Paying taxes on Poker Winnings...

[LImitPlayer]

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Online gambling is a stickier situation but luckily the CRA has decided in our favour on this one

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They haven't, thats the point you seem to be missing.

First you said we were lucky that we were fortunate because the accountants give bad advice. Now you say that we are lucky because the CRA is not the IRS.

If poker is your sole source of income, it is taxable. I didn't just say to myself Joe Schmoe on the 2 + 2 forums says it's not taxable so it must not be, or a buddy of mine knows about this stuff so he must be right.

I make over 6 figures from poker income and it is my sole source of income. I thoroughly researched the tax liabilities that effect me.

I called the CRA myself, was told it was taxable and I did not like the answer I was given.

I went to an accountant, who called the CRA and he was told it was taxable and I Still didn't like the answer I was given.

I went to a 2nd accountant, who also told me it was taxable.

I may not like the answer but it doesn't change it.

If you rely on poker as your sole source of income, it is taxable end of story.

Don't confuse winning 150K in a jackpot at the casino or winning the super 7 or lotto 649 lotteries which are not taxable with having a job (which is poker) with taxable income.

If you want to keep liiving in denial thats up to you.

You asked where i live, I live in Ontario, sounds like the same province as you since you are driving to windsor

[Mig]

IS it the same situation for Quebec ? Can you forward me to somewhere where it says that online gambling is prohibited ?

I seriously need to see a lawyer or something... With all the cash I'm generating with poker I really don't want to run into trouble...

The critical point is that the IRS cannot share information they have about illegal activities with law enforcement agencies. So whether you are an online poker player, drug dealer, or hired assassin, the prospect of getting arrested for admitting illegal activities to the IRS should not be a deterrent to paying your taxes.

Ed, if you're reading, how do you handle the lack of precedent with regard to paying taxes on online poker winnings? For example, how do you define a 'session'? Do PokerTracker records suffice as a way to substantiate your wins and losses?

Also, is there an accountant or tax attorney in the las vegas area that you would recommend?

[jackblack73]

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That last line is what I don't get...how can one pay taxes on illegal income?
This statement is illogical.


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Would you rather the government reward illegal behavior by not taxing it? I think that's much more illogical.

Moreover, it provides law enforcement with another avenue in which to prosecute. As with Capone, they simply were unable to gather enough evidence against him with regard to his other illegal activities.

[Peter666]

There are two other people here who have had the opposite response including one who had to present this in court. So the CRA is contradicting itself.

I think it is a matter of the way you present it to the CRA. If I was in your position, I would find any type of other work related activity, such as setting up your own consulting business in order to show that poker is not your sole source of income. A business does not have to produce money to be legitimate.

[lozen]

I do believe your tax records are confidential. If you were a contract killer and put that on your tax return with earnings and expensee they could not use that agsinst you in a court of law. Though they could let the GOVT know you derived your income from illegal purposes and than try and catch you. That's the tax law here in Canada. Our privacy l;aws are a little tougher though .

[Peter666]

Luckily, the Criminal Code of Canada does not punish those making bets in an illegal gambling setup. It only goes after the organizers of the event. Because they are foreign, you are untouchable. The worst that could happen is having the RCMP raid the illegal gambling establishment and seizing all assests, which would include any money you have with them. However, none of these establishments are on Canadian soil, so we are free.

If we set up our own website here in Canada that was not registered and took bets from all over the country, we would be considered illegal. If we had our office in Montreal, the police would raid it, seize all our assets and take us to trial. The gravest punishment is only 2 years though. Of course, this would allow us to get free university education at Club Fed, and for us white collar criminals, things are very comfortable from what I hear. Private rooms, TV, free internet, conjugal visits. It's always a good backup plan [img]/images/graemlins/tongue.gif[/img]

[Mig]

thanks for you reply. Basically I should be clean until they modify the rules.

[Ed Miller]

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Ed, if you're reading, how do you handle the lack of precedent with regard to paying taxes on online poker winnings? For example, how do you define a 'session'? Do PokerTracker records suffice as a way to substantiate your wins and losses?

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I'm sorry, but I'm not really qualified to postulate about this matter.. it's a question for a tax attorney. Having said that, I think Poker Tracker is, no doubt, an invaluable resource for record keeping.

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Also, is there an accountant or tax attorney in the las vegas area that you would recommend?

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I have a CPA, but I've been with him only six months, and I don't really feel comfortable recommending him yet. I haven't seen any problems, but he hasn't done a tax return for me yet.

[TimsterToo]

I live in the Netherlands and I'm hardly a tax expert here so I can't say anything about other countries.

Concerning the tax on illegal activities. In the Netherlands you can pay taxes over anything you earn money over and deduct the costs you make doing that. For instance there was a bit of an uproar over the income tax of a drugdealer (hard drugs not the often misunderstood coffeeshop situation) who deducted the cost of his pitbull terrier and his gun (all fire arms are illegal in Holland) from his income tax. The taxes will not report you to the police as they like you paying taxes. This doesn’t mean though that their money has been laundered and they can spend it on anything they like, the police will still take them down if they can’t proof that their too expensive car and too expensive house is not bought with money from non illegal activities. They just don’t get into tax trouble also. (I’m pretty sure they can also deduct the cost of laundering the money btw)

So a Dutch citizen would be better of paying taxes over illegal activities.

Poker specific, I’ve asked a tax inspector what their view on it was at the moment and he said that it’s a bit unclear if it isn’t your primary income as it depends on how poker is classified. (a gambling game, a game of skill etc etc) This is of course a specific Dutch issue as the taxes differ on pure luck games etc. Someone probably needs to go to court of this so we have an officlial ruling over this. If it is your primary source of income you should just treat it like you have a own business and pay normal income tax over it. So that would make things rather clear. He also told me that it would be best if I kept well documented records on my winning and losing and reserved an amount of my winnings to cover my ass in case they suddenly became very interested.

This was not an official conversation so he gave his professional opinion without putting it in writing or making statements I could hold him to. He did say that if he didn’t know about it, it wasn’t an issue yet. What he also added was that there’s a department of the taxes always looking into and monitoring new things as to determine the taxability of it. If poker was getting so big as I made believe it was he wouldn’t be surprised if they would take an official stance in the near future which would be inline with current tax laws and would be applicable from day one of online play, not from this day onwards. (hence his advice to make reservations)

That sounds logical to me and also something that all of us should reckon with, not just the Dutch players.

Lastly he said that if I win a couple of hundred $$ a year not to bother at all. If it becomes thousands the situation would change. I told him that I would hopefully need to reserve huge amounts in the future.

So document and reserve! The worst thing that can happen is that you actually have to use that reserve to pay taxes, otherwise you have savings. In any even you’ll better of than getting into huge financial problems with the tax department or have nothing to show for after playing poker for a couple of years.