Taxes when you have minimal records.

Osprey · #1 09-21-2005, 06:22 AM

So, I've been browsing the various tax topics and I have been getting scared. I will talk to a tax professional but wanted to see what other people are doing who are in the same boat. I will make probably around $90K from my real job this year.

Started playing poker over a year ago, didn't really do so well, lost a little, won a little less, kept at it. Didn't really PLAN. Since Jnauary I am up about $6300 in internet winnings, bonuses and B&M work. I got Pokertracker about 2 months ago, other than that and possibly being able to go back to bank deposits and withdrawals and reconstruct some things, I have no records. I have over $4000 in a separate subsidiary bank account I created for my bankroll, the other $2k is at various internet sites and Neteller. Since I have no records, I have no idea what my session by session winnings were, and I can't deduct my losses. What am I supposed to do if I want to pay taxes? There is definitely a trail that I would have a hard time explaining if I got a blow by blow audit of my banking records. Should I guess about my session wins and losses and hope I don't get audited? Also looks like my state won't let you deduct gambling losses anyway, really fantastic...

Thanks

Uglyowl · #2 09-21-2005, 07:03 AM

Don't try to hide it and try your best and you will be ok. As long as you aren't trying to screw the IRS you won't get in "trouble". You are like everyone else, they are not going to come down hard on you because you aren't superman when it comes to recording this stuff.

With rakeback, bonuses, etc. everything is really kinda convuluted anyway. For example, if you are clearing $100 for 1,000 hand bonus and play the first 500 hands, you really earned $50 for that day, but it isn't paid. Like work, that is money for that session.

Even with accurate records, it is really difficult to do this correctly. The tax code is archaic and do your best. Your tax professional will help you too.

AcmeSalesRep · #3 09-21-2005, 07:37 PM

[ QUOTE ]
With rakeback, bonuses, etc. everything is really kinda convuluted anyway. For example, if you are clearing $100 for 1,000 hand bonus and play the first 500 hands, you really earned $50 for that day, but it isn't paid. Like work, that is money for that session.

[/ QUOTE ]

This is all true, but for most people the bonus is not taxable until it is actually paid...just as with their income earned from their regular job.

Acme

KaneKungFu123 · #4 09-21-2005, 10:38 PM

you are a fool to report it.

William Wilson · #5 09-22-2005, 05:26 AM

[ QUOTE ]
you are a fool to report it.

[/ QUOTE ]

Please expand

MicroBob · #6 09-22-2005, 05:35 AM

as uglyowl said already, just do the best you can and everything should be okay for the most part.

First - $6300 isn't THAT much that the IRS is going to get too uptight about hopefully.

Second - It is my guess that MANY of those who won in internet-poker in the past year (or whatever) ar not reporting it and might not even be aware that they are supposed to report it.

For example - If I go down to a casino tonight and play blackjack and win $200 I am technically supposed to report it.
Screw that. It's good for about a couple tanks of gas these days and I'm keeping it.
There are LOTS of people who score little wins at casinos to whom it would never even OCCUR that they are SUPPOSED to report it.
People just don't know.

I think this is mostly the case with many internet-poker players as well.
Wonder if that 18 year-old kid who won $600k in the WCOOP has ANY idea that his winnings are taxable.

Anyway - for the OP's case...you at least have SOME documentation via pokertracker and neteller transactions.
If you're winnings were closer to $60k instead of $6k then it would be my guess that you might have something to worry about.
but again...with p-tracker and neteller records at least the IRS can see that what you are reporting is probably pretty close to accurate even if you didn't correctly document it every freaking day...and obviously this would only be the case IF they decided to come after you.

Osprey · #7 09-22-2005, 09:53 AM

Alright.
Second question-
If this were you doing it, would you make up some plausible winning amount, and then an offsetting losses amount in order to make the net correct? Or would you just report the net as your other income and hope that not taking any losses doesn't set off alarms?

KaneKungFu123 · #8 09-23-2005, 01:11 AM

[ QUOTE ]
[ QUOTE ]
you are a fool to report it.

[/ QUOTE ]

Please expand

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he has a full time job. his winnings are a small portion of said job. the likelyhood of him being audited = very very small.

if he is audited, he will only have to pay penalty.

amount of penalty versus risk of audited and found to be in the wrong... clearly he is better off not worrying about it.

Girchuck · #9 09-23-2005, 12:15 PM

If you only won a few thousand, chances are, your losses are less than a standard deduction anyways.

somapopper · #10 09-23-2005, 06:52 PM

I've seen the light on the taxes thing, and will be filing this year. Question is, is there any procedure for declaring gambling winnings that one did not declare in previous years, and if so, what dollar anount would these have to get up to for one to start to worry?

Not that I'm asking for any reason. [img]/images/graemlins/crazy.gif[/img]