Tax thought to ponder

[moondogg]

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Does anyone know if you need to pay state taxes on gamling winnings?

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In most cases, yes. If you are in Pennsylvania (fly, Eagles, fly, 4-0 be-atch!) you definitely are required to pay state taxes on gambling winnings. However, if I remember correctly, Pennsylvania lets you net your wins/losses into the single Gambling Winnings/etc line.

[mistrpug]

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Does anyone know if you need to pay state taxes on gamling winnings?

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In most cases, yes. If you are in Pennsylvania (fly, Eagles, fly, 4-0 be-atch!) you definitely are required to pay state taxes on gambling winnings. However, if I remember correctly, Pennsylvania lets you net your wins/losses into the single Gambling Winnings/etc line.

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Yup, PA (Philly). Thanks for the info. I'll look into that to be sure.

[cjs]

Micro, does it matter how much income you make from poker to be a "pro"? I estimate my poker income will be about 1/10th my real job's income. Can I still use a schedule C or am I not a pro because of my real income?

[pzhon]

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Micro, does it matter how much income you make from poker to be a "pro"? I estimate my poker income will be about 1/10th my real job's income. Can I still use a schedule C or am I not a pro because of my real income?

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I'm not an accountant, so don't take my tax advice as gospel.

An activity does not need to be a your main source of income for you to file a Schedule C form (and then Schedule SE if you make more than about $400). You need to take it seriously, as a for-profit activity rather than a hobby, if you want to be able to claim business expenses. I file multiple Schedule C forms for different activities. You are expected to file a Schedule C for business activities that lose money, and you may be able to use losses to cancel other income. You need to justify that you treat it as a (for-profit) business, not a hobby, because money you spend on hobbies should not affect your taxes.

Once you think of it as a business, you may find that many expenses can be attributed to the business, and are therefore deductible. I believe the cost of poker books, a new computer, monitors, a good chair, and an internet connection may count entirely or partially as business expenses. (For example, I count 50% of the cost of my broadband connection as a business expense. If I didn't gamble, I might be happy with a dial-up connection.) Going overboard in this area, or declaring that you have a home office, greatly increases the chance that you will be audited, but you get a discount equal to your marginal tax rate on all business expenses.

[mistrpug]

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However, if I remember correctly, Pennsylvania lets you net your wins/losses into the single Gambling Winnings/etc line.

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For all the Pennsylvanians out there, I checked and it is correct.

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Report all gambling and lottery winnings, including lottery winnings from other states and countries on Line 8 on the PA-40 Personal Income Tax return. You may only offset gambling and lottery losses (not expenses such as travel, meals, lodging, etc) to determine Line 8. You may not deduct any losses from playing the PA Lottery against taxable gambling and lottery winnings. Submit a statement explaining your gambling and lottery winnings. Do not include one Line 8 any PA Lottery winnings that you won during the tax year.

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Thanks again Moondogg.

[Wake up CALL]

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Is there anything you can show me that says that on-line poker is legal in the U.S.?


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More faulty reasoning here. I cannot show you it is legal to drink water from a plastic cup at high noon in Dodge City, Kansas but does that make it illegal? I cannot show you that is legal to take a shower in Mississippi (although ti very well may be) on Sunday afternoons. Does that make it illegal?

Do you see the problem? Laws are not passed making something legal, they are passed to make clarifications and to declare something illegal.

Sheesh!!!

[MicroBob]

Yes, I agree.

If it is something that you take seriously....that is, you are making a serious effort to make income off of the activity and you diligently keep records of it (showing that you take it seriously), then you be able to file a schedule C.


So, in my opinion, if you are playing 20-25 hours a week of multi-tabling 2/4 or 3/6 then you should legitimately be able to file a schedule C.

I believe that one of the precedent-setting cases that allowed 'professional' gamblers to file via schedule C involved a horse-race handicapper who actually had lost money for the year. But since it was his main source of income (I believe his sole source of income) he was still able to consider himself 'self-employed' for the purposes of tax-filing.
In the case (if I remember correctly), it was determined that it didn't matter that he lost money. What mattered was that he spent 40-50 hours a week handicapping the horses and it truly was a SERIOUS job for him.
Something like that anyway.


I suspect that somewhere in there is a grey-area where you shouldn't file a sched-C.
If I played 5-10 hours every other weekend I would have a harder time claiming that it wasn't anything more than 'just recreational'. Trying to justify my expenditures as deductions on this 'second' job (like mileage to the B&M every other weekend) likely wouldn't fly with any auditor. They would say 'Dude....you're just playing at the casino on the weekends to have a good time like any other casino patron....AND you're trying to claim that it's acutally some kind of bogus second job so that you can deduct the expenditures. Not good.'


I appreciate the posters who have said they agree with me...I hope this inspires some ideas on what you might be able to get away with on some of this stuff.

However, I DO want to reiterate (because I'm anal) that I'm not an expert on this stuff in the least. My Dad files my taxes for me and I just sign it (he insists...he likes to find additional deductions, etc).
IOW, I've NEVER even done my own taxes.

Most of the stuff that I have said on this topic is just based on my own feeble understanding of it which may or may not be accurate.

Okay....that's enough 'Use info at your own risk' disclaimers for this topic.