Income Tax on Poker Winnings

Now I haven't heard anything on the issue, and it seems like it would be a pretty big issue seeing that I'm sure there are a lot of poker players (not me) who are winning big at the online tables. The question is...must poker winnings be stated on an income tax return. Let's say you win some small amount of $300. Must it still be stated? I'm just wondering. It's not like i've won anything haha.

bwrobbel said:

Now I haven't heard anything on the issue, and it seems like it would be a pretty big issue seeing that I'm sure there are a lot of poker players (not me) who are winning big at the online tables. The question is...must poker winnings be stated on an income tax return. Let's say you win some small amount of $300. Must it still be stated? I'm just wondering. It's not like i've won anything haha.

Click to expand...

This has been asked many times in this forum. It is truly so complicated, that it just cant be handled properly in a forum setting. Best to find one of the several sites (or subsites of one of the major poker forums) dedicated to US Players and taxes on Poker.

The easy uncomplicated answer is...yes, the $300 you win is fully expected by law to be included in your income tax calculations.

Here are a couple of articles that you might find useful on taxes:

http://www.pokernews.com/news/2006/3/tax-tips-poker-players.htm

http://www.cardplayer.com/cardplaye...ticles/15283-tax-strategies-for-poker-players

Taxes must be paid, trying to be greedy will only brings trouble for yourself in the future. But online poker winning and taxes is a pain in the ass, consult a CPA for better understanding. $300 or $0.03 its income.

interesting...

Here is an interesting question, though: after reading the articles posted, it makes statements about deposits of $10,000.00 or more.

Let's say, for example, that I am making about $300.00 per week. I decide that I want to transfer that profit every week into my bank account. So, hypothetically, if we take $300.00 x 52 weeks = $15,600.00 per year. Will a bank report these deposits to the IRS? In other words, do banks check to see where these direct deposits are coming from and report them without your consent to the IRS if they feel that you are earning money illegally?

It seems as though small profits such as these could be no problem, but if you do get audited, you're in trouble. So, assume that other than your poker earnings, you are an honest taxpayer. The chances of you being audited are slim to none in this case...but there is a chance.

Of course...if you are in situations where the chances of being audited are high, I would not be trying to earn poker winnings online without reporting them.

Thoughts? Ideas? Comments?

I thought it was $600.

WEC said:

This has been asked many times in this forum. It is truly so complicated, that it just cant be handled properly in a forum setting. Best to find one of the several sites (or subsites of one of the major poker forums) dedicated to US Players and taxes on Poker.

The easy uncomplicated answer is...yes, the $300 you win is fully expected by law to be included in your income tax calculations.

Click to expand...

mls1024 said:

I thought it was $600.

Click to expand...

It depends per country, in the Netherlands the standard is 29% (does not matter if its 1$ or 1M$). But if they say its your income they can make it 52% (income tax). Thats why my friend is moving to Malta where its 5%.

For US players ALL winnings are taxable. Be it $1.00 or $1000.00 you are liable to pay taxes. Here's a few more sites to checkout:

http://www.gambling-law-us.com/Articles-Notes/online-gambling-tax.htm

http://www.onlinepokerfaq.com/guide/us-taxes.html

http://www.taxabletalk.com/posts/1198018566.shtml

Grindit9 said:

It depends per country, in the Netherlands the standard is 29% (does not matter if its 1$ or 1M$). But if they say its your income they can make it 52% (income tax). Thats why my friend is moving to Malta where its 5%.

Click to expand...

He should move to Britain, we pay nothing. The weather may not be as good though...

In Sweden, winnings from sites within the EU are tax exempt.
Winnings from sites outside the EU are taxable income.

What a load of hogwash.....

When I have a job, I pay my income tax, it is taken out before I get my hands on it and therefore, I assume what little money is left over, to be my own.

What I chose to do with it is my business alone. If I gamble, then it is ME taking the risks (calculated gambles) with MY money, not the government.

If I've already paid income tax to get this cash in the first place, why does the government think that they should get a cut when I invest my money in something other than their stocks and shares, and I make a tidy profit on it? (Well... I might do some day!!)

It seems to me that governments worldwide, think that they have complete autonomy over its populace and their finances!!!

Would they issue me with a tax rebate should I lose my shirt, my home etc. through gambling?

Would they bollocks!!!

Let me tell you how it will be,
There’s one for you, nineteen for me,
‘Cos I’m the Taxman,
Yeah, I’m the Taxman.
Should five per cent appear too small,
Be thankful I don’t take it all.
‘Cos I’m the Taxman,
Yeah yeah, I’m the Taxman.

- The Beatles

tpb221 said:

For US players ALL winnings are taxable. Be it $1.00 or $1000.00 you are liable to pay taxes. Here's a few more sites to checkout:

http://www.gambling-law-us.com/Articles-Notes/online-gambling-tax.htm

http://www.onlinepokerfaq.com/guide/us-taxes.html

http://www.taxabletalk.com/posts/1198018566.shtml

Click to expand...

This. ^^^

I use a great book that helps me with my poker winnings & taxes:

http://stickspoker.blogspot.com/2008/06/book-review-how-to-turn-your-poker.html

In the US first it is legally considered income and therefore taxable and reportable. Now with that said when you play at a live casino whether it be cards or slots or whatever they do not have to report it to the Irs unless there is a single payout of $1200.00 or more. So it is your decision on anything less what to do. Be honest and report it all or not and I am sure how you already file your taxes can probably answer that question.

I kinda skimmed over this thread but in Canada poker winnings are not taxable unless it is you major source of income. ie if you make 70k at your regular job you can make 69.99k at poker and not pay tax. FWIW.

mls1024 said:

I thought it was $600.

Click to expand...

No, $600 is the threshold at which you and the IRS must be issued a 1099 form for non-wage income. Less than $600 does not require a 1099, however any income no matter how small is still considered taxable income and you are legally obligated to claim it. However it doesn't apply to gambling winnings anyway -- there is a special W-2G form which is used to report gambling winnings. Any casino or gambling payer is required to issue a W-2G for "certain gambling winnings or if you have any gambling winnings subject to Federal income tax withholding." Per IRS Tax Topic 419.

dogfish44 said:

If I've already paid income tax to get this cash in the first place, why does the government think that they should get a cut when I invest my money in something other than their stocks and shares, and I make a tidy profit on it? (Well... I might do some day!!)

Click to expand...

Umm, because personal profit = income? You're being taxed on the profits generated from the wager, not on the amount of the wager itself. No different than earnings from stock investments. And just like any other investment earnings, you would typically offset taxes on gambling winnings by also declaring your gambling losses, which are listed as an itemized deduction (with losses limited to the amount of winnings claimed).

The issue here with online poker of course, at least until it is legalized and regulated in the US, is that offshore poker sites are not obligated, and won't, report anything at all the to the IRS. So it's really based on the honor system between you and the IRS (and perhaps your bank, if your deposits trip their reporting alarms). And while you might get away with not reporting small winning today, if the pending legislation to legalize and regulate online poker succeeds -- as I'm sure we're all hoping -- then you can be certain your winnings will be automatically reported to and tracked by the IRS, so you will be paying tax on it regardless.

forget all that junk, if ur winning money, go get a tax lawyer.

I don`t think that this will ever be a real issue since they can`t ever track your profits unless every poker room out there will one day cooperate with the IRS

Damn those taxes. What I find strange is...I had a customer who used to be a chef on a boat (can't remember if it was a cruise ship or personal ship), anyways he cleared over 100K a year and since he was on international waters he paid no taxes. No site is based in the US (that I know of) so wouldn't that be the same thing?? Not that it matters to me cause I suck anyway.lol

sky4ever said:

I don`t think that this will ever be a real issue since they can`t ever track your profits unless every poker room out there will one day cooperate with the IRS

Click to expand...

I can assure you that if the UIGEA gets overturned or an exception is made for online poker, then it will be because the US plans to regulate and tax it like they do other legal domestic gambling activity. And what are you going to do if, say, PokerStars is told they can legally operate in the US but they must turn over the records of all US winnings paid over the last X years? While probably unlikely, it could happen. The IRS doesn't have to have a TIN/SSN to tie taxable income back to you. You must provide a legit name, address, and DOB to all the poker sites I'm aware of, which is generally enough info to legally ID you. Just sayin', be careful with what you assume.

RichKo said:

Damn those taxes. What I find strange is...I had a customer who used to be a chef on a boat (can't remember if it was a cruise ship or personal ship), anyways he cleared over 100K a year and since he was on international waters he paid no taxes. No site is based in the US (that I know of) so wouldn't that be the same thing?? Not that it matters to me cause I suck anyway.lol

Click to expand...

If you are a US citizen or legal resident, your income is taxable no matter where you earn it, even overseas. The thing is, in most cases it's up to you to report it, otherwise the IRS cannot easily find out about it since overseas institutions are not require to report it themselves.

That said, I would strongly discourage people from contemplating tax fraud of any kind -- particularly where larger sums are concerned (like a 100K/yr salary) -- because the IRS can also be very resourceful. Not only that, but other people with an ax to grind could report you. Banks could get audited. There are a number of ways the IRS could "find out" without direct reporting, however unlikely it may be. If you're going to take a shot at getting away with it, I would certainly keep it to myself and not be posting about doing so on a public internet forum. The evidence could be used against you, and all that.

dmorris68 said:

And what are you going to do if, say, PokerStars is told they can legally operate in the US but they must turn over the records of all US winnings paid over the last X years? While probably unlikely, it could happen. The IRS doesn't have to have a TIN/SSN to tie taxable income back to you.

Click to expand...

This is more likely then you think. I can not see them giving PS or FT a license until they turn over old records. They will make you give them your ss# as part of thier license and then they will send the IRS all the old data. Simple as that. One of the US biggest concern is tracking money. They will get those old records-bet on it.

Ok,I know that you can deduct your direct expenses against your winnings. Only if your winnings exceed your losses but can you deduct your other expenses, computer, travel, food, lodging, seminars, as you would in any other business?

rugby0 said:

Ok,I know that you can deduct your direct expenses against your winnings. Only if your winnings exceed your losses but can you deduct your other expenses, computer, travel, food, lodging, seminars, as you would in any other business?

Click to expand...

If poker is your profession and not just a hobby, then those would be legitimate business expenses like any other. Even some hobby expenses are deductible if the intent of the hobby is to make a profit. But you have to be very careful, because the IRS makes very clear distinctions between business and personal/recreational activities, and don't usually allow them to mix (i.e. you can't deduct a computer as a business expense if you also use it for anything personal, same with a home office). However this is getting into specific tax advice which you should seek from a tax professional, not a poker forum.

I can probably answer for the UK.

Unless your trade/profession is poker player, gambling winnings are not taxable income.

The point at which playing poker stops being a hobby and becomes a profession, I dont believe is defined specifically anywhere but common sense would dictate that someone who holds down a job and plays in the evenings for fun, even profitable fun, is not exercising a trade or profession

On the other hand someone who scheduled their time around poker with the intension of making money to support themselves financially either entirely or partially is doing something completely different.

WEC said:

This has been asked many times in this forum. It is truly so complicated, that it just cant be handled properly in a forum setting. Best to find one of the several sites (or subsites of one of the major poker forums) dedicated to US Players and taxes on Poker.

The easy uncomplicated answer is...yes, the $300 you win is fully expected by law to be included in your income tax calculations.

Click to expand...

LuckyChippy said:

He should move to Britain, we pay nothing. The weather may not be as good though...

Click to expand...

Indeed the weather, but my friend has a couple of his own companies 2 so its more interesting to live there. And on Malta there are a lot of people working in the poker industry making it very interesting for him to lobby there and make new contacts.