Question about taxes....

[Exitonly]

I'm pretty sure it's not when you 'cash it out' but when you earn it. Atleast that's what i've read anytime i've looked this stuff up.

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other general info:

you can file either as a professional (but you'll need lots and lots of records) and then you'll pay like a 15% self employment tax, and can deduct ISP costs and office supplies/books.

or

you can file it as gambling where you add all your winnings into your income, and you can deduct the losses. But you're supposed to winning sessions seperate from losing sections and it's crappy, so even if you were a losing player, as long as you had some winning sessions, you'd be paying taxes on it.

And as far as not paying them, that seems like a bad idea as the governent will probably eventually find out, and interest and penalties will suck dick.

[broiler]

Your argument for not counting the income is flawed. Party's actions are what matters, not what they say. Party never verifies anything when you try to cash out, therefore the IRS would not agree with your argument. Constructive receipt will be shoved down your throat under audit and you would not win. You alone determine when the cash comes to you, which means that you are in full control of the funds once you leave the table.

Interesting points, but they do reserve the right to deny your withdrawl request.. I'm going to show my friend this thread later and see if I can get any more insight..

[broiler]

Your neighborhood bank also reserves the right to refuse your withdrawal request and I'm sure that nobody thinks that interest isn't income until you hit the ATM.

[rockythecat99]

I took out 6k off my party into neteller but haven't put it into my bank account. I think if i took out 999.99 every week it would be suspicious. I think I am just going to pay the taxes on it as I just started a really good job and don't want to jeopardize it over something stupid.

[Dave D]

[ QUOTE ]
Your argument for not counting the income is flawed. Party's actions are what matters, not what they say. Party never verifies anything when you try to cash out, therefore the IRS would not agree with your argument. Constructive receipt will be shoved down your throat under audit and you would not win. You alone determine when the cash comes to you, which means that you are in full control of the funds once you leave the table.

[/ QUOTE ]

Umm, I'm not an accountant or a lawyer, but I do know that this is definatly *not* the case. They've denied cash outs by me before, holding them up for over a week to verify things about my identity (don't ask the specifics, the indians are the indians).

Party has even deducted from my account because of a friend of mine's actions. When talking to the indian on the phone about how my friend's actions are irrelevent to me, his response was quite literally "it's party's money, we do what we want".

Party is *not* a bank account, you do *not* neccessarily control what money is in it. Just because most of the time you do, doesn't mean you always do.

edit: Not to mention that online poker is in a hazy legal territory anyway. As far as I'm concerned, the only way the gov't will ever find out about my winnings is when I cash them out. It's definatly not right for me to be taxed on money I lose later. Just like if I won a tournament in a casino and promptly lost it all at hte limit tables. I think in CT they are forced to report above 5k, and tax you instantly, so sometimes they structure their payouts for tourneys to avoid this (make it just under whatever the limit is). I know because I heard a floor guy talking about it. However, online isn't the same thing.

[Dave D]

[ QUOTE ]
Your neighborhood bank also reserves the right to refuse your withdrawal request and I'm sure that nobody thinks that interest isn't income until you hit the ATM.

[/ QUOTE ]

Yeah, but the bank cant confiscate your bank account for literally no reason, party can. Your bank account also has FDIC protections (like insurance), party does not. Though I realize that there are certain countermeasures taken after the Dutch Boyd thing.

[broiler]

I am a CPA and have dealt with the IRS in this area. They will tell you in no uncertain terms that this is income and no attorney that works in this area will tell you otherwise. Having a transfer held up a week to confirm your identity will not convince the IRS that you do not have full control over the account, especially if you got the money in the end.

I never said that Party was a bank account. I said that Party is an account in which you have a financial interest. The Treasury Department is very clear to include in their examples that it does not mean just bank accounts for reporting.

[broiler]

If the bank thinks that your funds are related to a crime, which includes money laundering, they have the right to hold the funds until a judge orders it released. I use the money laundering example becuase it is the favorite of the Treasury Dept. when they determine that you have offshore accounts of any kind. They will freeze all of your accounts in these circumstances, regardless of the merit of your claims.

Most of the sites have also included a statement that your funds are separate and secure. Read the Stars security and privacy statements. I will agree that most of these came out after the Dutch incident.

[LethalRose]

ok so, for a player who wants to pay taxes. I need to report only what I cashed out during that year? or my total net after buyins etc..