Tax Question: W2 Forms from Party?

[jsnipes28]

My CPA was telling me that if i were able to verify my income from Party via a W2 form that I would be able to get around the SE tax. Anyone heard of this or know if this is really an option?

Thx

[Aytumious]

Of course its not an option.

[Red Lion]

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Of course its not an option.

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[DING-DONG YO]

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Of course its not an option.

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Your CPA is a moron. You only get a W-2 from your employer. Since you aren't technically employed by party poker (even though it may feel that way sometimes with the rake), then you can't get a W-2.

[jsnipes28]

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Of course its not an option.

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Your CPA is a moron. You only get a W-2 from your employer. Since you aren't technically employed by party poker (even though it may feel that way sometimes with the rake), then you can't get a W-2.

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K thanks. I didn't think this was an option otherwise lots of people would be doing it, but figured I would ask anyway. Don't mind askng a dumb question to potentially save 15k /images/graemlins/smile.gif.

[stormy455]

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Of course its not an option.

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Your CPA is a moron. You only get a W-2 from your employer. Since you aren't technically employed by party poker (even though it may feel that way sometimes with the rake), then you can't get a W-2.

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Technically, that's true, but I think you are being a nit. U.S. casino's give jackpot winners a W-2G. Since Party is not regulated by the U.S. government they won't provide W-2Gs to their customers so as has been pointed out that isn't an option. I don't believe that having W-2Gs will make any difference on whether or not your gambling income is subject to SE tax anyway. The test is whether or not you are a professional gambler. I'd suggest you get advice from a CPA that specializes in gambling issues. It is pretty complicated, and most CPAs just aren't up to speed on it.

[DING-DONG YO]

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Of course its not an option.

[/ QUOTE ]

[/ QUOTE ]

Your CPA is a moron. You only get a W-2 from your employer. Since you aren't technically employed by party poker (even though it may feel that way sometimes with the rake), then you can't get a W-2.

[/ QUOTE ]
Technically, that's true, but I think you are being a nit. U.S. casino's give jackpot winners a W-2G. Since Party is not regulated by the U.S. government they won't provide W-2Gs to their customers so as has been pointed out that isn't an option. I don't believe that having W-2Gs will make any difference on whether or not your gambling income is subject to SE tax anyway. The test is whether or not you are a professional gambler. I'd suggest you get advice from a CPA that specializes in gambling issues. It is pretty complicated, and most CPAs just aren't up to speed on it.

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I'm being a nit? LOL.

I'm a CPA and everything you just said is correct. Even if party was to give you a W-2G, which they won't, it would show you have withheld 0 for SE taxes. Same as if you won a jackpot at Ceasar's and they gave you a W-2G.

However, it sounds like the OP's CPA wasn't thinking W-2G, he was thinking W-2. He was probably thinking if you have income on a W-2, then you're employed by someone and aren't subject to SE, which is 100% incorrect.

Search some of the threads in this forum from the winter. Lot of good tax stuff in there.

[stormy455]

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Of course its not an option.

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Your CPA is a moron. You only get a W-2 from your employer. Since you aren't technically employed by party poker (even though it may feel that way sometimes with the rake), then you can't get a W-2.

[/ QUOTE ]
Technically, that's true, but I think you are being a nit. U.S. casino's give jackpot winners a W-2G. Since Party is not regulated by the U.S. government they won't provide W-2Gs to their customers so as has been pointed out that isn't an option. I don't believe that having W-2Gs will make any difference on whether or not your gambling income is subject to SE tax anyway. The test is whether or not you are a professional gambler. I'd suggest you get advice from a CPA that specializes in gambling issues. It is pretty complicated, and most CPAs just aren't up to speed on it.

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I'm being a nit? LOL.

I'm a CPA and everything you just said is correct. Even if party was to give you a W-2G, which they won't, it would show you have withheld 0 for SE taxes. Same as if you won a jackpot at Ceasar's and they gave you a W-2G.

However, it sounds like the OP's CPA wasn't thinking W-2G, he was thinking W-2. He was probably thinking if you have income on a W-2, then you're employed by someone and aren't subject to SE, which is 100% incorrect.

Search some of the threads in this forum from the winter. Lot of good tax stuff in there.

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Okay, I'm the nit. /images/graemlins/blush.gif I suspect that the OP misunderstood his CPA rather than the CPA being a moron. I was an accountant in a casino, and most people couldn't tell you the difference between a 1099, W-2 or @-2G. As for the SE tax, I don't think the IRS has decided if they want to treat gambling income as self-employment income or not and since we gamblers make up a small % of the population, I don't think most CPAs are aware of the issues involved. Your advice to search the threads is great.

FWIW, I'm not a CPA, but I did pass the exam (or did I stay at a holiday inn express?)

[jsnipes28]

Wait, so is there any way to avoid the SE tax? That is a large amount I could save if it is possible.

Could you just not pay it and tell IRS if they asked that you thought it was unclear or something>

[stormy455]

There are people on this forum that are much more qualified to answer your questions than I am. There were some very good discussions last fall and I'd suggest you look at them. Most people will file as non-professionals. That means that they should include their gross winnings (by session) in their income. The losses can be deducted (up to the gross winnings) as an itemized deduction. In this case there would be no SE taxes due. If gambling was your primary source of income(that is to say if you were in the business of gambling rather than gambling as a hobby) you should file as a professional. In that case, you could report the net income and take deductions for legitimate expenses related to your gambling. You would have to pay SE tax. You decide whether or not to file as a professional. If the IRS challenges your filing status, it will be up to you to prove them wrong. As long as you make a good faith effort and have a basis for your decision, you probably won't get penalized, but you will have to pay interest on any back taxes due. Once again, I'd highly recommend finding a CPA that deals with gambling issues and searching these forums for discussions. Any good CPA should be able to do some research and keep you legal, but unless they have much experience you'd need to help them out by being informed asking them the right questions.

[C0pernicus]

Another issue I dont know the answer to is whether there is a combined maximum of SE taxes and SS withholdings as an employee. I would assume that at least 1/2 the SE tax is capped in that way.

[broiler]

The SS portion (12.4%) is capped at the wage limit ($90k for 2005) for both the employer and employee share. This cap applies to the combined earnings for an individual for all sources of income that are subject to employment taxes. The Medicare portion (2.9%) is uncapped for both halves of the tax.

[ubercuber]

You might be able to call it a hobby in good faith if you have not had a profit 3 out of the last five years. But I am just throwing that out there, I have zero expertise.