Legal Issue - Page 2

Brainwalter · #11 07-07-2005, 02:47 PM

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$4,000 may seem like alot to you and your friend at age 16, and it is. However, don't worry about paying taxes on it. The IRS isn't coming after him and his 4k. Just cash it out in 2 instalments of 2k each and enjoy.

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If the kid doesn't have a job he might not owe taxes on it at all.

Steve Mills · #12 07-07-2005, 03:22 PM

In reply to the comment above, he doesnt have a job. My impression is that he should report this anyway. I think it is wise for him to do things as by the book as possible for the kid's and my friend's sake.

Here are the main issues:

1) Would it be legal for a 16 year old to report gambling income? The alternative would be for my friend to report it as his.

2) Although 4,000 is not much, if he made a lot more then it could become an issue.

3) I have heard he must track by session. Does this mean each individual tournament he plays or could he just count from each time he logs in and out of whatever site it is he plays. This question also applies to my own gambling. How would one go about keeping track of all of this. I believe the site is pokerstars.

Thanks again for all your help,

highlife · #13 07-07-2005, 03:25 PM

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The kid is also violating the TOS of the online casino. If he is found out his account will be closed and winnings forfeited. I suggest he quits while he is ahead and waits two more years.

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Not necessarily forfeited funds. I know someone who got his money back from party

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no you don't. Party is VERY quick to forfeit funds for even suspected violation of TOS.

augie00 · #14 07-07-2005, 03:42 PM

Keep it in his poker account until he turns 18. Don't declare it.

Patchmaster · #15 07-07-2005, 04:16 PM

The IRS doesn't care how you make your money. They only care that you pay taxes on it.

The definition of "session" appears to be a bit murky. I've read lots of opinions but nothing that seems definitive. For lack of clear definition, I've decided to go with Sklansky's contention that it's all one big session. [img]/images/graemlins/grin.gif[/img]

Steve Mills · #16 07-07-2005, 04:27 PM

What would be the advantage of this as opposed to paying taxes on it now.

If the IRS truly doesnt care then why would it matter. Would Mass care at all?

Thanks,

smartalecc5 · #17 07-07-2005, 04:30 PM

Can't you withdraw it in like 200 bucks each month?

Heck, Im underage and I play under my parents name. If I withdraw a $150 check to my parent's name - do they have to pay taxes on it?

StellarWind · #18 07-07-2005, 04:42 PM

If you can withdraw the money without his age being detected by the poker room do so as soon as possible. The money is potentially vulnerable to being seized because of his age.

I certainly would not want to be part of teaching a 16-year-old that cheating on his taxes is right or wise.

I suggest that the child file a tax return and declare his gambling winnings. It's virtually inconceivable that a gambling procecution could come out of this. That's just not something the IRS gets involved in. Nor is any local jurisdiction likely to follow up on any information they are given.

Keep in mind that the tax forms do not require you to describe the type of gambling or the jurisdiction in which it occurred. That leaves any overzealous authorities with nothing to work with.

schwza · #19 07-07-2005, 05:09 PM

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What would be the advantage of this as opposed to paying taxes on it now.

If the IRS truly doesnt care then why would it matter. Would Mass care at all?

Thanks,

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this is only slightly relevant, but you should know that mass is harsh when it comes to gambling taxes. the us and mass make you declare all winnings as income, but mass only allows you to deduct losses on gambles that result in a win. so if you buy 2 $1 lotto tickets and win $1k, you have $1k income and $2 deductions for the feds and $1k income and $1 in deductions for mass. not exactly clear how that translates to online poker, but that's the law.

naschburger2 · #20 07-07-2005, 08:38 PM

I agree with stellar but a number of sites require verification by drivers license, utility bill and bank account statement before they will cash out the first time so it really depends on where he won the money. Do you wish to reveal the site or at least the network that it belongs to if any.