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[QUOTE="dmorris68, post: 1281822, member: 40397"]
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."  [URL="http://www.irs.gov/taxtopics/tc419.html"]Per IRS Tax Topic 419.[/URL]

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 [U]you will[/U] be paying tax on it regardless.
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