The Tax Man Cometh - Page 2

WichitaDM · #11 12-14-2005, 12:40 AM

Im not a dependant, i have no primary source of income. I list in on line 21 other income. If you read the link at the top it tells you this is an option. Im not 100% sure this is right, but i have been doing it for 3 returns with no problems. No problems with state taxes either.

edit- i realize you are supposed to add up winning and losing sessions and deduct and all that. What constitutes a session. A table,day,week,year? I have never seen the IRS specify what this is for online play. Until they do its one long session for me.

Niediam · #12 12-14-2005, 12:42 AM

But what do you do if you get audited next year and they say you owe them $200,000 in unpaid taxes, penalties, and interest? [img]/images/graemlins/frown.gif[/img]

Just because you havn't been caught at this point doesn't mean cheating on your taxes is a smart thing to do. A lot of people here have speculated that in the next few years the IRS may start taking a closer look at poker winnings now that it has become so popular...

WichitaDM · #13 12-14-2005, 12:44 AM

How am i cheating? Show me the tax code that says im cheating on my taxes...

Edit-Until the government more clearly defines a "session". Who is to say it is a day or a month or a year? Once this is clarified i will gladly do whatever it is they want me to do.

TheMetetron · #14 12-14-2005, 01:03 AM

If it's your primary source of income, you are self-employed. Period. Especially if you have been doing it for years.

Not filing as such is attempting to avoid paying the SE tax. This is not going to end good when you do get audited one year. All that interest is going to add up.

WichitaDM · #15 12-14-2005, 01:07 AM

SO you are telling me after fighting allowing people to file as professionals for years, fighting it all the way to the supreme court, now they require it? Do you have a link to any information on this?

What if i am a fulltime student?

TheMetetron · #16 12-14-2005, 01:09 AM

[ QUOTE ]
SO you are telling me after fighting allowing people to file as professionals for years, fighting it all the way to the supreme court, now they require it? Do you have a link to any information on this?

[/ QUOTE ]

Link to me showing them fighting a winning player who's primary income is gambling from filing as self-employed.

I do know they fought losing players from trying to file as a professional for obvious reasons. I've never seen them do the contrary.

The IRS wants you to file as self-employed if that's what you are. In fact, they will require it. There is no way getting audited and having 3 years of your only income being "Gambling" that they are going to let you slide.

TheMetetron · #17 12-14-2005, 01:11 AM

[ QUOTE ]
What if i am a fulltime student?

[/ QUOTE ]

You may be able to get away with not filing as professional if you can show you are a fulltime student. Still they are going to want you to inflate your AGI like hell by doing wins/losses separate and losses under your deductions.

But a non-student, who plays full-time for a living is not going to get away with not filing as SE.

TheMetetron · #18 12-14-2005, 01:12 AM

[ QUOTE ]
Just because you havn't been caught at this point doesn't mean cheating on your taxes is a smart thing to do. A lot of people here have speculated that in the next few years the IRS may start taking a closer look at poker winnings now that it has become so popular...

[/ QUOTE ]

This is very true. Just because you haven't been caught doesn't mean you aren't cheating on your taxes. Tons of people cheat and don't get caught for a long time, if ever. That doesn't mean they weren't cheating.

WichitaDM · #19 12-14-2005, 01:17 AM

"So you ask, why not declare myself a "professional" gambler. A few years ago that would not have been possible. Luckily a gambler named Robert P. Groetzinger fought the IRS on this issue. In a case that made it to the Supreme Court, the court held that you can legally be a professional gambler."

Taken from the link in the first post. It doesnt sound like they require you to file as a professional it sounds like the fought people wanting to do this and lost. Why then would they now require people to do this. Find me a link to where the irs states you are required to file as a professional. I dont think especially with the lack of IRS literature on online poker that i am cheating on my taxes filing how i have been.

TheMetetron · #20 12-14-2005, 01:31 AM

Give me a link to the case, I want to read the specifics.

From the IRS website:

[ QUOTE ]
You are self-employed if any of the following apply to you:

* You carry on a trade or business as a sole proprietor;
* You are a member of a partnership or limited liability company that files a Form 1065, U.S. Return of Partnership, that carries on a trade or business; or
* You are otherwise in business for yourself.

You are also self-employed if you have a part-time business, in addition to your regular job.

[/ QUOTE ]

This is exactly what you are.

Also, from the page on SE tax:

[ QUOTE ]
You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies.

* Your net earnings from self-employment (excluding church employee income ) were $400 or more.
* You had church employee income of $108.28 or more

[/ QUOTE ]

Anybody attempting to play poker for a living is obviously self-employed, no? You can't really dispute that fact. Otherwise, what are you... unemployed? Why don't you try to collect unemployment too?

Even if you are a student, I think you qualify under the part-time business as being self-employed with regards to that income.

My view on this comes from talking to my finacial advisor who has an MBA in Finance and is also a CPA; I've also done my own research on the issue and concluded the same as she did. I recently talked to a second financial advisor for a different reason to get a second opinion on retirement plans and she concluded the same as the first one I went to as far as self-employed status.

Everyone should really spring for the money for a good financial planner if you are making decent money from poker. They should be able to advise you on these matters instead of listening to an internet message board. But I highly doubt you are going to find one that think what you are doing is OK (unless, they have low morals, which some shady ones do).

Trust me, I'd love to not file as self-employed. It'd save me about $15-20k a year, but I'd rather not do something illegal.