#1
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Implications of Paying Poker Taxes This Way?
I know the accepted way of reporting is to tally winning sessions and write the sum of losing sessions as an itemized deduction. However let's assume that all of my poker income goes through Neteller and cashed out to my bank account before I use any of it. It would be different for someone with a Neteller debit card or takes checks/epassporte directly from the poker site.
So, what are the implications if I just report all of my Neteller cashouts as a sum under other income? If I haven't been keeping good records of my MTT win/loss, rakeback, bonuses, etc... isn't this a more accurate way of doing it? It avoids me getting taxed on my bankroll before I get to use it, just like not cashing out your stock portfolio (where you must report income tax only when you do cash out). Is anyone already doing this and how is it working for you? How about potential problems? For live players who can spend their bankroll any way they want the old accepted method seems like the best and only way to correctly report. However, shouldn't they actually make this the accepted way for reporting online poker taxes, given certain criteria is met? Wouldn't it be no different than if I was an online merchant selling items on eBay and reporting my PayPal cashouts as income tax? |
#2
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Re: Implications of Paying Poker Taxes This Way?
More than likely the IRS will never look into what you are doing as long as you are not audited. Now the interesting question is does reporting gambling income increase the chances of you being audited. If you do get caught what will happen is the IRS either belive you when you say you are a moron and let you go lightly (probably not), impose fines and interest upon you (probably - and remember this could be in the thousands of dollars), or give you a nice stay in your local prison (probably not).
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#3
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Re: Implications of Paying Poker Taxes This Way?
I've been debating just declaring my winnings as one lump sum, and pleading ignorance if I ever happen to be audited...the general consensus here in the past is that you shouldn't get in huge trouble if this happens, although even if all they do is make you pay the extra $$$ owed (no fines, etc.) it can still be a significant sum, depending on your volume of play.
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#4
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Re: Implications of Paying Poker Taxes This Way?
im still curious as to which is cheaper: declaring the lump net sum or declaring wins and itemizing losses. ive heard both.
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#5
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Re: Implications of Paying Poker Taxes This Way?
[ QUOTE ]
im still curious as to which is cheaper: declaring the lump net sum or declaring wins and itemizing losses. ive heard both. [/ QUOTE ] Declaring your net win as a lump sum income can pretty much never be worse than properly declaring your winnings and itemizing deductions. But the proper method can be far worse than the lump sum method. Take my taxes this year (numbers are made up, but represent what happened pretty effectively): Sum of winnings: $15K Sum of losses: $5K Net win: $10K Tax rate -- 25% In the lump sum method, I would have owed $1250 in Federal taxes. But using the proper method pushed me above the threshold where education expenses are fully deductible. So I ended up losing a chunk of my deductions for my wife's tuition. As a result, we ended up owing around $1800 in taxes due to my poker play. Filing properly increased our tax bill by roughly $550 over the lump sum method. But it protects us in case of an audit... Acme |
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