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#11
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Even if you get audited, as alluded to above, there is no paper trail except with respect to deposits and withdrawals.
If you deposit $1000 in a poker site, and run it up to $1 million, and then all the way back down to $1000, the only records of that are at the poker site in Costa Rica or wherever it may be. Unless you have made a bunch of deposits and withdrawals, reporting is strictly on the honor system. |
#12
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If everyone followed this example to the letter on their tax returns (65K winning - 65K losses - break even but tax hell) - wouldn't this cripple the online poker industry completely?
"Oh, go ahead and try our online poker site. Oh, by the way, even if you are a break-even or losing player, you will get crippled by the United States Tax Code because the laws were written before online poker came into prominance. Good luck!" [img]/images/graemlins/confused.gif[/img] |
#13
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I guess. That is why no one ever starts a business or does any activity that might generate income. What happens if your money-generating hobby, pastime, part-time business manages to break even? Your gross income would be inflated and look at all the bad things that happen.
Better to do nothing. Never attempt to make money, it will only lead to tax problems. |
#14
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I would say 99% of people that start a part-time business do not think about the AMT, Roth IRA or mortgage interest complications when they start. Just a wild guess. And I would say 99.9% of people that sign up for the first time at Party or PokerStars are not thinking about tax implications of this magnitude - especially just playing at the .5/1, 10+1 SNG levels.
If you have all the facts BEFORE you start the online poker hobby - then at least you'd have some sort of gameplan and understanding of what you are supposed to do taxwise. Unfortunately, I never expected this is the way taxes would be calculated. Never. |
#15
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The word "session" has not been defined by the IRS for on-line gambling.
The best advice I have seen is defining session by deposit/cash-out. So the more you limit the deposit/cash-out cycles, the more your reported winnings/deducted losses become your net results. |
#16
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That is the big question. If a "session" is every time you sit at a table, or enter an SNG or a MTT, then you can see the "nightmare" scenario that I'm talking about. If a session is defined much more loosely (cash-outs, deposits - stuff like that), then that is a much more tolerable story for a small-time (but active lately) player like me.
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#17
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[ QUOTE ]
This could be a serious issue for alot of posters on this site. I'd be interested to know how the law stands in the UK [/ QUOTE ] My understanding is that the UK does not consider gambling winnings to be taxable income. -Mike |
#18
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I have decided that I like this thread.
The fact that there is actually a real person out there, somewhere, who would do the right thing and report $100 of income in the scenario where they win $100 at the tables one day, and lose it back the next day - even though there is no chance of the IRS ever finding out about this - warms my heart. The fact that this noble, honest soul chooses to be troubled by this issue rather than give into the temptation to simply ignore it and report nothing fills me with hope for the human race. I am in awe. |
#19
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Any online play is going to create a paper trail. How can you be so sure that this is never going to be reported from the banks back to the IRS. You are probably right that most are safe from an audit, but you don't know this.
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#20
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I think it is safe to define a session in that manner.
In B&M play, if one plays poker for a long time, leaves the table to go to the bathroom and maybe grab a bite to eat, then comes back to the table to play some more -- is it one long session or is it two sessions? In blackjack, if I go to the casino and table-hop, playing a few hands from one shoe here, a few more hands from a shoe over there --- was that a hundred or so 'sessions' in my 2 hour vist to the casino, or just one? If a game breaks up online and you move instantly to another table, is it a new session? What happens when you multi-table -- many "sessions" at once? Deposits/Cash-Outs are the only really trackable criteria for starting/stopping of "sessions". |
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