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#31
11-01-2005, 02:07 PM
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Re: yes another TAX question....
[ QUOTE ]
Again, I dont know how to do it "properly". If the IRS wants it done "properly", they should make it easy to do [/ QUOTE ] It is easy to report your winnings properly: 1) Track your wins and losses on a per session basis. The term "session" is flexible (it has to be because of the many different types of gambling out there), but you can safely use a daily numbers at the same game and limit. That is, playing .5/1 HE, 1/2 HE, and 1/2 Omaha equals three separate sessions for the day. You can use PT, a spreadsheet, or just a pen and paper as long as you record the results daily. 2) When you file your taxes, the total of all your winning sessions is added to your gross income. And if you itemize, the total of all your losing sessions may be deducted. It's that easy! Of course, you can look for other tax breaks like the sales tax credit, but that doesn't make you any different than anybody else looking to pay less taxes. That's what accountants are for. 
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#33
11-01-2005, 02:20 PM
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Re: yes another TAX question....
[ QUOTE ]
[ QUOTE ] i heard if i file as a pro (i e primary source of income) i dont have to keep track of individual sessions -- that i just report my total net winnings. how false is this statement? [/ QUOTE ] It is not exactly false...but there is WAY more to it than this... Acme [/ QUOTE ] do you have a good reference for this? this is my (limited) understanding. - you have to qualify to file as a pro. the def's seem pretty lenient. - you have to pay 15% self-employment tax (this is both employer's and employee's 7.5% fica) - you can deduct expenses and lump together wins and losses.
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#34
11-01-2005, 05:26 PM
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Re: yes another TAX question....
[ QUOTE ]
[ QUOTE ] Again, I dont know how to do it "properly". If the IRS wants it done "properly", they should make it easy to do [/ QUOTE ] It is easy to report your winnings properly: 1) Track your wins and losses on a per session basis. The term "session" is flexible (it has to be because of the many different types of gambling out there), but you can safely use a daily numbers at the same game and limit. That is, playing .5/1 HE, 1/2 HE, and 1/2 Omaha equals three separate sessions for the day. You can use PT, a spreadsheet, or just a pen and paper as long as you record the results daily. 2) When you file your taxes, the total of all your winning sessions is added to your gross income. And if you itemize, the total of all your losing sessions may be deducted. It's that easy! Of course, you can look for other tax breaks like the sales tax credit, but that doesn't make you any different than anybody else looking to pay less taxes. That's what accountants are for. [/ QUOTE ] Youre not telling me anything i dont know. The point is that there are millions of people playing poker. Of course only a small portion of these are winning, but still, alot of these people dont even know you have to report your winnings. Alot of these people also dont use PT or any other kind of record keeping. Theres no law that says they have to. If the IRS wants everyone to pay the correct amount, they need to make it easier to do so. I might be a really good player who is really bad at keeping records. Now at the end of the year if I want to pay my fair share, what do I do? The only thing I can do is make my best guestimate as to how much I won. The IRS has no way of disproving this. How could they? There are no records anywhere. If I got audited for some reason they could look at all my bank account transactions from Neteller, and they would come up with approx the same amount that I did since thats where I wouldve made my guestimate from.
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#35
11-01-2005, 05:38 PM
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Re: yes another TAX question....
[ QUOTE ]
I might be a really good player who is really bad at keeping records. Now at the end of the year if I want to pay my fair share, what do I do? The only thing I can do is make my best guestimate as to how much I won. The IRS has no way of disproving this. How could they? There are no records anywhere. [/ QUOTE ] Sure there are records. If you get audited, they can ask for a copy of your Neteller records, and you don't have the option of saying no. As I understand it, in a deep audit, they look at the money going in an out of sites, and attempt to figure it out for you, developing their own estimate of what you owe. This estimate will almost certainly be favorable to them. At that point it is your responsibility to pay according to their estimate or disprove their estimate. By your own admission, you don't have the evidence necessary to truly prove or disprove anything. Generally speaking, people (even gamblers) are not as likely to get audited that deeply. More often, they will just ask for some more information/evidence to support what you reported. But if they call you and your answer is "I don't have any records", I'd say you are a lot more likely for a deep audit, and rightfully so.
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#36
11-01-2005, 05:39 PM
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Re: yes another TAX question....
Well, there are alot of replies here, most seem to be correct, but I will throw in my 2 cents, as I did a bunch of research into this before I turned Pro.
You do have to pay taxes on all your winnings, not just withdrawals. If you won it and it is earned, and they don't care if you withdraw. You are supposed to keep a detailed log of your wins/losses. I track each nights performance with a Excel spreadsheet (if you are interested in this template, PM me and I can send it to you) and I also use PT. But, I think if you don't have these records, I would suggest adding up the total in your acct(s) and subtracting all your deposits and withdrawals, this should give you your wins. This will really fck you up if you aren't filing as a Pro, but I assume you are. If you file as a Pro, you can claim your Net winnings, and deduct any expenses (travel, computer expenses, rent - the % of it that you use for office space, etc...). You do get stuck paying the extra 7.5% (actually I think it ends up being around 6.8% or so) for Medicare/SS (Self Employment tax), which your employer typically pays. I am not really sure how the difference works out to be if you didn't file pro vs if you did for the Medicare/SS (SE tax). But, I do know that if you don't file pro, you have to add up each winning session and deduct losses. A session would be looked at as each time you sat down at a table (and subsequently left). This is fairly easy to do using PT, but imagine how much your net wins would be - I calc'ed it once earlier this year. Oh, and the burden of proof is never on the IRS, it's always on you. PS - If you expect to make any sizable income from self-employment (ala Poker), the IRS expects you to make estmiated quarterly payments.
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#37
11-01-2005, 05:46 PM
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Re: yes another TAX question....
[ QUOTE ]
Alot of these people also dont use PT or any other kind of record keeping. Theres no law that says they have to. [/ QUOTE ] [ QUOTE ] IRS Publication 529: Diary of winnings and losses. You must keep an accurate diary or similar record of your losses and winnings. You cannot reduce your gambling winnings by your gambling losses and report the difference. [/ QUOTE ] I can't imagine a more clear refutation of your theory.
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#38
11-01-2005, 07:37 PM
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Re: yes another TAX question....
Sometimes I wonder if some of you guys even read a post before you respond with a one liner trying to sound as smart and witty as you can. Do you put any thought into it before you respond?
Like I said before, I WANT TO PAY MY FAIR SHARE. But lets say I dont have all the proper reocrds for the full year. if the IRS wants to subpeopna my Neteller reocrds, more power to them. They will have access to the same records that Im trying to use to estimate my taxes. They dont have access to poker site records and neither do I. Lets give an example Lets say I only played 5 days out of the year just to make this simple. Day 1...I won $1000 Day 2....I lost $1000 Day 3...I won $2000 Day 4...I won $1000 Day 5...I lost $500 Day 6 I withdraw...$1500 to Neteller and then to my bank. What do you think the IRS will say when I report $1500 in winnings? Remember that I dont have the records of the 5 playing days, so Im not purposly lying. Im only listing those figures because thats what I would know If kept full records. My actual winnings are $4000 and losses are $1500 for a Net of $2500. The correct way to report would be to report $4k in winnings and to write off $1500 as losses. I know all of that. But since I dont have these records, I only know that I took out $1500 of the poker site. If the IRS audits me and subpeonas Neteller records, they will see that I withdrew $1500 which is what I reported. Make sense? Multiply this times about 350 playing days that I have no records for and you see what Im talking about. The IRS can find out all about my Neteller withdrawals and deposits and thats perfectly fine with me because Im not trying to hide anything To take it one step further...let say I was pretty sure I was +$2500 total winnings so thats what I reported. I report $2500 in winnings and write nothing off as losses. I get audited for some non poker rleated reason and they check Neteller and see my $1500 withdrawal. They see I reported $2500 in winnings and you think they will have a problem? Thats very unrealistic.
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#39
11-01-2005, 10:12 PM
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Re: yes another TAX question....
I'll just give you one simple correction to virtually everything you say...
You mistakenly think the burden of proof is on the IRS. Acme
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#40
11-01-2005, 10:16 PM
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Re: yes another TAX question....
[ QUOTE ]
If you file as a Pro, you can claim your Net winnings, and deduct any expenses (travel, computer expenses, rent - the % of it that you use for office space, etc...). You do get stuck paying the extra 7.5% (actually I think it ends up being around 6.8% or so) for Medicare/SS (Self Employment tax), which your employer typically pays. [/ QUOTE ] You would owe 15.3% for Medicare and Social Security. If you do not file as a pro, you do not pay any fees for either of these. If you file as a pro, you have to pay both the employee AND the employer portions... [ QUOTE ] A session would be looked at as each time you sat down at a table (and subsequently left). [/ QUOTE ] This is an acceptable definition of a session...but it is not the only acceptable definition. [ QUOTE ] Oh, and the burden of proof is never on the IRS, it's always on you. [/ QUOTE ] Right. This is the key item the OP cannot seem to understand. Acme
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