How do poker bonuses fit in with taxes?

[tytygoodnuts]

Do bonuses get taxed in America?

[TheHip41]

bonuses are income, the same that money won playing poker is income, the same as money earned at a job. It's all income, all taxable.

[tytygoodnuts]

That's what I though. Thanks for clarifying.

[TWINUNO]

when do you start clarifying poker taxes. I dont make a steady income, and dont have a over a 2k bankroll. How do i prove or not prove any of my winnings?

[Benholio]

[ QUOTE ]
when do you start clarifying poker taxes. I dont make a steady income, and dont have a over a 2k bankroll. How do i prove or not prove any of my winnings?

[/ QUOTE ]

You don't have to prove any winnings.

[mosquito]

[ QUOTE ]
[ QUOTE ]
when do you start clarifying poker taxes. I dont make a steady income, and dont have a over a 2k bankroll. How do i prove or not prove any of my winnings?

[/ QUOTE ]

You don't have to prove any winnings.

[/ QUOTE ]

One of the most eloquently understated posts I have seen. Thank you for the humor.

They will require proof of offsetting losses, of course.

[kc_bandit]

Okay - here goes . . .

I am a tax attorney, so I know a little about the subject of income taxes. The rule is that any "accession to wealth" is treated as taxable income unless there is a specific exception in the code (e.g., tax free interest, life insurance proceeds, gifts or bequests, etc.). Poker winnings, bonuses or rakeback are all accessions to wealth, and are therefore taxable.

Do not assume that you will not need to substantiate your winnings. If you claim you only won $5,000 during the year, but the IRS finds $15k of withdrawals from your poker account at PP during the year, then you will have to justify why your winnings are lower than your withdrawals. Be prepared to do that.

As stated above, you will also need to substantiate your losses. But remember, unless you qualify to treat poker as your profession (a difficult test to pass, but not impossible), your gambling losses are not "above the line". They are itemized deductions (Schedule A)- subject to various limitations - and they do NOT offset your winnings if poker is not your profession.

In fact, if you don't itemize (i.e., you use a standard deduction), you basically lose all of your losses for income tax purposes since you cannot offset them against your winnings.

I hope that helps everyone. Taxes are a B!tch. At the end of the day, the odds of an IRS agent jumping all over gambling winnings is a long shot unless the numbers are very large - or you have other issues impacting your return.

JC

[jah7_fsu1]

At what amount of withdrawls do you have to file? I'm in college and have no other job, what is the minimum I have to make to get audited?

[Delphin]

[ QUOTE ]
At what amount of withdrawls do you have to file? I'm in college and have no other job, what is the minimum I have to make to get audited?

[/ QUOTE ]

IRS 1040EZ Instructions (http://www.irs.gov/pub/irs-pdf/i1040ez.pdf)

Chart A—For Most People
IF your filing status is . . . THEN file a return if your gross income* was at least . . .
Single $ 8,200
Married filing jointly** $16,400
*Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside
the United States (even if you can exclude part or all of it).

Chart C—Other Situations When You Must File
You must file a return using Form 1040A or 1040 if any of the following apply for 2005.
• You had net earnings from self-employment of at least $400.

So it's either 400 or 8200 depending on whether poker is considered self-employment.

[TWolf2006]

Move to Canada.

[MyTurn2Raise]

[ QUOTE ]
Move to Canada.

[/ QUOTE ]

and pay 50% in taxes


move to politics


Back to the original topic, keep in mind that tax courts don't work like criminal courts in the US. It's not "innocent until proven guilty." It's your job to prove your innocence if accused. You better have good documents and such supporting your position. Otherwise, you will get nailed.

Of course, audits are rare, especially so for low income earners.

[thedustbustr]

Audits are rare for low limit players. However, bankroll growth is exponential if managed properly. In 4 months I went from a $75 deposit playing $10NL to $5000 playing 200NL today. In 2005 I will file about $2000 in gambling income (I have other jobs that bring me above the threshold). In 2006, if I continue to play poker full time during academic breaks (I'm a student and don't play much during school), my 2006 net will be somewhere around $15000 (conservative estimate, including a projected move up to 400NL this summer). In 2007 I'll be filing some big bucks if everything follows the same exponential growth rate.

There will be a large rise in poker audits in the next couple years.

They are allowed to audit three years back.

If you see your poker winnins increasing, it would be wise to pay now, because once you do have relevant income from gambling in the IRS's eyes, your chance of audit is much much higher.



I am not a tax attourny, but I will be filing my meager winnings at SSNL from september through december. It's not like they're taking a quarter of it when the net is so small.

[jah7_fsu1]

Do they notice the "withdrawl checks"? I'm a low limit player but I've probably cashed out around 2,000 in the last 4 months (this is not all profit neccessarily). I keep a record (pen and paper) of each session and the net gain or loss for each session. Some of that money withdrawn came from bonuses and some from overdepositing.

(Sorry I'm an idiot and haven't ever filed taxes before)

I really appreciate the help guys it is hard to find good non conflicting info about this type of thing.

[Osric]

I was planning on filing this year using my Poker Tracker stats to show my profit...my thinking is that if I get audited, PT will be a fairly reliable document that I can use to show my win/loss. But the problem comes in with bonuses because I have no f'in clue how much I have made in bonuses this year. I just haven't tracked it at all. Should I "guestimate" or what?

I mean, it's not like I can write 10 different online companies and say, "I need this info for my 1040 form and even though you have no recognition at all by the US government, I'd like to know how much you gave me in bonuses this year."

And even if I could do that and get a response from the site, I don't necesarrily want them to say to themselves, "we're paying this guy way too much in bonuses..."

[scorer]

question is.......why would you declare anything.....

[scorer]

you guys are leaving a paper trail with your neteller accounts..theres the issue

[Osric]

[ QUOTE ]
question is.......why would you declare anything.....

[/ QUOTE ]

Cuz I don't want to be a "bottom" if the IRS catches up with me and ships me off to some place where bad things happen to pastey white, flabby guys? /images/graemlins/grin.gif

[spliff]

[ QUOTE ]
you guys are leaving a paper trail with your neteller accounts..theres the issue

[/ QUOTE ]

I dont understand this !

[TWolf2006]

[ QUOTE ]
[ QUOTE ]
Move to Canada.

[/ QUOTE ]

[ QUOTE ]
And pay 50% in taxes

[/ QUOTE ]

No taxes in Canada on casino or poker winnings. And 50% in taxes in employment income only occur to people who make a lot of money. My paycheques are only taxes at 18%.

[Finite_Risk]

How do you define "wins and losses"

Is it by hand...by session?

I cant see anyone being able to say...I won 10k in the hands I won and then go and itemize the 8k they lost in the hands they folded/didnt win.

Sessions might be doable...but does that mean you'd have to say..."my winning sessions equal 10k up...that's income" and "my losing session equal 8k...I itemize deduct that"

Or do you pay tax on the net amount that you can document (PT, etc).


Hopefully that was clear

[WhiteWolf]

[ QUOTE ]
question is.......why would you declare anything.....

[/ QUOTE ]

Because some people consider felony tax evasion to be -EV.

[WhiteWolf]

[ QUOTE ]


Is it by hand...by session?

....

Sessions might be doable...but does that mean you'd have to say..."my winning sessions equal 10k up...that's income" and "my losing session equal 8k...I itemize deduct that"



[/ QUOTE ]

The sessions method is correct.

[Cosimo]

[ QUOTE ]
Move to Canada.

[/ QUOTE ]

It doesn't work that way. Any US citizen is obligated to pay US income tax on income earned no matter where they reside. The only way to evade this responsibility is to renounce your US citizenship, which is an irreversible action and prevents you from ever setting foot back in the US.

not a lawyer, etc etc.

[scorer]

neteller is connected to your bank account..and when you take money out of neteller it goes into your bank acct....is that not a paper trail...i know an employee who told me offshore in sports theres a guy who makes upwards of 100k a year and nobody will never know....

[Malificent]

I keep it all in Quicken. Easy enough to do, plus that allows me to generate all sorts of useful reports.

[rocketplayer]

[ QUOTE ]
neteller is connected to your bank account..and when you take money out of neteller it goes into your bank acct....is that not a paper trail...i know an employee who told me offshore in sports theres a guy who makes upwards of 100k a year and nobody will never know....

[/ QUOTE ]

Give me his name I'll send him care package to his future address at Danbury Correctional.
/images/graemlins/mad.gif

[spliff]

[ QUOTE ]
neteller is connected to your bank account..and when you take money out of neteller it goes into your bank acct....is that not a paper trail...i know an employee who told me offshore in sports theres a guy who makes upwards of 100k a year and nobody will never know....

[/ QUOTE ]

I'd say, cash out to your neteller debit card, and only use it while abroad in cash-machines - that should be pretty safe.

[Nuevo99]

If you are in the US, your Neteller debit card is really connected with Omnibank in Louisianna. When you load your money to your card, what you really are doing is transfering it from Neteller (which is out of the country) to a bank in the country.

So it is within US control, dont kid yourself.
(not to mention the more publicity it gets the more likely it's going to get looked into)

[betadecay]

What happens if you get Party or neteller to mail you a check and you cash it at a check cashing store. Will that be super hard to trail?