Tax Question : Claim Total Winnings or Cashout?

[sammy_g]

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It's a rediculous hassle, especially in light of the fact that I'm only going to be charged based on the net amount.

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But you're not taxed based solely on net amount (at least in the US). [img]/images/graemlins/confused.gif[/img]

Your winning sessions are income, and you claim your losing sessions as deductions up to the amount of your winnings. This is not the same thing as simply reporting "I won $X playing poker."

[lehighguy]

Explain. Deductions reduce income right?

[Kurn, son of Mogh]

I would think any good accountant would be creative enough to solve this problem. I also see no reason why the IRS would get real anal about counting a day as a "session". Their rules say wins and losses must both be listed. I know some people who've told me their accountant uses cashouts & deposits.

I think you can come up with a workable model that in the event of an audit at least shows an attempt to comply with the regs.

Bottom line is the IRS says you can't net gambling wins and losses and report a single figure. Is it stupid? yes. Is it Draconian? yes. Is it fair? no.

Hey it's the IRS, WTF should we expect?

[sammy_g]

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Explain. Deductions reduce income right?

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It's not the same though. For one, you can't take a standard deduction. You have to itemize.

[Kurn, son of Mogh]

Correct, unless you already itemize, the IRS overtaxes your gambling income.

[lehighguy]

How big is a standerdized deduction?
What else can I itemize? Am I giving something up?
I've never done my taxes before.

[Kurn, son of Mogh]

How big is a standerdized deduction?

$6500 single

What else can I itemize? Am I giving something up?

The big one is mortgage interest. Download a Schedule A for Form 1040 from the IRS site to see the rest, but the bottom line is, if you're not paying a mortgage it is doubtful you can beat the SD.

As a young single man, you could very well be totally and completely screwed by the tax laws.

If you win $9k and lose $6k, netting $3k, what happens is you have to declare $9,000 in income from gambling. However, the standard deduction of $6,500 is more than your losses so you don't have an reason to itemize.

So, you have to pay taxes on the $9k of winnings, but you get ZERO tax break on the $6k of losses. The net effect is that while you netted $3,000 in gambling, you pay on $9,000 meaning the taxes you pay on your gambling actually exceeds your gambling net gain.

Yea, our laws SUCK.

I however itemize since I own a house, so it's not a big deal to me. The only problem is 1/2 the time I play at UB and forget to run the history grabber so my PT records are woefully short of complete. Add to that tracking what I got in rakeback or bonuses and it's a mess.

[MicroBob]

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I also see no reason why the IRS would get real anal about counting a day as a "session". Their rules say wins and losses must both be listed. I know some people who've told me their accountant uses cashouts & deposits.


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(disclaimer again that I don't know diddly):

It's my suspicion that this would be correct.

If you are making a concerted effort to document your income and pay a fair amount it is likely the IRS won't come crashing down on you too hard.
They obviously would be more interested (I think) in nailing those who are going out of their way to avoid their tax-obligations.



As i mentioned previously...don't worry about playing for 20 minutes at a shot.
Just record your final number at the end of the day (or beginning of the next day..or whatever) and count the whole day as a session.



I believe in Walter Lewis's book it is argued that there is some vagueness as to what constitutes a 'session'.

When this stuff was put in place for horse-racing they wanted you to document every bet....and I think some of that language carried over to poker and blackjack card-counters.
Obviously it's impossible to document every single money transaction (every single bet at the BJ and poker table).



Someone else mentioned in the NVG forum that if they found against you they would likely just make you pay up the remainder you owed and maybe some interest. I'm not sure if I'm remembering that correctly though.


Also - one would think that if you had an amount of money and purchases roughly corresponding to what you reported (or even a little less) that the IRS would find that you were indeed attempting to be fair and weren't trying to screw the system.



I suspect this kind of stuff happens with small-business owners all the time too.
They get lazy about keeping their records just like anyone else might.
I'm pretty sure I read some language along the way that "saying I'm too busy to keep accurate records" isn't an excuse.

I bet this stuff happens all the time and most people don't go to jail over it.


Get a notebook....make an attempt...don't worry about 20 minute sessions...just having a running daily-total of each online account's balance (each poker site, neteller, and your bank-account) gets you most of the way there.
If you also have "number of total hours played on each site during each day" and "limits played" as well as all your transactions back and forth (deposits and cash-outs) you are clearly being pretty diligent about documenting your income.

[flair1239]

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A lot of times I log on for 10, 20, 30 min. I play on multiple sites at once. It's a rediculous hassle, especially in light of the fact that I'm only going to be charged based on the net amount. All of that extra accounting is pointless.

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I record the ending balances of each of my sites everyday that I play.

I count each day as a session; Regardless of whether I play (1) 4 hour session or (2) 3 hour sessions on that day. Each calendar day I log a hand, I count as a session. Once a week I punch the information into excel and have it show my w/l for the day.

I can't imagine that this will not satisfy the IRS requirement.