Tax Issue

[Bluffking3d]

I've made about 25-30k in past 6-9months playing poker online. I have never cashed out over 9000$ to my bank. Im a college student with no income. I recently put about 15k in mutual funds on etrade. The rest is in my checking account. Should I report this income or is it to little to ever get noticed by IRS? Also aren't gambling winnings offset bygambling losses? Therefore couldnt I cash out all the money from checking account and mutual funds and then say I lost it in a casino and avoid taxes? (Because If I were to lose it in casino there would be no receipt of losses) Any input you could give me would be greatly appreciated. Thanks

[N 82 50 24]

That is enough that you could get into some serious trouble if audited. Of course, you're always unlikely to get audited, but the etrade and banking transactions might be a red flag that would increase your chances of being picked.

You should pay them. The "i lost it in a casino" approach won't work without proof -- While you might not *NEED* a receipt 100%, they obviously won't believe you if they see:

credit 15K from Party
debit 15K to etrade

Maybe if you had something like:

credit 15K from Party
debit 15K wire to Bellagio

and you didn't have any wire back in. Even then the agent would want to know how and when you lost it, preferably with a paper trail.

[Bluffking3d]

If I were to get audited what would be the likely penalites for this? Another problem is if I pay taxes I'm not sure exactly how much I have made? (Due to spending some of earnings and other various playing expenses that may be deductible) Should I estimate? If I estimate and I'm wrong would I get in same amount of trouble as if I didnt report at all? Or would penalties be less severe? I dont really have any records of winnings, just know that I made around 25-30g this yr. Also I probably made 5-10g last year and didnt report it.. Is there anything I should do about that?
Thanks

[SumZero]

I am not a tax lawyer, you should have one, you should pay your taxes, standard disclaimer.

The penalties for not reporting income are much, much, much worse than for reporting but miscalculating the amount you need to pay. Smallish amounts of money that aren't reported are still crimes and the IRS doesn't consider 10K or 15K a small amount. Basically if you don't report your income you are risking possible jail time if you get caught. If you make a good faith effort to report it as accurately as possible you are risking, at worse, taxes and penalties. Personally doing the thing that means not risking jail seems like a no brainer to me.

[N 82 50 24]

That's seem pretty much accurate to me. Like SZ, I am not an expert by any means. But it's common sense that if you report 15,000 even and it turns out to be 16,349, you're not going to jail. If you report 0 and it was 16,349, you could very well go to jail -- not saying you WILL, just saying I think it's over the amount they need to be able to send you there if they really wanted it.

[5thStreetHog]

[ QUOTE ]
If I were to get audited what would be the likely penalites for this? Another problem is if I pay taxes I'm not sure exactly how much I have made? (Due to spending some of earnings and other various playing expenses that may be deductible) Should I estimate? If I estimate and I'm wrong would I get in same amount of trouble as if I didnt report at all? Or would penalties be less severe? I dont really have any records of winnings, just know that I made around 25-30g this yr. Also I probably made 5-10g last year and didnt report it.. Is there anything I should do about that?
Thanks

[/ QUOTE ]Agreed with other posters.Just one thing,the 5-10g you made last year,there is a chance you could be ok there.Their is a minimum earned income needed to be required to file federal.So,if you made on the low end of that number(5-6g),you might not have been required to file.Now this assumes you had 0$ of other income,if you had any other income at all you certainly would pass this filing limit.There are other variables too.Go to IRS website and there is a good section on this,they actually dont want you to file if you dont have to.Also,state tax laws vary from this,minimum filing number will also vary.But as far as this year and 25-30g`s,cmon bro,you wouldnt exactly be Al Capone,but obviously there is no legal way around not claiming this.And netting win/loss is also not correct.(maybe in theory,but not by the law,unless you file as a pro)By the way im no tax expert lol,so dont trust me,do some research. Good Quick Info For Poker Winnings And Taxes (http://www.onlinepokerfaq.com/guide/us-taxes.html)

[Indiana]

Just report what u won. You won't go to jail for not reporting it, but why sleep poorly over the next few yrs for a few grand?

Indy

[BigBiceps]

Actually there is no statuate of limitations for tax fraud. If he makes a mistake then it goes away after 3-4 years (Fed/State).

So he would have to sleep poorly for the rest of his life, since by making this post, not reporting it would clearly be tax fraud.

Not reporting = penalties, interest, and possibly jail time.

[Wake up CALL]

[ QUOTE ]
Agreed with other posters.Just one thing,the 5-10g you made last year,there is a chance you could be ok there.

[/ QUOTE ]

Not good advice unless he played one session and went on a terrific heater. To make 5 to 6k don't you think he won many times this to net his $5K?

[Fore59]

I have some tax experience. Just report it man. With knowing your exact situation its difficult to determine what the penalities would be. Putting aside the monetary penalities, you also need to think about the stigma of having a tax fraud conviction on your record...not something potential employers will not look highly on.

Be safe and report it.

[kslghost]

You realistically can get away with losing some at a live casino, but you're going to need documentation and records of your individual wins and losses as "proof". They will CERTAINLY know about your winnings based on bank account transfers and will ask how this money got there and stuff.

I definitely wouldn't recommend doing this though, as not getting in trouble with the IRS is worth paying taxes... Get Turning Your Poker Playing into a Business and consider this advice.

[ChexNFX]

"How To Turn Your Poker Playing into a Business"

Is this book any good? I may pick it up if I hear a couple good things about it.

[SumZero]

[ QUOTE ]
You realistically can get away with losing some at a live casino, but you're going to need documentation and records of your individual wins and losses as "proof". They will CERTAINLY know about your winnings based on bank account transfers and will ask how this money got there and stuff.

I definitely wouldn't recommend doing this though, as not getting in trouble with the IRS is worth paying taxes... Get Turning Your Poker Playing into a Business and consider this advice.

[/ QUOTE ]

Right. And along these lines don't think you are being clever if you decide to buy/find losing lottery tickets/horse race tickets (buying them from people after the drawing/finding them at the track after a race) in order to cancel your wins. It has been tried and didn't turn out so well.

[5thStreetHog]

[ QUOTE ]
[ QUOTE ]
Agreed with other posters.Just one thing,the 5-10g you made last year,there is a chance you could be ok there.

[/ QUOTE ]

Not good advice unless he played one session and went on a terrific heater. To make 5 to 6k don't you think he won many times this to net his $5K?

[/ QUOTE ]Your right,good point.