Besides the Ethical Implications........

mscags · #1 08-19-2005, 01:16 PM

....What makes players claim all of their poker winnings? It seems to me that the gvmt has no way of tracing this. I just don't understand, there is no way that the IRS can possibly know how much money is in my party account, etc. Onc you withdraw and it goes on your bank activity maybe, I'm not sure how it all works really, but if the money is just in your account, how can they know? Not saying it is ethical to not claim, just wondering about it.

RunDownHouse · #2 08-19-2005, 01:25 PM

I'm not a lawyer or accountant or anything, so with that in mind:

They don't know about it if its all on a poker site, and even if they did, there's a chance they wouldn't be able to tax it anyways. To the best of my understanding, the US can't tax foreign income earned until it is repatriated into the US system. There seems to be a strong argument that poker is foreign income, since the sites are based outside the US, but of course its a gray area, and there haven't been any court decisions on it that I know of.

I claim my winnings, but only to the extent of what I've actually taken off-site and into my bank account.

PoorLawyer · #3 08-19-2005, 01:44 PM

It is a voluntary tax system so you don't have to claim anything and they probably won't know about it. The one time you get audited though and see funds going into or out of neteller and start poking around is where it all could blow up in your face. That being said, i just file the EZ form without thinking about it.

RunDownHouse · #4 08-19-2005, 02:26 PM

I'm assuming that they don't know about funds on sites like Party. Could they see funds in NETeller, since those are connected to a bank?

mscags · #5 08-19-2005, 02:56 PM

Whats the EZ form?

Tilt · #6 08-19-2005, 02:57 PM

You are kidding yourself. If you were thoroughly audited your banking records would be reviewed and it would be obvious that you had undeclared income. If a W2-G mismatch with your 1040 triggered the audit thats where they would start. If you are a professional and not declaring your earnings, they will be merciless.

#7 08-19-2005, 03:34 PM

[ QUOTE ]
I claim my winnings, but only to the extent of what I've actually taken off-site and into my bank account.

[/ QUOTE ]

StellarWind · #8 08-19-2005, 04:39 PM

[ QUOTE ]
To the best of my understanding, the US can't tax foreign income earned until it is repatriated into the US system.

[/ QUOTE ]
IANAL either, but I am 99.9% certain this is completely wrong.

You incur tax liability when you win the money. Where you keep the money or when you move it offsite or back to the U.S. is irrelevant.

It is likely that some future deal will be made to fully legalize online poker in the U.S. If this happens Congress will undoubtedly insist that the online sites cooperate with the IRS. It will be the price they have to pay to stay in our market.

Party might turn your old records over to the IRS in a few years. Don't ever say you weren't warned.

PTjvs · #9 08-19-2005, 04:43 PM

So the obvious answer is to withdraw all winnings via Neteller debit card? Am i mistaken in thinking neteller is also based outside the US, and probably wouldnt give records to the IRS?

jvs

Warik · #10 08-19-2005, 05:02 PM

I'm not going to claim my winnings due to ethical implications (I honestly don't feel I should have to, but that's an argument for a different thread), the reason I'll be claiming them honestly, including bonuses and rakeback, is because there is a 100.00% chance that if I were ever audited, my undeclared income would be found and at best I'd be fined a new [censored], and at worst I'd be thrown in jail (and ripped a new [censored]).

Very.... very -EV.

Regarding the question another poster had on withdrawing via NETeller debit card, I don't think that's viable either. If you deposited $5,000 on Jan 1st, played $10/$20 all year long, and made $100k in profit, what are you going to do with it? Hide it under your bed? You've either got to spend it or deposit it.

If it's deposited in the bank, the IRS will wonder where all that money came from. If you spend that money on a new Benz, the IRS will wonder how you can afford it. If you use that money to pay your normal expenses, the IRS will wonder why none of your work income is being spent.... and "that's none of your business" is not on the list of possible multiple choice answers.