonder.
[ QUOTE ]
So this makes it very hard for someone to be a 'part time professional gambler', but someone sued and won this discintion, but the IRS digs in their heels and makes you prove it? Or you can only be a 'part time professional gambler' if at one time you were a 'full time professional gambler'? Or is there no way to be classifed as a 'part time professional gambler'? [/ QUOTE ] I wonder if it would just be easier to get 5 guys together and form an S-corportion or limited liability company thats mission is to provide value for its shareholders through gambling, booze, and lap dances. Stu |
#36
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Re: Anyone over 6 figures actually filing as a Pro?
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Or is there no way to be classifed as a 'part time professional gambler'? [/ QUOTE ] You can definitely file as a "part time professional gambler". I know someone who for many years has a 9-5 job and has also filed as a pro in order to write off many travelling expenses. -ActionBob |
#37
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Re: Anyone over 6 figures actually filing as a Pro?
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Ya but as a pro you can pay taxes on just your net income, while if you don't file as a pro you have to pay taxes on your gross and deduct your losses. [/ QUOTE ] could someone explain this so that an idiot like me can understand it please? if a filing pro makes 50k for the year but has a networth of 20k, he only had to pay taxes on the 20k putting him in what sort of tax bracket? at most he would only have to pay the IRS like 10k since his networth is only 20k? |
#38
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Re: Anyone over 6 figures actually filing as a Pro?
[ QUOTE ]
Ya but as a pro you can pay taxes on just your net income, while if you don't file as a pro you have to pay taxes on your gross and deduct your losses. [/ QUOTE ] Again, I'm certainly not a CPA but this statement is definitely not true. -ActionBob |
#39
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Re: Anyone over 6 figures actually filing as a Pro?
[ QUOTE ]
could someone explain this so that an idiot like me can understand it please? if a filing pro makes 50k for the year but has a networth of 20k, he only had to pay taxes on the 20k putting him in what sort of tax bracket? at most he would only have to pay the IRS like 10k since his networth is only 20k? [/ QUOTE ] What do you mean by net worth? Are you saying you make 50k and then have 30k of expenses? Or are you saying that you have assets worth 20k? Basically, it is real simple: Pro: you just take your "net" profit at the end of the year, and pay taxes on it. You will be taxed an add'l ~7%+ for SS and medicare that an employer normally would pick up. This caps out around 88k or so (the medicare, which is part of the 15% (~2.9%) has no cap). But, you are able to deduct any "business" related expenses, and also contribute to a retirement plan (look into a SEP-IRA if you haven't). Someone who files their poker income as "gambling winnings": You add all your "session" wins (the IRS is a little vague, but basically, it corresponds to when you sit down at a table and then leave - you can easily do this by exporting PT data to Excel and filtering), and that is added to your gross income. You can then use all your "session" losses as deductions. You cannot use poker expenses as deductions either. I hope this answers your question. |
#40
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Re: Anyone over 6 figures actually filing as a Pro?
[ QUOTE ]
[ QUOTE ] Ya but as a pro you can pay taxes on just your net income, while if you don't file as a pro you have to pay taxes on your gross and deduct your losses. [/ QUOTE ] Again, I'm certainly not a CPA but this statement is definitely not true. -ActionBob [/ QUOTE ] I don't see anything inaccurate about that statement. |
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