Am I admitting to breaking the law when I pay my taxes on winnings?

[jrz1972]

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There's a box on the 1040 form for gambling winnings

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Not really. You're probably thinking of the "other income" line.

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(if you don't itemize it's pretty easy).

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It's easy whether you itemize or not.

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You don't have to specify what kind of gambling you did. If you want to claim gambling losses, that's where it gets a lot more complicated. I've just calculated all the money I moved to my bank account in a year and subtracted what I'd deposited and entered that figure (no loss for any given year).

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This is unambiguously wrong, as in it is not up for debate.

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Since the online gambling is illegal according to the DoJ, there really aren't tax codes to address it

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This is also wrong. The tax code is actually reasonably clear on how to handle gambling winnings.

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and this seemed like a good faith effort on my part to pay my taxes.

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It may be a good-faith effort, but it also shows you failed to take 45 seconds out of your life to google the topic.

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If the U.S. isn't going to bother to make it legal and regulate it, that's about all we can do.

However, there is actually a far more elaborate system that the pros use to track their wins and losses

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Everyone is supposed to track their wins and losses, whether you're a "pro" or not.

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from legal brick and mortar gambling (Phil Gordon addresses it somewhere on the Full Tilt site) but those tax regulations are written for a system where a player buys chips from one source, plays at one table at a time, and cashes out their chips at the same source. Even using poker tracker I don't see how anyone could apply these sort of regulations to online winnings because the B&M system works by tracking individual sessions.

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Um, it's like really easy to do this woth PokerTracker. Export your session stats to Excel and sort by $ won. Add your winning sessions. That's what goes in "other income" along with bonus money. Now add your losing sessions. That goes as a deduction. You're done in under 5 minutes, less if you've used Excel before.

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Online people jump from table to table, site to site, play in multiple currencies at times, get bonuses, rakeback, and all kinds of other things that don't really apply to brick and mortar play.

If someone is unlucky enough to get audited (probably more likely for those with no other source of income), they at least should have tried to pay taxes on their winnings because chances are they will have screwed something up according to the IRS

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I pay taxes on my poker income and I'm 100% sure I haven't screwed anything up. This is really very easy assuming you keep records.

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and owe a penalty on whatever figure they didn't pay taxes on. But the only sure way to get screwed is try to hide the money or not pay taxes on it at all even if it IS supposed to be illegal (as Capone found out the hard way).

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These tax threads would be a lot better if people who didn't have any idea what they were talking about would just refrain from posting and spreading bad information.

Also, welcome to the forums.

[primetime32]

while you will get some "experts" who will tell you that they know the answer, the fact is that no one knows the best way to handle internet poker winnings. Its all a big crapshoot.

[Zetack]

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Recent 60 min segment stated "internet gambling is 100% illegal"

So now when I pay taxes on my internet poker winnings, I am in essence admitting I gambled online and documenting that I have broken the law?

Is this something of concern?

Mizzles

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The answer is no. Assume for the sake of your question that internet gambling is illegal, paying your taxes internet gambling winnings is not an admission for the simple fact that it can not be used against you in court or turned over to law enforcement officials. If the IRS did turn over the information to local police who then developed other evidence to use against you in a criminal prosecution, that other evidence is highly likely not to be admissable in court.

Now if you get a divorce and as part of the divorce filings your wife claims that you make large sums of money gambling on the internet thus she wants more alimony...well the police can go to town on your ass.

--Zetack

[college kid]

The IRS doesn't report anything to other agencies--it's not in their best interest. They just want their cut. That's why it's shouldn't be a big concern. Al Capone and numerous other mobsters were nailed for tax evasion because even though the police couldn't get hard evidence on just how they were making large sums of money, they were indeed making large sums and not paying taxes on it. That's been the downfall of a lot of criminal organizations. So pay your taxes, and don't worry about it.

[Zetack]

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The IRS doesn't report anything to other agencies--it's not in their best interest.

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They are forbidden by law from doing so, it has nothing to do with their self interest.

[college kid]

Good to know.

[jrz1972]

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Am I admitting to breaking the law when I pay my taxes on winnings?

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No, because when you pay your taxes, you're reporting "gambling winnings" and "gambling losses," not "illegal internet poker winnings" and "illegal internet poker losses." The IRS neither knows nor cares that you happened to win your money on the internet as opposed to a perfectly legal B/M casino.

just move to Canada, its all good here, and tax free also

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if you r a drug dealer, by law u must report all income on your tax return, so u do the math. And its not illegal until they make a law saying it is.

[Pog0]

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just move to Canada, its all good here, and tax free also

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Everyday, another one pops up with this misconception.

[TStoneMBD]

the irs isnt allowed to report anything to any federal agencies so you cant be arrested for what you file. basically, in the united states, its fine if you break the law as long as you pay taxes on it.

they couldnt catch al capone for criminal activity so they put him in jail for tax evasion.