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#1
10-31-2005, 12:08 PM
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Re: yes another TAX question....
If you come up with a good answer, let me know because I have the same problem. Heres how I see it.
1) I dont know exactly what I owe and neither does the IRS, but I want to pay my taxes 2) The IRS most likely would never know about my winnings if I didnt report them, so Im quite sure there wont be a problem with NOT reporting winnings that arent withdrawn yet even though legally they should be reported. 3) When it comes to breaking down wins and losses, there is no clear cut clarifiaction on what a session is when youre online. You could report daily results and call them a session, but why not do it weekly, or monthly? Remember that the IRS doesnt even know youre playing and winning. My personal opinion is that at least 90% of people dont report at all. I have no 1099s. As far as I know, my responsibility is to pay my taxes as truthfully as possible. There is no law saying that I have to keep a spreadsheet of every session I play or my results for every day. I dont have to use PT by law. If I didnt keep any records, the only thing I would know (and the only thing the IRS could prove) would be the deposits going into my bank account from Neteller. So lets assume that I have no records. Lets assume that I have deposits into my account totaling $80K for the year. Couldnt I just report the $80K as winnings? I know that Im suppossed to seperate wins and losses, but since I have no records (and there is no law requiring me to keep records), what can the IRS do about my reporting my winnings with no losses reported? Would they really care? There is no place to report HOW you won the money. It could be $80K in lottery winnings, so would they even question it? Like I said , Im trying to do whats right and pay my taxes, but they make it pretty tough to do correctly. 
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#2
10-31-2005, 06:08 PM
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Re: yes another TAX question....
[ QUOTE ]
If you come up with a good answer, let me know because I have the same problem. Heres how I see it. 1) I dont know exactly what I owe and neither does the IRS, but I want to pay my taxes, you lose 2) The IRS most likely would never know about my winnings if I didnt report them, so Im quite sure there wont be a problem with NOT reporting winnings that arent withdrawn yet even though legally they should be reported. 3) When it comes to breaking down wins and losses, there is no clear cut clarifiaction on what a session is when youre online. You could report daily results and call them a session, but why not do it weekly, or monthly? Remember that the IRS doesnt even know youre playing and winning. My personal opinion is that at least 90% of people dont report at all. I have no 1099s. As far as I know, my responsibility is to pay my taxes as truthfully as possible. There is no law saying that I have to keep a spreadsheet of every session I play or my results for every day. I dont have to use PT by law. If I didnt keep any records, the only thing I would know (and the only thing the IRS could prove) would be the deposits going into my bank account from Neteller. So lets assume that I have no records. Lets assume that I have deposits into my account totaling $80K for the year. Couldnt I just report the $80K as winnings? I know that Im suppossed to seperate wins and losses, but since I have no records (and there is no law requiring me to keep records), what can the IRS do about my reporting my winnings with no losses reported? Would they really care? There is no place to report HOW you won the money. It could be $80K in lottery winnings, so would they even question it? Like I said , Im trying to do whats right and pay my taxes, but they make it pretty tough to do correctly. [/ QUOTE ]
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#3
10-31-2005, 06:15 PM
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Re: yes another TAX question....
Much of number 3 is correct, and it does raise some interesting questions. I'm not familiar with the letters of the law, but when you say it's notmy duty tokeep a spreadsheet, I don't think that's true. THe burden to keep accurate and detailed records may be on you. Is PT required? Of course not, but more than just bank statements may be. Yes, the overwhelming majority of people don't do this properly. Should you? Well, that's for you to decide.
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#4
10-31-2005, 06:32 PM
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Re: yes another TAX question....
[ QUOTE ]
1) I dont know exactly what I owe and neither does the IRS, but I want to pay my taxes [/ QUOTE ] True. But lacking information confirming your story, the IRS' view will be the only one that matters. [ QUOTE ] 2) The IRS most likely would never know about my winnings if I didnt report them, so Im quite sure there wont be a problem with NOT reporting winnings that arent withdrawn yet even though legally they should be reported. [/ QUOTE ] And the IRS *most likely* would not know that mobsters had income from illegal sources. But when they fail to pay taxes on this income, they can still end in jail. Personally, I don't want to rely on "most likely" with the IRS. [ QUOTE ] 3) When it comes to breaking down wins and losses, there is no clear cut clarifiaction on what a session is when youre online. You could report daily results and call them a session, but why not do it weekly, or monthly? [/ QUOTE ] I believe the IRS has made it clear through past rulings that a session is shorter than a month. How much shorter -- week, day, etc. -- is not cleanly defined. [ QUOTE ] Remember that the IRS doesnt even know youre playing and winning. [/ QUOTE ] See John Gotti... [ QUOTE ] My personal opinion is that at least 90% of people dont report at all. [/ QUOTE ] Do you think this is a valid reason FOR YOU to not report? [ QUOTE ] I have no 1099s. As far as I know, my responsibility is to pay my taxes as truthfully as possible. [/ QUOTE ] Which means paying taxes when you win the money, NOT when you withdraw the money... [ QUOTE ] There is no law saying that I have to keep a spreadsheet of every session I play or my results for every day. [/ QUOTE ] The burden of record-keeping is on the individual, NOT the IRS. [ QUOTE ] I dont have to use PT by law. [/ QUOTE ] True. [ QUOTE ] If I didnt keep any records, the only thing I would know (and the only thing the IRS could prove) would be the deposits going into my bank account from Neteller. [/ QUOTE ] Ignorance is no defense. This is something the courts have maintained time and again. [ QUOTE ] So lets assume that I have no records. Lets assume that I have deposits into my account totaling $80K for the year. Couldnt I just report the $80K as winnings? [/ QUOTE ] Not legally. [ QUOTE ] I know that Im suppossed to seperate wins and losses, [/ QUOTE ] No. You are REQUIRED to separate wins and losses. There is a substantial difference. [ QUOTE ] but since I have no records (and there is no law requiring me to keep records), [/ QUOTE ] See above. You are wrong on this one. [ QUOTE ] what can the IRS do about my reporting my winnings with no losses reported? [/ QUOTE ] They can hit you with fines for under-reporting your income. [ QUOTE ] Would they really care? [/ QUOTE ] Maybe, maybe not. Do you want to test them? Are the potential consequences worth the minimal effort required to do things the right way? [ QUOTE ] There is no place to report HOW you won the money. It could be $80K in lottery winnings, so would they even question it? [/ QUOTE ] Again...maybe, maybe not. But is it worth the chance that they will? [ QUOTE ] Like I said , Im trying to do whats right and pay my taxes, but they make it pretty tough to do correctly. [/ QUOTE ] IMO, you are not trying very hard. You are trying harder to make your life easier and to avoid potential tax issues (deduction phase-outs, etc.) than you are to pay your taxes properly. Acme
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#6
10-31-2005, 07:51 PM
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Re: yes another TAX question....
Okay, I began playing in April of this year. I have Pokertracker, and at the end of each month I have tabulated my total winnings. I also have recorded my rakeback for each month. I am mostly a ring game player, and I did not keep very good records of my tournaments for the first couple months, but have since rectified this. I can come up with a reasonable estimate of my tournament play by subtracting my ring game winnings, my bonii, and my rakeback from my total winnings.
I have several questions: The first is, if I can exactly determine my net (wins - losses), is that enough? If it is sufficient, then I have nothing further: I've kept track of my bankroll each month, and I know I will be able to determine exactly my net. The second is, if that's not sufficient, what should I do if I feel that Pokertracker is materially mis-stating my winnings? I'm not sure how often it has happened, but I remember one session where I looked at the cashier, and it said that I was about even, but Pokertracker said I was up substantially. Thirdly, how should I estimate my tournaments if I need to itemize those? I can probably make a rough guess as to how many I played, my ITM%, and so on, but I did not keep very good records when I first started playing them, and thus my estimate might be horrible. Thanks for all of your help, I really appreciate it. Editted to add: At what point does it become "correct" to file as a pro? I heard something about a level of income being the criterion.
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#7
10-31-2005, 06:46 PM
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Re: yes another TAX question....
I think the IRS needs to change the rules or make them clearer. If somebody reports 95% of their winnings and misses 5% and still gets penalized, then their philosophy will probably be "Fine then, I won't pay anything at all."
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#8
10-31-2005, 08:07 PM
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Re: yes another TAX question....
[ QUOTE ]
I think the IRS needs to change the rules or make them clearer. If somebody reports 95% of their winnings and misses 5% and still gets penalized, then their philosophy will probably be "Fine then, I won't pay anything at all." [/ QUOTE ] I absolutely agree with you. But this need does not excuse the philosophy. The rules are what they are. We have to live with them until we can get them fixed... Acme
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#9
11-01-2005, 12:25 PM
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Re: yes another TAX question....
[ QUOTE ]
[ QUOTE ] 1) I dont know exactly what I owe and neither does the IRS, but I want to pay my taxes [/ QUOTE ] Youve misinterpreted almost everything Ive said True. But lacking information confirming your story, the IRS' view will be the only one that matters. How is the IRS even going to have a view, when they have no records whatsoever from any source saying that Ive earned ANY amount of money playing poker? I will report what I think is right. How could they possibly doubt me? There is no evidence one way or another. [ QUOTE ] 2) The IRS most likely would never know about my winnings if I didnt report them, so Im quite sure there wont be a problem with NOT reporting winnings that arent withdrawn yet even though legally they should be reported. [/ QUOTE ] And the IRS *most likely* would not know that mobsters had income from illegal sources. But when they fail to pay taxes on this income, they can still end in jail. Personally, I don't want to rely on "most likely" with the IRS. [ QUOTE ] 3) When it comes to breaking down wins and losses, there is no clear cut clarifiaction on what a session is when youre online. You could report daily results and call them a session, but why not do it weekly, or monthly? [/ QUOTE ] I believe the IRS has made it clear through past rulings that a session is shorter than a month. How much shorter -- week, day, etc. -- is not cleanly defined. [ QUOTE ] Remember that the IRS doesnt even know youre playing and winning. [/ QUOTE ] See John Gotti... [ QUOTE ] My personal opinion is that at least 90% of people dont report at all. [/ QUOTE ] Do you think this is a valid reason FOR YOU to not report?Where did I say I wasnt reporting? [ QUOTE ] I have no 1099s. As far as I know, my responsibility is to pay my taxes as truthfully as possible. [/ QUOTE ] Which means paying taxes when you win the money, NOT when you withdraw the money... True, but again, what if I dont know how much I won each day or month? What if I only know how much Ive withdrawn? Then thats the only thing I can report [ QUOTE ] There is no law saying that I have to keep a spreadsheet of every session I play or my results for every day. [/ QUOTE ] The burden of record-keeping is on the individual, NOT the IRS. The burden of proving Im wrong is on the IRS. They can no longer just say IM owe xx amount and force me to pay it. The law was changed putting the burned of proof on them, but they would have no reason to even suspect that Im wrong since theryre not getting any 1099s or other documents from poker sites. You think theyre going to look at my return and out of the blue say "AH HA!! This guy is lying!? [ QUOTE ] I dont have to use PT by law. [/ QUOTE ] True. [ QUOTE ] If I didnt keep any records, the only thing I would know (and the only thing the IRS could prove) would be the deposits going into my bank account from Neteller. [/ QUOTE ] Ignorance is no defense. This is something the courts have maintained time and again. Ignorance of what? Maybe I have losses in my account that havent been accounted for yet? MAybe I have gains. No records = no proof. [ QUOTE ] So lets assume that I have no records. Lets assume that I have deposits into my account totaling $80K for the year. Couldnt I just report the $80K as winnings? [/ QUOTE ] Not legally. [ QUOTE ] I know that Im suppossed to seperate wins and losses, [/ QUOTE ] No. You are REQUIRED to separate wins and losses. There is a substantial difference. Great, I'll try to comply with a law that nobody understands. I asked an IRS agent exactly what on online session was and he couldnt give an intelligent answer. grey area [ QUOTE ] but since I have no records (and there is no law requiring me to keep records), [/ QUOTE ] See above. You are wrong on this one. [ QUOTE ] what can the IRS do about my reporting my winnings with no losses reported? [/ QUOTE ] They can hit you with fines for under-reporting your income. With what proof? [ QUOTE ] Would they really care? [/ QUOTE ] Maybe, maybe not. Do you want to test them? Are the potential consequences worth the minimal effort required to do things the right way? Minimal effort? Complying with laws that are so garbled is not minimal effort. [ QUOTE ] There is no place to report HOW you won the money. It could be $80K in lottery winnings, so would they even question it? [/ QUOTE ] Again...maybe, maybe not. But is it worth the chance that they will? [ QUOTE ] Like I said , Im trying to do whats right and pay my taxes, but they make it pretty tough to do correctly. [/ QUOTE ] IMO, you are not trying very hard. You are trying harder to make your life easier and to avoid potential tax issues (deduction phase-outs, etc.) than you are to pay your taxes properly. Again, I dont know how to do it "properly". If the IRS wants it done "properly", they should make it easy to do. Ive talked to 2 different accountants and friend talked to a 3rd, and they all gave different answers to these questions. Acme [/ QUOTE ]
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#10
11-01-2005, 02:07 PM
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Re: yes another TAX question....
[ QUOTE ]
Again, I dont know how to do it "properly". If the IRS wants it done "properly", they should make it easy to do [/ QUOTE ] It is easy to report your winnings properly: 1) Track your wins and losses on a per session basis. The term "session" is flexible (it has to be because of the many different types of gambling out there), but you can safely use a daily numbers at the same game and limit. That is, playing .5/1 HE, 1/2 HE, and 1/2 Omaha equals three separate sessions for the day. You can use PT, a spreadsheet, or just a pen and paper as long as you record the results daily. 2) When you file your taxes, the total of all your winning sessions is added to your gross income. And if you itemize, the total of all your losing sessions may be deducted. It's that easy! Of course, you can look for other tax breaks like the sales tax credit, but that doesn't make you any different than anybody else looking to pay less taxes. That's what accountants are for.
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