Tax thought to ponder

[fnord_too]

Actually that article talks about the IRS thing some.

[Wake up CALL]

[ QUOTE ]
There's never been a conviction for on-line gaming from a player standpoint but as we all know it is technically illegal in most places in the USA.

[/ QUOTE ]

When you begin a question with a faulty premise it is probable that all that follows will be flawed as well.

[moondogg]

[ QUOTE ]
IANAL but I am pretty sure they cannot use your tax return as evidence against you in this case. I believe there was a ruling (I think supreme court) about this since you cannot be compelled to testify against yourself (fifth ammendment) but you can be compelled to report all your income and pay taxes on it. Maybe an attorney can weigh in here and clear this up, but I am pretty certain that this is the case.

There has been at least one on line gambling conviction, sort of.

At any rate, based on history, not paying your taxes is a greater risk than paying them.

[/ QUOTE ]

Thanks for the link, fnord. I knew I had read about that somewhere, but I couldn't find the reference.

I especially like the term "silver platter"

[MicroBob]

[ QUOTE ]
but as we all know it is technically illegal in most places in the USA.

--------------------------------------------------------------------------------



When you begin a question with a faulty premise it is probable that all that follows will be flawed as well.



[/ QUOTE ]


Indeed.
I think it is safer to describe online-gambling as currently being in a legal 'grey-area'.

[BradleyT]

[ QUOTE ]
This is a night and day comparason but wouldn't it be the same as a drug dealer admiting he sold drugs for a living but decided he wanted to pay taxes on his income?

[/ QUOTE ]

In Iowa you have to get a drug tax stamp otherwise you get charged some obnoxious fine amount if you're a dealer.


Iowa Drug Stamp Tax

Description: Tax is imposed on dealers in possession of specified quantities of marijuana and other controlled substances.

Tax Rate: $5/gram of processed marijuana; $750/unprocessed marijuana plant; $250/gram of other taxable substances; $400/10 doses if not sold by weight

Distribution of Funds: State General Fund

Due Date(s) of Returns: Tax payment is required upon possession and must be evidenced by a stamp permanently affixed to the taxable substance.

[BIGRED]

[ QUOTE ]
Not sure what you mean.

I log my win/loss totals on each site each day.

[/ QUOTE ]
Is this how you have chosen to define what a "session" is for yourself? I'm asking because according to many posts I've read on this topic, it seems you need to record your wins and losses at the table level. I know this has been discussed before, but I never understood why it makes a difference if you lump everything on a table, daily, weekly, monthly, or yearly basis. I know nothing about the line items that go on the tax form so that's probably why I don't understand the differences in the effects of how granular you get with your sessions.

So, I met with a CPA for the first time yesterday to discuss this matter. I wanted to meet with a CPA who knew something about this topic, but I couldn't find any, so I ended up meeting with just a regular CAP who deal with people who have "regular" jobs and businesses. However, from his perspective, accounting is accounting no matter where the money comes from so he said he would know just as much about reporting poker wins as a CPA who has 100 clients who are online players... who knows.

Anyway, I asked him this question and he said it doesn't matter how detailed you keep your records. In the end, it's just two numbers. total wins, and total losses. So I said to him that IRS wants poker players to report wins and losses at a "session" level (per table, I guess) because this favors the IRS whereas lumping everything together favors Joe Public. He said he didn't really understand why this is so.

Did I not ask the question right? Is he not the right person to help me if he says this? What do I need to ask him? I wish I can talk to a CPA who has some experience in this.

[MrDannimal]

I log my data defning a "session" as the time I start up a poker client to the time I shut it off. So it's not calendar days, and it's not per-table.

I think that the CPA is right for a "recreational" gambler. You'll declare your total wins, get taxed on that amount, and then be able to declare total losses to offset that in some manner. The reason for keeping the detailed statistics is so that if you're ever called on to prove your proifts/losses were what you reported, you can do so.

That's not legal advice in any sense, but just what I've gathered from posts here from people who are either accountants or have reported back from their meetings with accountants.

[mmanne]

But isn't it true that how you define a session will define your total wins and losses?

Example
I play for a total of 1 day. In that day I sit for 3 hours at a table and win $100. Then, I get up, have lunch and sit at another table and lose $200. Finally I go home and play online, where I sit at 2 tables simultaneously and win $600 on one and lose $100 on the other.

My wins and losses can be defined a number of different ways.
If a day is a session. I'm +400 for the year
If online vs B&M is a session. I'm +500 and -100 for the year
If each time I 'sit' is a session. I'm +600 and -200
If each table is a session. I'm +700 and -300

matt

[BIGRED]

[ QUOTE ]
But isn't it true that how you define a session will define your total wins and losses?

Example
I play for a total of 1 day. In that day I sit for 3 hours at a table and win $100. Then, I get up, have lunch and sit at another table and lose $200. Finally I go home and play online, where I sit at 2 tables simultaneously and win $600 on one and lose $100 on the other.

My wins and losses can be defined a number of different ways.
If a day is a session. I'm +400 for the year
If online vs B&M is a session. I'm +500 and -100 for the year
If each time I 'sit' is a session. I'm +600 and -200
If each table is a session. I'm +700 and -300

matt

[/ QUOTE ]
Good example... thank you. Your net is still 400, but you have different scenarios. Do these differences make a difference in how much you end up paying? Again, I'm very ignorant about the line items in the tax form.

Does it make a difference because in sceanrio 1 you are reporting the least in your gross income which keeps you at a lower tax bracket? And in scenario 4 you are reporting the most which might put you in a higher bracket?

[mmanne]

I don't know the answer to this stuff, as this'll be the first year I declare Gambling income. However, I don't believe you have a choice on how to report. I am going to go to a CPA who knows something about gambling returns, and hopefully this person will tell me what my legal obligation is.

matt