Can I write off deposits?

When I withdraw money from a poker site can I write off the initial deposits on my taxes?

If you declare as a professional poker player on your tax return, yes you can.

If not, it's considered a pleasure. Unless you need to do it to further your business.

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Not deposits. A deposit isn't considered a loss until you lose it. Now once you lose it, you can deduct the loss but only to offset your winnings. You can't deduct losses in excess of winnings. But you don't have to be a pro to do that -- anybody can do that too.

One of the distinctions with pro vs amateur players is that pros can deduct additional costs as business expenses, i.e. travel and buy-ins to live tournaments.

dmorris68 said:

Not deposits. A deposit isn't considered a loss until you lose it. Now once you lose it, you can deduct the loss but only to offset your winnings. You can't deduct losses in excess of winnings. But you don't have to be a pro to do that -- anybody can do that too.

One of the distinctions with pro vs amateur players is that pros can deduct additional costs as business expenses, i.e. travel and buy-ins to live tournaments.

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So basically for someone who plays as a hobby I can for example deposit $300 then withdraw $800 and write off the $300 initial deposit and only pay taxes on the $500 profit?

In the US tax code, it states you are allowed to deduct $3,000 per year, even as a carry-over loss from previous years. If you are a casino rat or a casual gambler, would assume you have lost over $3,000 in the year. Keep tract of the days you play and the money you take to play; some type of log.

....that is over and above the win/loss deduction. Meaning if you win $25,000 but loss $26,000 you may still take the additional loss on the 1040 form.

A9ofHearts said:

So basically for someone who plays as a hobby I can for example deposit $300 then withdraw $800 and write off the $300 initial deposit and only pay taxes on the $500 profit?

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No, re-read my post. Get deposits out of your mind, nothing about a deposit is deductible.

It's about profit and loss. As long as a deposit still sits in your account, it's neither -- it's no different than if it were still sitting in your bank account. Only what you lose through sitting down at a poker table becomes a loss that is subject to deduction.

To use your example, if you deposit $300, spend all $300 of that in BI's, and win $800 gross, then yes you can deduct $300 from the $800 gross winnings to yield a taxable income of $500. However if you only spent $100 in BI's, then you could only deduct $100 of that, the remaining $200 would still be your asset and neither taxable nor deductible.

Basically, if you play strictly tourneys, you're expected to total up all of your buy-ins. That constitutes your losses. Then total up all of your cashes, that's your gross winnings. If you win more than you lost, then you can deduct the losses before claiming the difference as income. If you lost more than you won, you can't deduct anything as a recreational player. You may be able to as a pro, I'm not sure as I'm neither a poker pro nor a tax pro, but from your questions I'm guessing you're not either.

Ok. Thanks.

You can not write off the deposit unless you lost it all. However, if you keep good records. You can write off buy ins to tournaments that you did not win. You can write off the loss of a cash game as long as you were down. You can NOT write off more than you have won. Example: You send 100 bucks to enter a tourney. You lose. You are down $100 that can be wrote off as a loss. However, the next day, you buy in again at $100 but you win $1000. So, you profited $900. You have to claim the $900 as profit and still write off $100.

The key to all above is your record keeping. It must include at least, the amounts you won or lose the time, date and place you played. screen shots of the buyin amounts both won and lose would be valuable support materials. Declarinf yourself a professional is a simple item.

Just have to say, glad this is something I don't have to worry about when I start crushing online poker for tens of dollars LOL.

Misdir said:

In the US tax code, it states you are allowed to deduct $3,000 per year, even as a carry-over loss from previous years. If you are a casino rat or a casual gambler, would assume you have lost over $3,000 in the year. Keep tract of the days you play and the money you take to play; some type of log.

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Misdir said:

....that is over and above the win/loss deduction. Meaning if you win $25,000 but loss $26,000 you may still take the additional loss on the 1040 form.

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No, there is no carry-over loss on gambling. (well, except the stock market )

The best quotes were from dmorris68 who seems to have general smartness in many areas and lost2qandisa.

The problem with asking tax questions in a forum like this is people who do not know what they are talking about spout up with the completely wrong answers. Especially since gambling is a completely different aspect in many ways from the normal tax treatment. (note: The US Govt sticks it to gamblers almost like no other country)

Seemed to me there was a tax section somewhere on the forum where someone answered questions about taxes, if not, there are several places you can find the information. As a completely general non-complex rule (which means there are alot of exceptions and complications being the US tax code), you basically owe any net profits made from poker, gambling as part of income in your tax form, which can not be reduced by any other deductions except other gambling losses. (it is much more complicated than this really, please see an accountant familiar with poker, gambling issues if you have serious questions) Net Profits is really the wrong term as if you follow the rules exactly it is more complex than that, but it seemed a simple enough term. (Another note: A nonresident alien of the United States cannot deduct gambling losses on Schedule A of Form 1040NR) Stick it to the aliens, lol

From the IRS themselves...

It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.

The funny thing is, if you keep a daily written record of your gambling activities throughout the year, including buyins, cashouts, profits, the IRS will accept the document as accepted proof of those wins and losses without further detail in most cases. But try to make this document all in one day as you prepare for an audit, and watch yourself go down in flames...

rugby0 said:

Declarinf yourself a professional is a simple item.

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It isn't, there are rules and requirements.

dmorris is right. Also if you file as a pro you can carry over losses with some criteria.