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#1
11-13-2005, 05:22 AM
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tax question
So I have learned through the message boards that you have to pay taxes on what is in your account and not just what you cashout from neteller. I am about to pay for the state taxes before jan 1st 2006 so that I can deduct off the fed taxes. So... my question is... I have about 50k in an account that is being blocked and investigated because I was at a table where people were dumping chips. One person told me that he account was suspended for 8 weeks. So I am in a way scared, perhaps this is a shady site and I don't get my money back... There is a chance. In this situation would I have to pay taxes for the year with the money that is currently blocked?
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#3
11-13-2005, 09:50 AM
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Re: tax question
[ QUOTE ]
So I have learned through the message boards that you have to pay taxes on what is in your account and not just what you cashout from neteller. I am about to pay for the state taxes before jan 1st 2006 so that I can deduct off the fed taxes. So... my question is... I have about 50k in an account that is being blocked and investigated because I was at a table where people were dumping chips. One person told me that he account was suspended for 8 weeks. So I am in a way scared, perhaps this is a shady site and I don't get my money back... There is a chance. In this situation would I have to pay taxes for the year with the money that is currently blocked? [/ QUOTE ] This sucks on many levels. I would think you wouldn't have to pay since you do not even have access to it but who knows. I would find out from a professional. I wonder if this thread will still get flammed by the tax nazis.
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#4
11-13-2005, 11:06 AM
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Re: tax question
I'm not a CPA just a recent college graduate in accounting using the good old common sense test (that isn't always applicable to the IRS).
Best thing to do is consult a professional with some experience. But I would probably go ahead and do the following. Make an estimated tax payment on your state income tax ignoring the fact that the 50k is frozen, basically making sure you have paid tax on all gambling winnings. The account should then be cleared (hopefully not cleared of all money) by the time you have to file your actual return. At which point you can use the proper method to account for your gambling activity. If they take the 50k I would certainly classify that as a gambling loss and account for it accordingly...but since you are in limbo right now just go ahead and make the estimated tax payment as if you could withdraw it...
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#5
11-13-2005, 11:25 AM
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Re: tax question
[ QUOTE ]
So I have learned through the message boards that you have to pay taxes on what is in your account and not just what you cashout from neteller. I am about to pay for the state taxes before jan 1st 2006 so that I can deduct off the fed taxes. So... my question is... I have about 50k in an account that is being blocked and investigated because I was at a table where people were dumping chips. One person told me that he account was suspended for 8 weeks. So I am in a way scared, perhaps this is a shady site and I don't get my money back... There is a chance. In this situation would I have to pay taxes for the year with the money that is currently blocked? [/ QUOTE ] Your account being blocked has no bearing on the taxes you owe. If you are filing as a recreational gambler, you owe tax on the sum of all your winning sessions minus the sum of all your losing sessions (if you file as a pro you will use the net). Simple as that. As for a CPA, I recommend Russ Fox. A google search should give you plenty of info on him. PM me if you need more details. ___1___
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#6
11-13-2005, 03:37 PM
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Re: tax question
[ QUOTE ]
[ QUOTE ] So I have learned through the message boards that you have to pay taxes on what is in your account and not just what you cashout from neteller. I am about to pay for the state taxes before jan 1st 2006 so that I can deduct off the fed taxes. So... my question is... I have about 50k in an account that is being blocked and investigated because I was at a table where people were dumping chips. One person told me that he account was suspended for 8 weeks. So I am in a way scared, perhaps this is a shady site and I don't get my money back... There is a chance. In this situation would I have to pay taxes for the year with the money that is currently blocked? [/ QUOTE ] Your account being blocked has no bearing on the taxes you owe. If you are filing as a recreational gambler, you owe tax on the sum of all your winning sessions minus the sum of all your losing sessions (if you file as a pro you will use the net). Simple as that. As for a CPA, I recommend Russ Fox. A google search should give you plenty of info on him. PM me if you need more details. ___1___ [/ QUOTE ] There is no way Im paying tax on that money yet. What if the money gets confiscated because they think you were cheating? Now you lose the money AND already paid tax on it? Not me. The money is under investigation so you havent earned it yet. Think of it as a bonus that might or might not get. Its not your money until all conditions are released and you can withdraw it at will. Right now, the money still belongs to the site, not you.
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#7
11-13-2005, 03:43 PM
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Re: tax question
[ QUOTE ]
The money is under investigation so you havent earned it yet. Think of it as a bonus that might or might not get. Its not your money until all conditions are released and you can withdraw it at will. Right now, the money still belongs to the site, not you. [/ QUOTE ] You really shouldn't try to pass off statements such as this as a fact.
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#8
11-13-2005, 06:44 PM
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Re: tax question
[ QUOTE ]
[ QUOTE ] The money is under investigation so you havent earned it yet. Think of it as a bonus that might or might not get. Its not your money until all conditions are released and you can withdraw it at will. Right now, the money still belongs to the site, not you. [/ QUOTE ] You really shouldn't try to pass off statements such as this as a fact. [/ QUOTE ] I didnt say it was a fact. He asked what people would do in his situation and I told him what I would do. He can do whatever he wants. You guys are ridiculous about this tax stuff. The IRS doesnt know what is in your poker account. If you wanted to not report your winnings until you withdrew them, the IRS wouldnt know. Is that legal? No. But this is a different story. OP doesnt know if this is his money or not. If I was in that spot, theres no way I would pay tax on the money until I knew If I was getting it for sure or not. and THAT is a fact.
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#9
11-13-2005, 09:11 PM
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Re: tax question
I have to agree with Iceman on this one - I *religiously* pay my taxes (quarterly, etc.), and I'm fairly sure if I was in this situation (which I hope never to be), that I would just "ignore" this income while this situation was up in the air. If the amount was significantly smaller ($1k or less?), I would just pay the taxes and deal with it as a loss if it turned out that way later on... but at 50k, that is a fairly significant amount of money to be paying taxes on that may or may not be yours to keep, and no guarantee as to when the investigation would end.
I think there is the "black and white" answer, and the reasonable answer. Obviously if the IRS audits you, you would be forced to explain the situation, and they would probably force you to pay the taxes at that point, but I think the argument is reasonable. Needless to say, this isn't actual tax advice, and each person would have to deal with this individually and within their own comfort zone.
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#10
11-13-2005, 09:12 PM
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Re: tax question
[ QUOTE ]
Its not your money until all conditions are released and you can withdraw it at will. Right now, the money still belongs to the site, not you. [/ QUOTE ] This does make sense to me. The money isn't necessarily yours, it still belongs to the site because of the situation you're in. As a result I think you can get away with not claiming it. Everything is such a gray scale with filing taxes. I would just use your judgment on this one but consulting a professional is your best bet if you want to make sure you aren't liable. IMO, it is morally ridiculous to me to even consider filing money that I may not even get. I personally think it would be fine to just file that money on next year's returns instead. However iceman, the IRS doesn't know what's in your poker account but if you are audited the IRS has the right to ask for the passwords to your poker accounts to check the balance of them. Someone on this forum was audited and refused to give the IRS their password to his accounts and he was penalized. In this situation however, if the IRS wanted the password to your confiscated poker account they wouldn't be able to access the information they needed to anyway since you can't login yourself, right?
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