Legal Issue

Steve Mills · #1 07-07-2005, 12:49 PM

Hello everyone,

One of my close friends has a son who plays online poker (surprise, surprise [img]/images/graemlins/ooo.gif[/img]). He didnt think this was a problem until he won a big multi last week and took down something like 4,000 i think he said. I wish i could win this much [img]/images/graemlins/laugh.gif[/img]. Anyway, this obviously got him concerned and he started asking me about it.

I was wondering how or if he should go about reporting the gambling income of a 16 year old. He asked me but i had no idea. Obviously this is illegal on many levels, but other than telling the kid to blow all his winnings and stop playing what can be done as far as taxes and what not. Should he even be concerned about taxes? I don't know the kid that well but he seems like a responsible kid and a pretty good cardplayer and seems to be making a good amount. I don't think his dad or I see a problem with him continuing as long as its as legal as possible.

Thanks in advance,

highlife · #2 07-07-2005, 01:07 PM

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.

bigalt · #3 07-07-2005, 01:12 PM

I'm assuming the account is registered in the dad's name? The obvious solution seems to me to be for him to take the tax burden.

Steve Mills · #4 07-07-2005, 01:46 PM

[ QUOTE ]
I'm assuming the account is registered in the dad's name? The obvious solution seems to me to be for him to take the tax burden.

[/ QUOTE ]

The account is in the kids name i believe. I think they were wondering if it would make sense to file it as the kids taxes instead of his dads as the kid would be in a much smaller tax bracket.

Also i knew before posting this thread that i was going to get a lot of people saying he should wait 2 years. This is a solid response, however an option i believe he has thought over a lot and is looking into what other choices he may have. Obviously the kid is eager to keep playing and i dont think either of us see a big problem in his poker playing. My impression was he wasnt worried about pokerstars or whoevers rules, but more considered about the MA state laws against gambling and the IRS.

Thanks again,

hardinda · #5 07-07-2005, 01:54 PM

How will they cashout the money? Into the kid's account or dad's account? I think that would have alot to do with who gets to report it on their taxes.

Steve Mills · #6 07-07-2005, 01:56 PM

I have also heard that you are supposed to track wins and losses seperatly. I know i just keep track of my overall net. My net is still around 0 so i havent thought about taxes for myself, but how would one go about tracking their income, or trying to backtrack their income if all they know is their net? I imagine if someone actually tracked their results for each sit down at a table it would be a very long and tedious process. Is this what you are expected to do?

Thanks,

dcasper70 · #7 07-07-2005, 01:57 PM

he can transfer me the money, I'll take care of it for them [img]/images/graemlins/tongue.gif[/img]

TheHammer24 · #8 07-07-2005, 01:58 PM

[ QUOTE ]
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.

[/ QUOTE ]

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

LIRob23 · #9 07-07-2005, 02:20 PM

TheHammer24 · #10 07-07-2005, 02:46 PM

[ QUOTE ]
$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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Actually, keep withdrawals under 1500. It's risky, but probably EV+ to not report. 10% of 4000 = $400 in taxes. Thats enough to be a big nuisance to you, but not enough for the IRS to devote resources to go after you.