Rakeback, taxes, and an argument for the IRS

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Believe whatever you want, and pay your taxes accordingly.

I consider it income - I pay on everything I take from Neteller to my checking account. Makes it pretty simple for me.

Dogmeat [img]/images/graemlins/spade.gif[/img]

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That surely does make it simpler for you, but it doesn't make it correct. Whether your income (winnings, bonuses, rakeback) is kept at a poker site, at Neteller, or in your checking account doesn't affect its categorization as taxable income.

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I hope this isn't a dumb question but how does a tax auditor know about your neteller account? It's not like neteller sends a form reporting what you have every year. I probably will not pay taxes until I make a decent amount. I work and goto school full time so what I make isn't much.

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They may or may not know about Neteller. Neteller, essentially being an offshore bank account is not required to give your information to the US government and by keeping that money in your Neteller account you may be able to avoid paying taxes on that money since the IRS would have no idea how much money is in question.

As soon as you bring that money into your US bank account your auditor will know all about it. It seems to me that if you ever wanted to access that money in the US it would show up in an audit. If you leave it in Neteller you might be able to get access to this using your Neteller debit card, but since I am not sure what information the banking systems record the IRS may be able to track your purchases and withdrawals with that as well.

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I consider it income - I pay on everything I take from Neteller to my checking account. Makes it pretty simple for me.

Dogmeat [img]/images/graemlins/spade.gif[/img]

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Me too... makes it easier, and my accountant agreed with me on this method. (I'm in Canada, though)

[Cactus Cactus]

I believe that we had this post before and he said that his accountant said that rake back is tax dect.

[Bartleby]

GAAP and Tax Code are two different animals. Although, I am sure Tilt's logic is seriously flawed as some others have pointed out, you certainly can't base any argument regarding the issue on GAAP. He is attempting to avoid claiming rakeback on his income taxes not his financial statements.

[scott2130]

The very fact that you posted means you don't belive your own logic. You were given very precise explanations on why it is income but you still argue your point.

If you honestly belive your logic then go work for KPMG in their tax shelter division. I am sure you will fit right in.