Pay taxes on earnings?

[EvoLoN]

Hi guys, I heard that if you earn more than 500 dollars playing online poker you have to pay taxes on it? Is this true? Do the big money winners do this or is there a way around it? Thanks, ~EvoLoN~

[Paul2432]

I'll assume you live in the USA. Other countries may be different.

You heard wrong. You have to pay taxes on all the money you earn. Even $1. [1]

Big winners that do not want to risk legal trouble with the IRS do pay taxes. The way to get around it is to simply not report the income. You may or may not get caught. The larger the amount, the greater the risk. The more elaborate the scheme to hide the money, the less likely you can use the excuse "oh I did not know I was supposed to pay taxes on that" (which would mean just interest and penalties) and the more likely you will be charged with tax fraud (likely prison sentence).

I am not a tax attorney or CPA, just someone who reads about this stuff here.

Paul

[1] Gambling income is not reported on your 1040 as "earn". Instead winnings are reported on Sch 1040, and losses deducted on Schedule A. This leads to a grossly unfair tax on gamblers where a player could owe greater than 100% tax on winnings, or even tax on a net loss.

[amulet]

any income, including gambling earnings are taxable, even $1. most players keep two sets of records, one showing greater losses then they really loose. if you win cash, it is difficult for the irs to know. the online compines are offshore, and do not report winnings to the irs. partypoker even has epassport linked to it, which is an offshore debit visa and atm card - i think epassport is a terrific solution. however, if you do not report gambling income, you are breaking the law.

[BigBaitsim (milo)]

Gambling winnings are fully taxable under US law.