Do bonuses affect taxes? (US) - Page 5

david050173 · #41 08-23-2005, 04:15 AM

I am not a lawyer.
1) you can consider it a gift. The irs will not. If you think about it for a minute it will be obvious why allowing something like that would open up an insane number of loop holes.
2) Sure. But remember to add the rake back into your wins then. The net effect is that you nothing changes.
3) One shows an effort to follow the rules. One shows a delibate effort to defraud the US taxpayers. Who do you think is going to get a harsher penalty?
4) You mom was probably giving you bad tax advice. Her claiming you as a dependant can cause you to pay more tax but if make a certain amoutn (I think it is like `1500) you have to file a return even if you get all of your money back.

Your professor is nuts. Off shore does not prevent you being required to pay taxes, full time student doies not mean you do not owe taxes if you have income, and finally money is taxed multiple times all over. Your case in court would be that you are young and stupid. That would be your only defense. He is right that your odds of getting audit are low. However there is some random auditing of every return.

You should download the irs phamphlets on the penalties for not paying taxes and then decide if it is worthwhile.

[ QUOTE ]
A few questions....

1) if you were to consider your bonuses as a "gift" (in reality its just party poker giving you back your rake.. thats why its after a certain # of hands) what the hell does the IRS do then? Tax an off shore poker account?

2) Next question is.... can you deduct rake too? If so that helps alot. For example if someone had gross earnings of 60k from poker, and total losses of 40k (20k profit), but it took them a boat load of hands because they had a low bb/100... and in the time it took them to make that 20k profit they spent 20k in rake (hypothetical) can they then deduct that as losses as well and have no taxable income as far as poker is concerned? Assuming they got no rakeback that is.

3) Next question is... what about the people who are filing their gambling income incorrectly and just reporting profits? What if they were to get audited... are they in the same boat as people who did not file at all?

4) I dont know why but when I was growing up for every job I had my mother told me to write down exempt from taxes and i've never paid taxes on anything. I presume with the amount of money involved with poker i'm not exempt from taxes on it... can someone tell me if my mother claiming me as a dependency has any effect on poker winnings?

Also, when talking to my college professor (accounting teacher/CPA) this is what he said to me...

"if i were you i wouldnt even worry about it, first off the IRS has much bigger fish to fry and it would cost them more money to audit you... second of all nothing is reported to them so theres a less than 1% chance of you being audited, thirdly, in the VERY unlikely event that you were, you would have a very strong case in court... as the poker room is off shore, you're a full time student, you are just transferring money thats already been taxed from one account to another"

Can anyone tell me if he is correct about anything?

[/ QUOTE ]

Python49 · #42 08-23-2005, 04:54 AM

[ QUOTE ]
Sure. But remember to add the rake back into your wins then. The net effect is that you nothing changes.

[/ QUOTE ]
How is nothing effected if you are deducting rake as opposed to not deducting it? 60k wins, 40k loss, 20k deduction in rake... $0 taxable income. Also if you do get rake back at 25%, ok.. 25% of the 20k rake is 5k, add that to your gross earnings which would be 65k gross earnings with 40k deductions in losses and 20k deductions in rake.. leaving you with only 5k taxable income. As opposed to someone not filing their rake as deductions and they have 60k gross earnings, 40k lost at the tables... 20k taxable income. How is filing deductions for rake a net 0 effect..

Python49 · #43 08-23-2005, 05:06 AM

[ QUOTE ]
3) One shows an effort to follow the rules. One shows a delibate effort to defraud the US taxpayers. Who do you think is going to get a harsher penalty?

[/ QUOTE ]
This was assuming in the second scenario that the person is just blissfully ignorant.

broiler · #44 08-23-2005, 07:28 AM

The part that you are forgetting here is that your 60k of wins has already had the 20k of rake deducted from it. If you want to deduct the rake, you would have to increase your winnings reported back up to 80k.

broiler · #45 08-23-2005, 07:45 AM

To answer your questions in order
1) The US tax law is based on worldwide income, so it doesn't matter where the money is held to determine taxability. Also, the thing that nobody here ever mentions is that corporations cannot give gifts according to the IRS and tax law. The gift tax rules that are quoted relate to individuals only. These "gifts" are items that would be deductible by the corporation, if it was a US corporation and therefore taxable. If anyone thinks that the casinos don't deduct comps on their tax returns, they are fooling themselves.

2)I answered this in a subsequent post, but the quick answer is that the rake was already deducted.

3)The magnitude of the change determines the problems that will arise. A small time player is likely to have less of a problem than a higher stakes player. The statute of limitations never starts if a person doesn't file a tax return, so the person that doesn't file anything is open to more potential problems.

4)My guess is that the exempt is relating to withholding taxes. The reason that you claim exempt is because you are unlikely to make enough in your early jobs as a student (usually the reason that allows you to claim exempt) to have a significant tax liability.

5)Your professor is giving very bad advice here. If he is a CPA, then he has knowingly given incorrect tax advice that also asks you to lie about your taxes. In most states, he could lose his license for this. I can tell you that NY would take his license in a second and hit him with a stiff fine if a statement like that was reported to the Department of Education. I would admit that the IRS is most likely to find out when you try to get the money back to the US bank, but he is wrong when he thinks that you would have a good case in court. If you try to take something like this to court the IRS gets nasty with charges of money laundering and the defense will likely cost you more than the amount that you tried to transfer back into the US.

david050173 · #46 08-23-2005, 05:17 PM

[ QUOTE ]
[ QUOTE ]
3) One shows an effort to follow the rules. One shows a delibate effort to defraud the US taxpayers. Who do you think is going to get a harsher penalty?

[/ QUOTE ]
This was assuming in the second scenario that the person is just blissfully ignorant.

[/ QUOTE ]

The ignorance defense has had a very poor record in court....