Who Pays Taxes on Poker Earnings? (POLL)

[HoosierFan]

The big difference is in most state taxes, which base their taxable income of the Federal AGI. If you include your gross winnings in your AGI and deduct your losses as itemized deductions, you will not be able to take those deductions in many states.

To take an example to the extreme: You gross $100,000 of winnings and lose $99,000. Assuming you already itemize, there would be no change in the federal tax. However, in say Ohio, you would owe tax on the $100,000 which would be at the marginal tax rate of over 7%. So you would owe $7,000 of tax on $1,000 of income!

[Chaser]

Thanks for the answers.

Well this sux if your deductions are not considered as valid ones. Do you know where can I find which states accept them or not? NJ here

Thanks
Nrogi

[HoosierFan]

It doesn't look like NJ allows any itemized deductions... Sorry!

[broiler]

Gambling losses are allowed for NJ residents. Line 23 of the NJ-1040 is net gambling winnings. The instructions clearly say that you are allowed to net your substantiated gambling losses against your gambling winnings for this line of the return.

[ QUOTE ]
The big difference is in most state taxes, which base their taxable income of the Federal AGI. If you include your gross winnings in your AGI and deduct your losses as itemized deductions, you will not be able to take those deductions in many states.

To take an example to the extreme: You gross $100,000 of winnings and lose $99,000. Assuming you already itemize, there would be no change in the federal tax. However, in say Ohio, you would owe tax on the $100,000 which would be at the marginal tax rate of over 7%. So you would owe $7,000 of tax on $1,000 of income!

[/ QUOTE ]

So basicly you can't play poker! - I don't see how you can do anything but lose money if this is the way it works. If you broke even you would then still owe the 7k right?

Why do we spend so much time learning to play poker? Just so that the act of playing the game costs us less then a bad player? - in the end we both lose, or am I missing something. -

[Scotty O]

I agree, it is unfair for how a session is accounted for. Makes its very difficult to track. One can have 1000's of sessions every year. Alomost impossible to track. I vote for deposits v. withdrawals for the ring games and count tournaments separately. The later is eaisier to track.

[vilemerchant]

Paying taxes on poker winnings is a silly idea. This is not an honest living, it's a way to trick others out of their money. It's daylight robbery and I've never known a bank-robber to pay taxes [img]/images/graemlins/smile.gif[/img]

Sorry but the idea of paying honest taxes on a dishonest living just doesn't sit with me!

-D. Beat

[Jimbo]

[ QUOTE ]
So basicly you can't play poker! - I don't see how you can do anything but lose money if this is the way it works. If you broke even you would then still owe the 7k right?


[/ QUOTE ]

In Ohio and perhaps a few other States, yes. Most States however do not compute your taxes in this manner. Several have zero State income tax. My State has a 6.5% cap for the highest rate but it is computed on my 1040 amount after my itemized deductions so this method has no additional adverse effect on me.

[XxGodJrxX]

I've read this whole thread looking for an answer, but I only see technical terms on tax laws. How much $ do you have to have made playing poker to report it? I have made around $2 grand since I started a few months ago. With a part-time job, poker money, and scholarships from my university, I probably make $6 or $7 thousand dollars a year. I am fearing having to pay a huge % of my winnings to the IRS, and that just may make playing poker a waste of time when it comes to making $$.

[AlexTrue]

Very thoroughful thought! [img]/images/graemlins/smile.gif[/img]