Another Tax Thread on Online Winnings

[Jim Easton]

[ QUOTE ]
The question you must ask yourself is "what is the probability someone will look?"


[/ QUOTE ]

You also need to factor in the consequences if someone does look (such as - Prob * cons. = x). Then decide how large an x you can stomach.

[Nottom]

[ QUOTE ]
If you net 60k playing poker, if you won 160k an dlost 100k, or won 80k and lost 10k- it's the same tax liability).

[/ QUOTE ]

I don't know a lot about the subject, but I am almost positive this is not the case. The biggest difference is the affect on you other possible deductions. I picked up a copy of "The Gamblers guide to Taxes" from BAM last night and they gave a couple examples of how a break even player can get screwed pretty badly when they report it correctly. I would venture that a winning player could have some of the same problems.

The more I read about the subject, the more I understand why most people cheat when it comes to gambling winnings. For the average person who may gamble a couple thousand and come ahead a slight winner or loser over the year, the current tax laws make it increadably difficult for that person.

[MicroBob]

if poker is a significant source of income for you and not just recreation then you CAN file a schedule C and claim poker (or any other gambling vnture) as a small business.
this is detailed on other threads and in the book ambler's guide to taxes.
if you didn't play enough to realistically be able to claim it as a true source of income then you aren't supposed to file a schedule-C though. you are not supposed to file a schedule-C for gambling if it is just a diversion or recreation.

[TwoGun]

I am fairly certain the only way the tax law screws you is because it forces you to itemize your deductions. If you would have taken the standard deduction if it were not for poker winnings, and you had a small amount of wins/losses, then it screwss you.

Standard deduction is about 4k. If you win 3k, lose 2k- then yes- the system screws you. You will end up taking the standard deduction and basically be paying full tax on the 3k.

However, if you are alrady itemizing your deducitons, or you are a big player so your losses are 10k+, then it really does not matter. In fact, the current system (in my opinion) is nice to big internet players. Big internet players do not have many 'business costs' like traveling. Thus, If you just sit on your ass at home and make 100k playing net poker, (let's say 160k wins, 60k losses), you just pay tax on 100k but you avoid FICA/social security which is huge. If you declare as pro, you have to pay double fica/social security due to self-employment tax.

The current system sucks for small players who win a little, but have losses of around or less than 4k (provided they take the standard deductions).

[Prickly Pete]

[ QUOTE ]
If you net 60k playing poker, if you won 160k an dlost 100k, or won 80k and lost 10k- it's the same tax liability

[/ QUOTE ]

I'm not sure I want you as my tax accountant. [img]/images/graemlins/tongue.gif[/img]

[alekhine8]

I know its not right but I am probably just going to report my net winnings and be done with it. I really only played seriously the last 3-4 months at low limits and took out almost $2k so I dont think its going to be a serious problem for anyone.

I just dont have the time nor the records to do anything else.