Pay Your Taxes

[amulet]

i keep reading posts asking how to avoid paying taxes. this is disturbing. all 2+2 poster share a common bond. i don't want my fellow poker players to end up in trouble. based on the posts i have read regarding taxes i expect trouble for many here. the IRS will catch up with most people who break the law.

i like living in the united states, and i like all the benefits from driving on good roads to the protections offered under our constitutional. sure there are problems, and i often disagree with our elected leaders. but i choose to live here.

all poker winnings must be declared for all US citizens.

additionally, when a person files their taxes the form asks if you have any overseas accounts or are a director/officer of any overseas companies. fraud is not something you want to be charged with.

tax evasion is not something you want to be charged with.

pay your taxes.

[5thStreetHog]

Gee thanks...Doh!!!

[Jeff_B]

also don't admit to a crime on a very public forum.

[amulet]

that is great advice jeff! especially after reading the posts.

[Kilillan]

tax...es?

[Suigin406]

now that u bring it up...where exactly would i go for help in paying my online gambling taxes?? any help would be appreciated. Thx...

[amulet]

a good account, or a tax lawyer. if you need a tax lawyer who has a lot of experience representing casinos and gamblers just let me know. i'll give you the name and number of the guy i use.

[Suigin406]

[ QUOTE ]
a good account, or a tax lawyer. if you need a tax lawyer who has a lot of experience representing casinos and gamblers just let me know. i'll give you the name and number of the guy i use.

[/ QUOTE ]

OK, i'll look into these areas and see what I can come up with...if I run into any problems, I'll drop u a PM...thank you for the help...

[bumpking]

[ QUOTE ]
a good account, or a tax lawyer. if you need a tax lawyer who has a lot of experience representing casinos and gamblers just let me know. i'll give you the name and number of the guy i use.

[/ QUOTE ]

I've read varying posts about how to report them. Are they supposed to go under "other income" along with all other gambling, or is this supposed to be a schedule c as if it were a business, with write-offs and all?

Obviously the latter sucks as you have to pay 13.5% self employment tax. I've heard that if it's part time, then it's "other" income. If full time, then it's schedule c. What's the exact definition and rules? Anyone know?

Thanks in advance,
-BK

[Poker_Ace]

[ QUOTE ]
the IRS will catch up with most people who break the law.

[/ QUOTE ]

LOL -- give me a break. The IRS catches up with a tiny percentage of people who cheat on their taxes where, as here, nobody is filing W-2s or 1099s.

There are arguments for paying taxes on poker winnings, but this is not one of them.

[ChexNFX]

[ QUOTE ]
[ QUOTE ]
the IRS will catch up with most people who break the law.

[/ QUOTE ]

LOL -- give me a break. The IRS catches up with a tiny percentage of people who cheat on their taxes where, as here, nobody is filing W-2s or 1099s.

There are arguments for paying taxes on poker winnings, but this is not one of them.

[/ QUOTE ]

If you are very good with withdrawing small, odd amounts, it may just look legit. Big withdrawls of more than a few thousand consistently, will be flagged. I read somewhere that $3,000 EFT is when the most banks flag big brother.

[Suigin406]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
the IRS will catch up with most people who break the law.

[/ QUOTE ]

LOL -- give me a break. The IRS catches up with a tiny percentage of people who cheat on their taxes where, as here, nobody is filing W-2s or 1099s.

There are arguments for paying taxes on poker winnings, but this is not one of them.

[/ QUOTE ]

If you are very good with withdrawing small, odd amounts, it may just look legit. Big withdrawls of more than a few thousand consistently, will be flagged. I read somewhere that $3,000 EFT is when the most banks flag big brother.

[/ QUOTE ]

i thought most banks filled out a SAR was filled out for 1K?? i could be wrong here, someone correct me if i am...

[amulet]

this is changing quickly. over time they will now catch up with most. and they will subpoena a lot of the poker records in the next few years. they can and will go back 7 years.

[bumpking]

[ QUOTE ]
this is changing quickly. over time they will now catch up with most. and they will subpoena a lot of the poker records in the next few years. they can and will go back 7 years.

[/ QUOTE ]

That still don't mean a thing. If they can prove that you won $100k last year playing online poker, then you can say you lost $80k in a real B&M cardroom or Vegas. No way they can track that!

[RoundGuy]

[ QUOTE ]
That still don't mean a thing. If they can prove that you won $100k last year playing online poker, then you can say you lost $80k in a real B&M cardroom or Vegas. No way they can track that!

[/ QUOTE ]

And you're keeping the 80k...where? Under your mattress?

[aces_full]

[ QUOTE ]
this is changing quickly. over time they will now catch up with most. and they will subpoena a lot of the poker records in the next few years. they can and will go back 7 years.

[/ QUOTE ]

LOL subpoena what poker records??? You really think offshore sites like Party,Stars,etc would cooperate. You have got to be kidding me. Even if they did, do you honestly think the IRS is going to go through every single record of millions of US online gamblers to see who owes money. No freakin way.

The only way people are likely to be caught not reporting poker winnings is if they are audited. There is a small percentage of random audits, but for most, unless your tax return raises some red flags, it just gets a quick check and is processed.

I do agree with you on one thing though: If you make all or a significant portion of your salary through poker winnings, then you would be an idiot not to report it. I really don't think the average small stakes recreational player with a full time job that might make a few thousand extra a year at the poker table has much to worry about.

[Zetack]

[ QUOTE ]
[ QUOTE ]
this is changing quickly. over time they will now catch up with most. and they will subpoena a lot of the poker records in the next few years. they can and will go back 7 years.

[/ QUOTE ]

That still don't mean a thing. If they can prove that you won $100k last year playing online poker, then you can say you lost $80k in a real B&M cardroom or Vegas. No way they can track that!

[/ QUOTE ]

Unfortunately, the IRS requires you to report the $100K as income, you have to claim the 80k as itemized deductions. So if the IRS proves you had 100k in online winning you didn't declare, you're screwed.

Also, by $100K in online winnings I asuume you mean net. If you won a million in your various winning sessions and lost 900k in your losing sessions, you are required to report the million as income.

Finally, the "hey I lost 80k at a casino and you can't prove I didn't" isn't going to cut it, you need more documentary evidence of your losses.

So, basically, under your strategy you are screwed.

Have a nice day.


--Zetack

[amulet]

it doesn't work that way. good luck if you think that. you must have detailed records to substantiate your claim.

[CaptVimes]

[ QUOTE ]
[ QUOTE ]
this is changing quickly. over time they will now catch up with most. and they will subpoena a lot of the poker records in the next few years. they can and will go back 7 years.

[/ QUOTE ]


That still don't mean a thing. If they can prove that you won $100k last year playing online poker, then you can say you lost $80k in a real B&M cardroom or Vegas. No way they can track that!

[/ QUOTE ]

Speaking as a CPA, if you claim $80,000 in gambling losses the IRS may just want to see you someday. That is why you need to keep records. If you have no records and they audit you, you can kiss all those deductions goodbye. Which then means you pay not only the tax due, but also penalties and interest. The IRS doesn't have to prove anything, you do.

I would think the B&M's keep track of who buys & Redeems chips.

You earned the money, pay the taxes.

[nws103]

[ QUOTE ]

i like all the benefits from driving on good roads to the protections offered under our constitutional.

[/ QUOTE ]

phew...for a second i thought you were talking about the united states of america. that gave it away though. what sort of magical fairy land are you referring to?

[Python49]

[ QUOTE ]
There is a small percentage of random audits, but for most, unless your tax return raises some red flags, it just gets a quick check and is processed.

[/ QUOTE ]
Yeah and actually filing your taxes correctly actually increases your chances of an audit if you are filing the wins and trying to deduct the losses... high deductions = increased chance of audit.

Everyone should pay their taxes.

But I mean let's be honest here... the chances of getting in trouble or "caught" are pretty ridiculous... first the banks would have to report you which they won't do unless its over a 10k (im positive this is what the amount is unless its been changed recently). The IRS has much bigger fish to fry than people trying to evade their poker winnings.... I plan to report my taxes simply because the money ive made I want to do things with that will certainly raise red flags but if someone wanted to get their poker winnings in cash and owe no taxes its really not that hard. Simply cash out the money to your bank account, take a trip to the casino, withdraw from ATM there, keep a journal recording how much you "lost" and you'll have the proof on your bank statements as well.

The CPA I went and talked to on 3 different occasions as I was growing my bankroll (each time it got bigger I got more worried that i might need to report) he told me the chances of being audited are less than 1%, and when you are audited you basically pay the penalties and fines which are just %s of what you owe'd.... surely some of the mathematicians here can do the EV on this using less than 1% chance of owe'ing X% (penalties) + %(fines) + 35% taxes and figure out what the +EV choice is.

With that said, just pay your taxes and not worry about it. It's the right thing to do.

[I_C_ALL]

SAR stands for Suspicious Activity Report. I believe for the brokerage industry it is either 3k or 5k(just had this on my cont. ed and still don't remember it) It is for suspicious activity and not for the amount of the withdrawal. Thus a 6k withdrawal could go through no problem, but a 5k withdrawal could get flagged based on circumstances.

Link to some more information:

http://www.bankersonline.com/compliance/sartrends.html

May want to try and google cause that link kinda sucks. lol

[Python49]

The 10k I was referring to was a 10k deposit into your account. I don't know about withdrawls... just going by what I read off the banks website/friends who work at banks/CPAs

[jlkrusty]

I asked a person at a bank if they could provide me with a record of checks I had cashed there over the past year. The person said they could not except for checks deposited in my account. I told them I had not deposited one particular check, but it was really important that I see records because someone owed me some money and they claim I had cashed a check. They again said I would have to go to the source of the check because they did not keep records of that unless I deposited it into my account.

That sounded odd to me. Are there really no records of cashed checks below "X" dollars that are not deposited into my account? I sure would like the bank records to verify my own records, but how can I get them? If I can't get them, then can anyone else, like the IRS or a court? I have the feeling that this was just a misinformed bank person, and that if I went to the manager, I could probably get some kind of printout. I thought someone on here might know more.

Also, regarding losses at a B&M casino, suppose my record consists of a notebook that lists the dates that I visited B&M casinoes and how much I won or lost on the particular visit. Is that a sufficient record or do I need something more? I ask because I know that casinoes do not always track everyone. If you use a player's card, you are tracked more accurately, but if you don't, the casino often does not track you (and how could they if you have never even given them your name?).

[Lego05]

Someone told me that you can't deduct gambling losses in excess of your other income. An example would be: So if my gross winnings were 40k and losses were 23k so net I made 17k I should report 40k winnings and deduct 23k as losses. However, according to this you can't deduct more than your other income so if I made 10k working part time at McDonalds or whatever I would only get credit for 10k in deductions and not 23k. This is worrisome for me because my income besides poker is $0.00 and this would prevent me from getting deductions and I'd be paying taxes on like 40k when I only made around 17 or 18k. The guy who told me this is a friend who graduated college 2 years ago and now works as an accountant - his job is to do people's taxes and he said he was familiar with doing taxes on gambling winnings.

Does anybody have any information on this one way or another?

[CaptVimes]

[ QUOTE ]

Also, regarding losses at a B&M casino, suppose my record consists of a notebook that lists the dates that I visited B&M casinoes and how much I won or lost on the particular visit. Is that a sufficient record or do I need something more? I ask because I know that casinoes do not always track everyone. If you use a player's card, you are tracked more accurately, but if you don't, the casino often does not track you (and how could they if you have never even given them your name?).

[/ QUOTE ]

That should be good.

Suprised your bank didn't record the checks you cashed. I've hand banks show me copies of the checks I have deposited, of course that was a business account so it may be different.

[CaptVimes]

[ QUOTE ]
Someone told me that you can't deduct gambling losses in excess of your other income. An example would be: So if my gross winnings were 40k and losses were 23k so net I made 17k I should report 40k winnings and deduct 23k as losses. However, according to this you can't deduct more than your other income so if I made 10k working part time at McDonalds or whatever I would only get credit for 10k in deductions and not 23k. This is worrisome for me because my income besides poker is $0.00 and this would prevent me from getting deductions and I'd be paying taxes on like 40k when I only made around 17 or 18k. The guy who told me this is a friend who graduated college 2 years ago and now works as an accountant - his job is to do people's taxes and he said he was familiar with doing taxes on gambling winnings.


[/ QUOTE ]

This is wrong. Gambling losses cannot exceed gambling winnings. Your other income, wages, interest, etc., has nothing to do with how much you can deduct.

[tempogain]

say i net $100,000 playing online. what records do i need? how do i report it? should i just report a net and to hell with it? what would be adequate documentation of wins and losses?

[godofgamblers]

I plan on reporting my 20k net somehow and just paying the 3-4k. That might not be the proper way to do it, but it seems its enough to keep me out of big trouble. Right...?

[Bobby Cannoli]

The other problem with tracking SARs in an effort to track >income< taxes, is that the two aren't necessarily related.

I made several $K last year and never withdrew. This year I made a $2K withdrawal, but am down for the year. So I paid taxes last year, with no SAR, and won't pay taxes this year, when I did have a withdrawal.

[mojobluesman]

Are gambling/poker winnings taxed the same rate and in the same way as other earned income?

In other words, do you have to pay SS and medicare taxes (at 2 levels) as well as income tax at your typical income tax rate?

I read something about the self employment tax that seems to refer to the SS and Medicare taxes, but not the income taxes.

[Copernicus]

[ QUOTE ]
Someone told me that you can't deduct gambling losses in excess of your other income. An example would be: So if my gross winnings were 40k and losses were 23k so net I made 17k I should report 40k winnings and deduct 23k as losses. However, according to this you can't deduct more than your other income so if I made 10k working part time at McDonalds or whatever I would only get credit for 10k in deductions and not 23k. This is worrisome for me because my income besides poker is $0.00 and this would prevent me from getting deductions and I'd be paying taxes on like 40k when I only made around 17 or 18k. The guy who told me this is a friend who graduated college 2 years ago and now works as an accountant - his job is to do people's taxes and he said he was familiar with doing taxes on gambling winnings.

Does anybody have any information on this one way or another?

[/ QUOTE ]

This is incorrect. Your deduction of gambling losses is solely related to your gambling winnings and has nothing to do with other income.

[Copernicus]

[ QUOTE ]
say i net $100,000 playing online. what records do i need? how do i report it? should i just report a net and to hell with it? what would be adequate documentation of wins and losses?

[/ QUOTE ]

You are required to keep records of wins or losses at each "session" gambling. Unfortunately there is no definition of a "session".

For ring games online I cant imagine youd be challenged (on the basis of incomplete records) if youve recorded the site, time you sit down to your first table, time you leave your last table and net wins for that period of time.

However, say you buy into a satellite for $100 that gets you a $1000 entry into another satellite that gets you a $10000 ME seat, and you lose on your first hand of the ME.

The definition of a session is critical here, because, assuming there is no option to cash out your satellite wins, you can argue that your net for the session was -$100.

On the other hand, the IRS could argue that you had a winning session of $900, another winning session of $9000 and a losing session of $10,000.

There could be huge tax differences in the two.

[jlkrusty]

[ QUOTE ]
Suprised your bank didn't record the checks you cashed. I've hand banks show me copies of the checks I have deposited, of course that was a business account so it may be different.

[/ QUOTE ]

The difference might be that you deposited your check. Making a deposit appears directly on your bank account. But, just cashing does not produce any readily available record from your bank (or at least that's what the bank person told me). Does your bank also keep records of your checks cashed that have no portion of them deposited, or do they only keep records of the ones that are deposited?

It seems to me that if there are no readily verifiable ways to cooberate or disprove your own private record, then your private records should be more than sufficient. I mean, I think there is a very small chance that my private record has a small mistake on it, but I have no way of really verifying. So, I guess I am just stuck with whatever I've written on my private notepad, right?

[latefordinner]

I know this has been written about a million times before, but are people really itemizing each session? It is not uncommon for me to win $2000 one day and lose $1500 the next. I can't believe I have to claim an income of like one million dollars for the year and 950k in deductions on what is actually an income of about 50k. that seems like it will raise all sorts of redflags (income greater than a million, deductions 95% of that)

[geormiet]

use common sense. If you are reporting 1mil in wins and 950k in losses I think you are probably following the letter of the law too closely.

It woudl be nice though if people woudl be frank about what they've done or what they plan on doing re: poker taxes, but it seems everyone is paranoid about posting that sort of thing on a public message board.

[Joe Camel]

[ QUOTE ]
I know this has been written about a million times before, but are people really itemizing each session? It is not uncommon for me to win $2000 one day and lose $1500 the next. I can't believe I have to claim an income of like one million dollars for the year and 950k in deductions on what is actually an income of about 50k. that seems like it will raise all sorts of redflags (income greater than a million, deductions 95% of that)

[/ QUOTE ]

Start believing, because that is exactly what the IRS expects you to do. Hope you don't live in Massachusetts or another state where you can't deduct the $950K from your taxable income (for state income tax only).

[Wake up CALL]

[ QUOTE ]
It seems to me that if there are no readily verifiable ways to cooberate or disprove your own private record, then your private records should be more than sufficient. I mean, I think there is a very small chance that my private record has a small mistake on it, but I have no way of really verifying. So, I guess I am just stuck with whatever I've written on my private notepad, right?


[/ QUOTE ]

Here is how it works, suppose the IRS performs an audit. They then determine that you won $5,000,000 and lost $3,000,000. Your records say otherwise, they say we don't believe you, pay your taxes. You either pay or go to tax court, your records appear incomplete, now three years later you pay the tax, the interest and the penalties, the IRS is happy, you are sad.

[Unabridged]

having alot of money in the gambling winnings column or filing as a pro is a huge red flag, you just put yourself on the audit map.
if you want to avoid taxes it is simple, watch you bank account balances so they don't get too high and keep your transactions below $3000.

[RoundGuy]

[ QUOTE ]
if you want to avoid taxes it is simple, watch you bank account balances so they don't get too high and keep your transactions below $3000.

[/ QUOTE ]

Were you born stupid, or did your mama have to teach you....

[Unabridged]

[ QUOTE ]
[ QUOTE ]
if you want to avoid taxes it is simple, watch you bank account balances so they don't get too high and keep your transactions below $3000.

[/ QUOTE ]

Were you born stupid, or did your mama have to teach you....

[/ QUOTE ]

i think giving away money that will be used to kill people is stupid and evil.

[Parlay Slow]

[ QUOTE ]
[ QUOTE ]
I know this has been written about a million times before, but are people really itemizing each session? It is not uncommon for me to win $2000 one day and lose $1500 the next. I can't believe I have to claim an income of like one million dollars for the year and 950k in deductions on what is actually an income of about 50k. that seems like it will raise all sorts of redflags (income greater than a million, deductions 95% of that)

[/ QUOTE ]

Start believing, because that is exactly what the IRS expects you to do. Hope you don't live in Massachusetts or another state where you can't deduct the $950K from your taxable income (for state income tax only).

[/ QUOTE ]

You'd end up paying hundreds of thousands in Federal anyways when AMT kicked in.

If you follow the letter of the law for gambling taxes then it's impossible to be a poker pro.

[RoundGuy]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
if you want to avoid taxes it is simple, watch you bank account balances so they don't get too high and keep your transactions below $3000.

[/ QUOTE ]

Were you born stupid, or did your mama have to teach you....

[/ QUOTE ]

i think giving away money that will be used to kill people is stupid and evil.

[/ QUOTE ]

Well, that doesn't answer my question -- but it does prove my point. Thanks.

[Wake up CALL]

[ QUOTE ]
If you follow the letter of the law for gambling taxes then it's impossible to be a poker pro.


[/ QUOTE ]

OMG! Has anyone told all those guys on TV this jewel of wisdom? It is gonna break their peapicken little hearts. /images/graemlins/heart.gif

[Parlay Slow]

I'm not really sure what you mean by that comment, but for the tournament pros it's not so bad.

For a big cash game pro like Chip Reese it seems conceivable to me that he could have something like $40 million in profits on the top line and $30 million in losses on the bottom line.

His $40 million gross income means that with the AMT he'd be looking at a $10 million+ tax bill.

[broiler]

Where are you coming up with your tax calculation? His tax would probably be in the 4-5 million range. Gambling losses are allowed for AMT, so his tax would not be equal to his net income. It is highly unlikely that anyone with income at that level would be near AMT due to the regular tax rate being higher than the AMT tax rate.

[Parlay Slow]

AMT is based on gross income

gambling losses do not deduct from gross income

[Unabridged]

[ QUOTE ]
Where are you coming up with your tax calculation? His tax would probably be in the 4-5 million range. Gambling losses are allowed for AMT, so his tax would not be equal to his net income. It is highly unlikely that anyone with income at that level would be near AMT due to the regular tax rate being higher than the AMT tax rate.

[/ QUOTE ]

so you think him or other pros actually pay out 50% of their winnings as taxes? they deal entirely in cash/chips. i'd be surprised if they claim >25% of their winnings for cash games

[neverforgetlol]

"I choose to live here" is not an argument justifying taxation, if that's what the op meant.

[jlkrusty]

[ QUOTE ]
[ QUOTE ]
It seems to me that if there are no readily verifiable ways to cooberate or disprove your own private record, then your private records should be more than sufficient. I mean, I think there is a very small chance that my private record has a small mistake on it, but I have no way of really verifying. So, I guess I am just stuck with whatever I've written on my private notepad, right?


[/ QUOTE ]

Here is how it works, suppose the IRS performs an audit. They then determine that you won $5,000,000 and lost $3,000,000...

[/ QUOTE ]

How is the IRS going to determine that you won $5,000,000 and lost $3,000,000?????? Suppose you claim you won $2,500,000 and lost $500,000. Who is correct? What records will the IRS subpoena to determine that you actually won $5,000,000? Your bank records? What if your bank records really don't say much of anything. Then what? Will the IRS subpoena Party Poker records? Full Tilt? Bodog? Will any of these institutions ignore the IRS request?

Does someone know what the IRS uses to "determine" things in an audit?

The problem that many of us are bothered by is that if a session was equal to every time we sat down on a new table, then we might very easily have $1,000,000 in winnings and $960,000 in losses. Claiming $40,000 in winnings is fine, but claiming $1,000,000 in income seems to create all sorts of problems. For example, you can only claim medical expenses as a deduction for the amount in excess of 7.5% of your income. Say I had a medical emergency and ended up spending $20,000. If my overall winnings were $40,000, then I could deduct $17,000 of that. However, if my net profit were $40,000 but my session wins were $1,000,000 (with a deduction of $960,000 in losses), I could only claim my medical expenses if they exceded $75,000 (7.5% of $1,000,000)!!! There are other problems as well.

So, the question remains: how will the IRS determine what you won on each of your sessions. Is the IRS going to rely on your bank records? On your purchases? Or, will they try to go after records from the offshore internet poker sites? Will you get screwed if you combined any sessions together? What if I sit down to play poker on one table, play for a bit, leave the table, take a pee, and sit down at another table; are those two seperate sessions?

I don't want to cheat the U.S. government, but I don't want to get screwed right and left because my intermitent pee doubled the number of sessions I played. There has just got to be a more reasonable approach to all of this.

So, again, what things other than our personal notepad, our bank records and our spending records (checks, credit cards, etc.) is used to determine what our actual profits and losses were? Does anyone know?

[broiler]

I'm sorry, but you are flat out wrong on this one. Gambling losses for a non-professional are an other miscellaneous itemized deduction. These are allowed for AMT.

A person that itemizes does not start with gross income for AMT. If you itemize, you start with AGI less itemized deductions, then you add back some of your itemized deductions. Gambling losses are not one of these added back deductions. You can see this for yourself by looking at Form 6251.

[broiler]

I have no idea what they do for their taxes, but that was not my point. If $10 million was the amount claimed as winnings, then it is very possible that 50% was paid, once you figure in state taxes.

[mmbt0ne]

[ QUOTE ]
I'm sorry, but you are flat out wrong on this one. Gambling losses for a non-professional are an other miscellaneous itemized deduction. These are allowed for AMT.

[/ QUOTE ]

[ QUOTE ]
If you follow the letter of the law for gambling taxes then it's impossible to be a poker pro.

[/ QUOTE ]

Who's flat out wrong again?

[broiler]

Your response reminds of the reason that all of the other CPAs and tax professionals stopped posting at 2+2. I try to give a correction to a post and I get a snide, pointless response like yours.

What exactly is your point? Gambling deductions are allowed for AMT for everyone. The only time that there has been a question on this is for non-professionals. The case history cited in the Groetzinger case contains a case that states that professional gamblers do not have to add back their losing sessions for AMT.

Feel free to correct me with your answer, since I'm sure that you are also a CPA or EA and deal with gambling taxes on a regular basis.

[Wake up CALL]

[ QUOTE ]
How is the IRS going to determine that you won $5,000,000 and lost $3,000,000??????

[/ QUOTE ]

In whatever manner they deem suitable, it appears you may have never filed taxes before.

[ QUOTE ]
Suppose you claim you won $2,500,000 and lost $500,000. Who is correct?

[/ QUOTE ]

One guess and if you guess you are correct then go back to answer number one.

[Dizzy]

I watched this video off google last week and I have no Idea if it applies to poker earnings or not but I found it very interesting to say the least...... I live in Canada so it really doesn't appy to me.

we don't pay taxes on gambling earnings.... we win the lotto it is all ours, same with gambling, we can even get back the money the (US)B&M casinos hold back when you get a big payout.

anyway here is a link
http://video.google.com/videoplay?docid=-4312730277175242198&q=Freedom+to+Fascism

if this is inapropriate mods .... feel free to remove.

Dizzy

[Sniper]

[ QUOTE ]
Will the IRS subpoena Party Poker records? Full Tilt? Bodog? Will any of these institutions ignore the IRS request?

[/ QUOTE ]

You should expect that all sites will comply with all gov't requests... however, this isn't really the issue... the burden of proof lies with YOU. In the case of the IRS, to a certain extent, you are guilty, until you can prove yourself innocent, once they start looking at you.

[mmbt0ne]

[ QUOTE ]
What exactly is your point?

[/ QUOTE ]

His post specifically mentions poker professionals. Your's specifically mentions non-professionals. Why don't you just tell us about what dog grooming supplies are tax deductible as well?

[jlkrusty]

[ QUOTE ]
[ QUOTE ]
How is the IRS going to determine that you won $5,000,000 and lost $3,000,000??????

[/ QUOTE ]

In whatever manner they deem suitable, it appears you may have never filed taxes before.

[/ QUOTE ]

Mercy. It's hard to get any answers on here and it feels like I am talking in circles. I have filed my taxes for many, many years, and I have never had any problems. I keep records of my gross receipts and expenses; however, I always wonder if they are detailed or accurate enough. They seem right to me, but how do I really know for sure? The reason I don't really know is because I've never been audited.

Has anyone here actually been audited for how they claimed their gambling winnings? If so, can you share any details of your experience?

People keep saying extremely vague answers here, and I suspect it is because nobody really knows:

I ask, "How is the IRS going to determine what you made?"

You answer, "In whatever manner they deem suitable." Well of course they are going to do it in whatever manner they deem suitable. But, now I have to follow up with the rather obvious question of:

"What manner do they deem suitable?"

And I guess you will answer with:

"Depends on your situation."

And then I'll ask,

"My situation is that I make money from poker. So, what manner is suitable to determine my income from that?"

So, can we just get through all this and get to some real meat. Let's stop talking in such obscure generalities, and try to get to some actual specifics.

People also say that I have to prove my income myself; that the IRS does not prove anything. Well that is true, but there is what lawyers call a shifting burden of proof. If you have a personal record of your wins and losses, then you have met your burden and the burden of proof shifts onto the IRS. That is, once you've met your initial burden (which I believe is met with a personal log that looks reasonable), then it is the IRS's burden to prove it is wrong. This is pretty basic stuff.

However, I keep going back to my initial question which is "what the IRS will use to try to disprove your personal log?" Obviously bank records and purchase receipts will be used, but what else? Has anyone on this forum ever had the IRS successfuly subpoena all your hand logs from an offshore poker site? Anyone?

The thing that would help us the most is to find someone who has actually been audited on their gambling winnings and find out what they went through in proving/disproving their wins/losses.

[Russ Fox]

[ QUOTE ]
His post specifically mentions poker professionals. Your's specifically mentions non-professionals. Why don't you just tell us about what dog grooming supplies are tax deductible as well?

[/ QUOTE ]

Well, a professional nets his wins and losses and files his gambling income on Schedule C. There are no itemized deductions directly related to gambling; thus, gambling won't push a professional player into the AMT.

For the nonprofessional, broiler is correct. Gambling losses are deductible under the AMT. Again, itemized deductions for gambling losses won't push a non-professional player into the AMT.

And broiler's comment regarding your post [ QUOTE ]
Your response reminds of the reason that all of the other CPAs and tax professionals stopped posting at 2+2. I try to give a correction to a post and I get a snide, pointless response like yours.

[/ QUOTE ] hits the nail on the head as to why I rarely post on tax issues...and one of the emphases of my practice is gambling.

-- Russ Fox (EA)

Co-author, "Why You Lose at Poker"

[mmbt0ne]

Well thank God when you do make a post on it you are sure to whore out your services and pimp outside interests. What better could you use 99 posts over 2 years for?

[dafulv]

im sure this has been asked a thousand times but should we pay taxes on winnings like 4k or so? and would consequences be just as harsh if we dont?

[Wake up CALL]

[ QUOTE ]
People also say that I have to prove my income myself; that the IRS does not prove anything. Well that is true, but there is what lawyers call a shifting burden of proof. If you have a personal record of your wins and losses, then you have met your burden and the burden of proof shifts onto the IRS. That is, once you've met your initial burden (which I believe is met with a personal log that looks reasonable), then it is the IRS's burden to prove it is wrong. This is pretty basic stuff.


[/ QUOTE ]

We have all been trying to help answer your questions but it appears that until you get an answer you like you will refuse to believe anyone else. Why do you bother asking if you think you already know the answers?

As stated hundreds of times on this board in the past you cannot shift the burden of proof to the IRS without going to a formal hearing at a tax court. Even then if the IRS can show that any of your records are incomplete it casts doubt on all your claims and I wouldn't want to be you in that case.

[ QUOTE ]
(which I believe is met with a personal log that looks reasonable)

[/ QUOTE ]

This is really hilarious, "looks reasonable"? WTF are you talkingh about, the IRS wants records that are accurate, not records that "look reasonable".

[ QUOTE ]
then it is the IRS's burden to prove it is wrong.



[/ QUOTE ]

Again you can't accept that this is not the case, it is your burden to prove your records are correct, period. As you might say, " This is pretty basic stuff".

[lambchop]

[ QUOTE ]


So, the question remains: how will the IRS determine what you won on each of your sessions. Is the IRS going to rely on your bank records? On your purchases? Or, will they try to go after records from the offshore internet poker sites? Will you get screwed if you combined any sessions together? What if I sit down to play poker on one table, play for a bit, leave the table, take a pee, and sit down at another table; are those two seperate sessions?

So, again, what things other than our personal notepad, our bank records and our spending records (checks, credit cards, etc.) is used to determine what our actual profits and losses were? Does anyone know?

[/ QUOTE ]

Ok, if you do not file your gambling winnings or you do and are subsequently audited and the IRS has reason to believe that you did not fully report your winnings...then the courts have ruled that the IRS is able to reconsruct your income. Now they have several different ways of reconsructing your income, some of which are by bank deposits and by your net worth. They are also able to take a several day sample of winnings and apply that to the whole year...if they so happen to take this sample during a "hot streak" of yours then the burden of proof shifts to you to prove that your income was less than this amount for the year.

When determing the extent of gambling losses and deductions the Cohan Rule is applied which basically allows you a deduction if you don't have records because you MUST have incurred them. Now this is very ambigious I know, and to what amount will differ by taxpayer.

So, the moral of the story is to keep records, buy poker tracker, or if B&M keep a log book. This is all sufficient evidence to prove your income and losses if you do it accurately and with good faith.

Like someone said earlier, there is no definition for an online "session." Just use good judgement and you should be ok. If you are grossing a million dollars a year playing poker then you probably fit the definition of a "profesional" and you should file by filling out a Schedule C and netting your earnings and writing off all of your expenses. Yes, you will have to pay self employment tax but it's probably much better to do it this way. If your wondering, as the courts have ruled, you can file gambling as your trade or business if you "pursue it full time, in good faith, with regularity, and is NOT a hobby."

Either way, if anybody would like me to further detail any of this I will just let me know and everyone have a Happy Thanksgiving!!

-Lambchop

[broiler]

What is your problem? A good tax discussion is going on here and you feel the need to continue with the useless posts. I answered your concern in my response. Your ridiculous question is completely uncalled for.

You also chose to personally attack another respected tax professional for no reason. He also answered your concern and you felt it necessary to treat him like garbage.

Please move your trolling to another forum. The legislation forum doesn't need you or your worthless statements.

[jlkrusty]

[ QUOTE ]
[ QUOTE ]


So, the question remains: how will the IRS determine what you won on each of your sessions. Is the IRS going to rely on your bank records? On your purchases? Or, will they try to go after records from the offshore internet poker sites? Will you get screwed if you combined any sessions together? What if I sit down to play poker on one table, play for a bit, leave the table, take a pee, and sit down at another table; are those two seperate sessions?

So, again, what things other than our personal notepad, our bank records and our spending records (checks, credit cards, etc.) is used to determine what our actual profits and losses were? Does anyone know?

[/ QUOTE ]

Ok, if you do not file your gambling winnings or you do and are subsequently audited and the IRS has reason to believe that you did not fully report your winnings...then the courts have ruled that the IRS is able to reconsruct your income. Now they have several different ways of reconsructing your income, some of which are by bank deposits and by your net worth. They are also able to take a several day sample of winnings and apply that to the whole year...if they so happen to take this sample during a "hot streak" of yours then the burden of proof shifts to you to prove that your income was less than this amount for the year.

When determing the extent of gambling losses and deductions the Cohan Rule is applied which basically allows you a deduction if you don't have records because you MUST have incurred them. Now this is very ambigious I know, and to what amount will differ by taxpayer.

So, the moral of the story is to keep records, buy poker tracker, or if B&M keep a log book. This is all sufficient evidence to prove your income and losses if you do it accurately and with good faith.

Like someone said earlier, there is no definition for an online "session." Just use good judgement and you should be ok. If you are grossing a million dollars a year playing poker then you probably fit the definition of a "profesional" and you should file by filling out a Schedule C and netting your earnings and writing off all of your expenses. Yes, you will have to pay self employment tax but it's probably much better to do it this way. If your wondering, as the courts have ruled, you can file gambling as your trade or business if you "pursue it full time, in good faith, with regularity, and is NOT a hobby."

Either way, if anybody would like me to further detail any of this I will just let me know and everyone have a Happy Thanksgiving!!

-Lambchop

[/ QUOTE ]

Thanks for sharing your insights. Your post is one of the more informative posts on here. I sincerely appreciate it.

I was particularly intrigued by your statements that the IRS takes a several day sampling of winnings and then extrapolates your income from there. I wonder how they do that. I imagine that they might take a random period of time for the tax year, then get all records from all online sites you played on for that period of time, and then extrapolate your income from that. If your stated wins and losses do not approximately match the short period of time, then your burden increases greatly, and you must justify the entire year. Then, you are going to have to show quite a bit more than just personal logs.

My question with the above is whether anyone has ever had the IRS actually obtain hand histories, or your table deposit/withdrawal records from any online poker site to determine income? Is there any case law where the IRS did this, or does anyone have personal experience with this?

[jlkrusty]

[ QUOTE ]
We have all been trying to help answer your questions but it appears that until you get an answer you like you will refuse to believe anyone else. Why do you bother asking if you think you already know the answers?

[/ QUOTE ]

Sorry if I come accross that way, as I really do want answers. And no, I do not consider myself to be a tax expert. I wouldn't be asking if I thought I already knew the answers.

Please understand that many of my questions (or even some statements) are simply me playing devil's advocate. I've done this in order to try to get at some of the finer details of how taxes on gambling works.

[ QUOTE ]
[ QUOTE ]
(which I believe is met with a personal log that looks reasonable)

[/ QUOTE ]

This is really hilarious, "looks reasonable"? WTF are you talkingh about, the IRS wants records that are accurate, not records that "look reasonable".

[/ QUOTE ]

Let me clarify what I meant by this. I did not mean to state that records are sufficient if they show a "reasonable" amount of income. What I meant was that records should be sufficient if they are "reasonably" detailed and showed a "reasonable" and good-faith attempt to be accurate and complete. That's how I meant the term "reasonable." And, that's what I'm asking if the IRS will accept.

If your log is reasonable (as I defined it), then will the IRS be less concerned about splitting hairs over whether you every single session was individually listed (as opposed to combined), and whether you actually won $501 on a session instead of $500?

[ QUOTE ]
Again you can't accept that this is not the case, it is your burden to prove your records are correct, period. As you might say, "This is pretty basic stuff".

[/ QUOTE ]

Well, when I was talking about shifting burdens of proof, I was talking more about tax court itself. But, I recognize that we would all prefer to never get there in the first place.

To avoid ever getting to tax court, here's the hypothetical scenerio I am thinking of:

1. I declare gambling winnings and losses.
2. I get audited.
3. IRS asks me to show records showing my gambling wins and losses.
4. I show the IRS a "reasonably" detailed log of my session wins and losses.
5. I show the IRS my bank records which correlate with my log.
6. I show the IRS what my net worth is (my property and portfolio)
7. The IRS sees that my bank records and my net worth basically match up with my personal log.
8. Because of #7, the IRS is not really concerned about splitting hairs over whether one session was actually two sessions, or whether I won a couple dollars more (or lost a couple more) in any particular session. My log (as cooberated by my bank records and net worth) is therefore accepted as accurate, and the IRS lets the matter go.

#8 is really where my main question is. How far will the IRS go in splitting hairs to determine if your log is accurate? Does the IRS reject your log if even one session is off by even one dollar? What if two sessions were inadvertantly left off because you played another session shortly later and lost everything you won--you forgot to list these two sessions, but were fairly dilligent in listing all other sessions. Do any of these minor mistakes cause the IRS to reject your log? My guess is that the IRS will be reasonable in their approach, but then again, maybe it is unreasonable to think that the IRS will be reasonable about anything.

And for that matter, how will the IRS even determine that you had two sessions (one losing and one winning that offset each other) in the first place? Is there anything else that needs to match up with your log besides your bank records and net worth? Maybe someone here knows of some case law on point or has actually been audited on their gambling winnings.

[amulet]

they are much more likely to use your lifestyle to figure out your income then a small sample. mortgage/rent, car payments, credit card spending, banking, etc.

[BalugaWhale]

I am confused... forgive me for diving in here so late

But instead of filing my gambling income and then deducting my losses (which is pretty much impossible to differentiate from PT, although maybe there is an easy way to determine losses that I don't know)

Why don't I just report my net gain as my income? It's not like the IRS would know any differently without subpoenaing hand history records from the sites themselves, and I think we know that the IRS doesn't want to get involved in that mess.

My question is, I suppose, can't we only report our net gain? That might keep us in a lower tax bracket and make filing much simpler.

Thanks for your help, I am just trying to figure out how to file taxes now that I am no longer a dependent of my parents.

[RoundGuy]

[ QUOTE ]
Why don't I just report my net gain as my income?

[/ QUOTE ]

Because that is against the IRS rules.

[ QUOTE ]
.. and I think we know that the IRS doesn't want to get involved in that mess.

[/ QUOTE ]

Really?? How do "we" know this?

[ QUOTE ]
My question is, I suppose, can't we only report our net gain? That might keep us in a lower tax bracket and make filing much simpler.

[/ QUOTE ]

You may do whatever you like -- I will do it the right way. You need to worry about getting caught -- I don't.


[ QUOTE ]
I am just trying to figure out how to file taxes now that I am no longer a dependent of my parents.

[/ QUOTE ]

Hire an accountant.

[BalugaWhale]

[ QUOTE ]

Because that is against the IRS rules.

[/ QUOTE ]
Sure, but without PT how is anyone going to know their net income/losses? Not really possible I dont think.[ QUOTE ]


Really?? How do "we" know this?

[/ QUOTE ]
Cause the sites aren't subject to US jurisdiction so a whole host of problems is created.

[ QUOTE ]

Hire an accountant.


[/ QUOTE ]
I'm working on it.

Thanks for your smartass tone by the way, I am very genuinely trying to make sure I do this legally and in the most cost effective way possible. From what I understand there is a lot of grey area in the field of online poker.

[Sniper]

[ QUOTE ]
Sure, but without PT how is anyone going to know their net income/losses? Not really possible I dont think.

[/ QUOTE ]

Technically, the IRS requires that you log your activity, PT helps you do this, but if you don't use PT, you still have the responsibility.

[ QUOTE ]
Cause the sites aren't subject to US jurisdiction so a whole host of problems is created.


[/ QUOTE ]

I wouldn't hang my hat on this in ANY way... if the US asks the sites for records, they will get them!

[ QUOTE ]
From what I understand there is a lot of grey area in the field of online poker.

[/ QUOTE ]

Not really... some people are trying to say that there is, to justify their own questionable actions.

[jlkrusty]

[ QUOTE ]
Sure, but without PT how is anyone going to know their net income/losses?

[/ QUOTE ]

I think most everyone agrees that if you report your net win only, and you get audited, you are going to get in trouble.

[ QUOTE ]
[ QUOTE ]
Cause the sites aren't subject to US jurisdiction so a whole host of problems is created.


[/ QUOTE ]

I wouldn't hang my hat on this in ANY way... if the US asks the sites for records, they will get them!

[/ QUOTE ]

I think this is a big unknown. As of yet, not a single person has said that their hands have ever been subpoenaed. Yet, at the same time, that does not mean it won't happen. Also, if the IRS ever does try to get hand histories, it will be interesting to see what a site like Bodog does.

If the U.S. ignores the WTO (World Trade Organization), then it follows that some off-shore sites would ignore a request from the U.S. If the U.S. wants all these off-shore sites to cooperate fully, then maybe the U.S. itself should cooperate with rulings from the WTO.

[ QUOTE ]
[ QUOTE ]
From what I understand there is a lot of grey area in the field of online poker.

[/ QUOTE ]

Not really... some people are trying to say that there is, to justify their own questionable actions.

[/ QUOTE ]

The problem is that this is an odd field that not many people (not even very many accountants) know much about. Thus, it behooves any poker player to try to become educated. Before talking to your accountant, you should know enough so that you can tell if your accountant is full of crap.

If you don't declare any losing sessions, I think an automatic presumption would arise that you have filed a fraudulent return. At the very least, I would say it is a huge mistake to only declare net wins.

[DonButtons]

What about if your being backed? How do tax laws apply?

Do you pay taxes on your % of the winnings?

What if your backer is a bookie, or a big time sports betting loser for the year? Can he deduct his loses to his share of the profits?

[Sniper]

[ QUOTE ]
I think this is a big unknown.

[/ QUOTE ]

I suggest you read the site T&C's more carefully...

[Mitch Evans]

If you only declare your net wins, I think the IRS would be very interested to speak to the only gambler in the US that didn't lose any money in a year.

[jlkrusty]

[ QUOTE ]
[ QUOTE ]
I think this is a big unknown.

[/ QUOTE ]

I suggest you read the site T&C's more carefully...

[/ QUOTE ]

Link?

[imsobroke]

How do you report donkaments? What's a session, 1 donkament? For an easy example say I won $1,000 playing SNG's and lost $900. Is it as easy as putting down $1k for winnings and $900 for losses?

[imsobroke]

[ QUOTE ]
I watched this video off google last week and I have no Idea if it applies to poker earnings or not but I found it very interesting to say the least...... I live in Canada so it really doesn't appy to me.

we don't pay taxes on gambling earnings.... we win the lotto it is all ours, same with gambling, we can even get back the money the (US)B&M casinos hold back when you get a big payout.

anyway here is a link
http://video.google.com/videoplay?docid=-4312730277175242198&q=Freedom+to+Fascism

if this is inapropriate mods .... feel free to remove.

Dizzy

[/ QUOTE ]

Thanks for posting this. Interesting stuff.

[chicagoY]

"i like living in the united states, and i like all the benefits from driving on good roads to the protections offered under our constitution"

you can have all the infrastructure you want for 10 percent of GDP, why does it have to be 40 percent?

[chicagoY]

one year= one big session

[Python49]

[ QUOTE ]
If you only declare your net wins, I think the IRS would be very interested to speak to the only gambler in the US that didn't lose any money in a year.


[/ QUOTE ]
Yeah i'm sure the people that win money at the lotto are also reporting the tickets that didn't win them anything. Whose to say you couldn't have just won a big donkament online? Or whose to say that you didn't just play for a day online and run incredibly lucky at 50/100 nl? If you put down that you won such and such amount and are audited and produce a "journal" that you kept for that day you won all that money... how can they refute this in any way assuming online sites are not giving out any records?

Whose to say that if I withdraw all my bankroll from an ATM in AC and keep a journal each time I go saying I lost an amount totaling to what I withdrew, that i'm not being honest? The problem with the whole thing is that their tax code is making it incredibly too hard to report to begin with, they aren't regulating these poker sites, and the way they want you to report is absurd... until then, I feel that they think any money they do get is a bonus.

[Burnsabre]

This might be a dumb question... but I'm young, slightly anarchistic, and don't know crap about taxes. So, presume a college kid wins a bunch of money, spends it all traveling, and then ends up without enough to pay taxes on it... does he get his the proverbial rape by the IRS..

And next question, US Citizen living in Prague... do I gotta pay taxes? Do I gotta pay state tax?

[hoppscot22]

A question for all those Canterbury people (or other minnesota people). I have been looking for a good accountant (or someone to help with taxes) in the minneapolis area. Anyone have any contacts that they can recommend? I have tried to find one but have been unable to come up with one and I feel like I need to this year.

Thanks

[jj_frap]

Would recent legislation make this a textbook case of taxation without representation?

[jlkrusty]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
I think this is a big unknown.

[/ QUOTE ]

I suggest you read the site T&C's more carefully...

[/ QUOTE ]

Link?

[/ QUOTE ]

[Sniper]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
I think this is a big unknown.

[/ QUOTE ]

I suggest you read the site T&C's more carefully...

[/ QUOTE ]

Link?

[/ QUOTE ]

[/ QUOTE ]

Are you saying you can't find the individual poker site T&C's?

[jlkrusty]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
I think this is a big unknown.

[/ QUOTE ]

I suggest you read the site T&C's more carefully...

[/ QUOTE ]

Link?

[/ QUOTE ]

[/ QUOTE ]

Are you saying you can't find the individual poker site T&C's?

[/ QUOTE ]

Well, let's take Bodog, for example. I have read their entire terms and conditions. There are 32 paragraphs. I cannot find which paragraph in specific you might be referring to that says that Bodog will turn over anything to anyone but the client and Costa Rica.

The following does introduce the 32 paragraphs:

THE PLAYER AGREES THAT THEY HAVE VOLUNTARILY SOUGHT OUT AND ESTABLISHED CONTACT WITH BODOG AND THIS WEB SITE. BY PLACING A WAGER WITH BODOG, THE PLAYER AGREES THAT THEY ARE, FOR THE PURPOSES OF MAKING ANY WAGERING TRANSACTIONS, DEEMED TO COME TO COSTA RICA, THE JURISDICTION OF RESIDENCE OF BODOG, AND ARE ENTERING INTO TRANSACTIONS IN COSTA RICA UNDER THE LAWS OF COSTA RICA. THIS AGREEMENT WILL BE GOVERNED BY THE LAWS THE GOVERNMENT OF COSTA RICA, THE JURISDICTION THAT THE WAGERING TRANSACTION TAKES PLACE IN, AND NO LEGAL ACTION OF ANY NATURE CAN BE INITIATED IN ANY OTHER JURISDICTION SAVE THE JURISDICTION OF THE WAGERING TRANSACTION. THE PLAYER IS RESPONSIBLE FOR OBSERVING GAMBLING PROHIBITIONS OF THEIR RESPECTIVE COUNTRY.

As for the 32 paragraphs of the T&Cs, paragraph 6 talks about record retrieval from the client only:

6. Account Searches and Inquiries. Any additional services requested by a client including, but not limited to, reports, account searches, or account inquiries other than the information available on the web statements, may be subject to an administration fee. This is to be determined on a per incident basis. This fee must be paid in advance, and is refundable if, in the event of a dispute, the evidence favors the Player.

I did not see a paragraph stating that Bodog would turn over records to any other entity. So, I guess I don't know what paragraph you are referring to.

There is a link at the bottom of this page (https://www.bodog.com/join/app/PrepareSignup?signupStartPage=%2fjoin%2fjoin-start.jsp) that will take you to Bodog's terms and conditions.

Which of these paragraphs do you read to say that Bodog will turn over records to the U.S. government? I am not saying you are wrong, I am simply saying I do not know which paragraph you are referring to.

Perhaps you are referring to a T&C at another site. That's why I asked you to pinpoint the reference. I imagine that publicly traded sites (like Party Poker) would be more cooperative since they were so with the UIGEA.

However, even for those sites, is there actually a single incident where any poker site actually turned over hand histories to the United States or any other country? So far, I have not seen a single poster come forward with information like this.

[jlkrusty]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
I think this is a big unknown.

[/ QUOTE ]

I suggest you read the site T&C's more carefully...

[/ QUOTE ]

Link?

[/ QUOTE ]

[/ QUOTE ]

Are you saying you can't find the individual poker site T&C's?

[/ QUOTE ]

Well, let's take Bodog, for example. I have read their entire terms and conditions. There are 32 paragraphs. I cannot find which paragraph in specific you might be referring to that says that Bodog will turn over anything to anyone but the client and Costa Rica...


[/ QUOTE ]

Sniper:

I'm looking at FTP terms and conditions. I still don't know what T&Cs you are talking about:

http://www.fulltiltpoker.com/terms.php

Do one of these T&C paragraphs state that FTP records, hand histories, etc. will be turned over to an entity in accordance with the laws in which country you live? Perhaps I am just not reading them right.

That's why I asked originally for the link. Please pinpoint the T&Cs and the paragraph for which you are referrencing.

[Sniper]

krusty, I don't think you are going to find an explicit reference to turning over HH's, but you might check the fraud sections for references to cooperating with "other agencies"... I am sure this was in Party's, I haven't reviewed the others lately.

My statement still stands though, even if its not explicitely stated, you should not expect that they will not cooperate... or require that you procure the information from the sites, for them!

I would expect any site to comply with a request from the IRS to provide... amount deposited, amount withdrawn, amount won/lost.

[Python49]

And what if the poker account you have been playing on isn't even in your name to begin with.....

[Sniper]

[ QUOTE ]
And what if the poker account you have been playing on isn't even in your name to begin with.....

[/ QUOTE ]

python, if you are signed up at a poker site (against their T&C) with a fraudulent name, for the purpose of cheating on your taxes... you should not be posting about it on an internet message board.

[jlkrusty]

[ QUOTE ]
[ QUOTE ]
And what if the poker account you have been playing on isn't even in your name to begin with.....

[/ QUOTE ]

python, if you are signed up at a poker site (against their T&C) with a fraudulent name, for the purpose of cheating on your taxes... you should not be posting about it on an internet message board.

[/ QUOTE ]

Most of what any of us are writing are in terms (I hope) of hypotheticals. I am trying to get at the nuances of how this all works, and so I have asked some hypothetical questions. I certainly try to file my taxes in a good-faith manner, and I suggest everyone else do the same. No one should ever intentionally try to cheat on their taxes.

That said, Python makes another good point for why offshore sites might be less likely to start sharing their records with third parties.

Overall, in regards to poker records being turned over, I am still uncertain as to whether this would ever happen. I am not finding anything in writing from the online poker sites that states that this will happen, and as far as we know, it has never happened in the past.

Here are the reasons I think a site would be relunctant to share its records:

1. A site may not believe the U.S. has any jurisdiction over them.

2. A site may already believe that its actions in taking U.S. bets are against the UIGEA. A online sporting bet site (e.g., Bodog) certainly knows the U.S. disagrees with it allowing sporting bets, but it does it anyhow. These sites defy the U.S. (maybe partly because the U.S. defies rulings from the W.T.O.). So, why would these sites choose to cooperate with a U.S. records requests? What will the U.S. do (more than what they are currently doing) if a site like Bodog ignores the records request?

3. Customers to an online site are concerned about thier privacy. If site A is more likely to share records than site B, more customers would be attracted to site B. So far as we know, no site has actually turned over its records.

4. A poker site may realize that some of its customers are not properly verified (as Python suggested). Thus, if a records request for person "X" was asked for, the poker site might have low certainty as to whom person "X" really is. So, even though you never used a different alias, the poker site does not know that and has low confidence in what alias you might have used. As such, a poker site might be more inclined to ignore the request alltogether.

Now that doesn't mean a site won't turn over its records. We don't really know. However, I do agree with Sniper in that you should expect it to happen--much in the same way that we should file our return with the expectation of being audited. We should do both not because of the chance of it actually happening, but because it is the right thing to do (and also because we don't want to get screwed over if it does happen). It is right to pay taxes on everything we earn. Even if we knew for 100% certainty that a site would never turn over its records, we should for the sake of principle still state everything as accurately as we can just as though the records were already turned over.

[Sniper]

[ QUOTE ]
However, I do agree with Sniper in that you should expect it to happen--much in the same way that we should file our return with the expectation of being audited. We should do both not because of the chance of it actually happening, but because it is the right thing to do (and also because we don't want to get screwed over if it does happen). It is right to pay taxes on everything we earn. Even if we knew for 100% certainty that a site would never turn over its records, we should for the sake of principle still state everything as accurately as we can just as though the records were already turned over.

[/ QUOTE ]

This paragraph should probably be stickied /images/graemlins/wink.gif

[jrz1972]

[ QUOTE ]
My statement still stands though, even if its not explicitely stated, you should not expect that they will not cooperate... or require that you procure the information from the sites, for them!

[/ QUOTE ]

I haven't read the whole thread, but if this is like any of the other millions of "Do I Have To Pay Taxes?" threads, people are probably hoping that poker sites won't turn their records over to the IRS. As always, this issue is a red herring.

If you happen to get audited (which is unlikely but certainly possible), the IRS is not going to call PokerStars or Neteller or anybody else and ask them for their records. Rather, the IRS is going to call *YOU* and ask *YOU* to provide those records.

And of course when I say "ask" I mean "demand."

It doesn't matter whether PokerStars will work in tandem with the IRS. All that matters is that if you're a US citizen and you claim a deduction for gambling losses, it's up to you to substantiate that deduction. If you can't or won't provide records of your wins and losses when the IRS comes calling, you are screwed.

[aces_full]

Some of the posts in this thread seem downright silly because of the misinformation and assumptions stated as facts. I'm no tax expert, but I have been filing a tax return for 19 years now. I have never been audited. How likely are you to be audited? Well a quick google search can tell you that less than 2% of taxpayers are audited, and less than 1% of taxpayers are subjected to a face to face audit. Look people, the IRS is a business just like any other, they have a staff, a budget, and a job to do. They certainly don't have the manpower to do a line by line check of every tax return that gets filed. The argument that offshore online poker sites will voluntarily give records to the IRS is just silly. Why would they? It's their dime and their time to supply these records to a foreign government, so I really don't see it happening. Even if they did, the IRS simply does not have the resources to check through mountains of records to make sure that all the US online gamblers properly reported their winnings, no sir, aint gonna happen in a trillion years. So what it comes down to is this: If you don't report online gambling winnings, you won't get caught unless you are audited, and there is about a 98% chance you will not be audited. This is just a real fact of life with US tax code-much of it is based on the honesty system, and the IRS has never been able to successfully close the tax gap (the gap between what is paid and what is actually owed) despite the universal appeal of lost millions in unpaid taxes annually.

If you don't like the idea of paying taxes on poker winnings my advice would be to simply not report it. Your odds of being caught are very slim unless we are talking about a lot of money. One way the IRS can potentially bag you is if you were to invest your winnings in an interest bearing vehicle (even a savings account). The 1099-INT forms are sent by banks to the IRS, and if the interest you earn is out of line with the amount you make, red flags will go up.

Another fact: Your chances of being audited go up the more money you make. A big red flag for audits are large or too numerous itemized deductions (especially business expenses). Self employment is also a big red flag,this is because if you are self employed, it's easy to cheat. So if you put "professional gambler" on your tax return, your odds of being audited just went up! Also, from my research, your chances of being audited go up if you work in a business that typically deals in cash, or receives tips.


One other thing I encountered in my research on audits is that the amount of potential back taxes and fines potentially collectible by the IRS also figure into whether or not a return gets audited.

Bottom line, if you don't want to pay taxes on your winnings, don't report them. If you do want to pay taxes, make sure you do it correctly because by reporting something, you are more likely to be audited than if you simply reported nothing. Also, don't make other mistakes on your forms like forgetting to declare capital gains or interest earned. You certainly don't want to get audited for an unrelated reason and then have the IRS find out you won $10K in online poker last year.

Another misconception to clear up: If you get caught, you probably are not going to jail or even be charged with anything. The IRS just wants the taxes owed plus interest and fines. I know someone who got caught not reporting winnings from a B&M slot machine. The players club card was used to keep track of the wagering and the casino turns this info over to the IRS. My buddy just got a bill for the amount owed, simple as that.

[RoundGuy]

[ QUOTE ]
Some of the posts in this thread seem downright silly because of the misinformation and assumptions stated as facts.

[/ QUOTE ]

After reading your post, the irony of this statement nearly brought tears to my eyes.

[ QUOTE ]
If you don't like the idea of paying taxes on poker winnings my advice would be to simply not report it. Your odds of being caught are very slim unless we are talking about a lot of money.

[/ QUOTE ]

Do you know what a SAR is? Research it. A bank will submit a SAR anytime there is an unusual, non-payroll deposit to your account. I've heard of one being triggered for as little as $1000. It depends on what the bank considers as unusual.

If you get a half dozen SAR's in a year, what do you think is going to happen?

[ QUOTE ]
Bottom line,

[/ QUOTE ]

Bottom line -- you're an idiot.

[aces_full]

[ QUOTE ]
[ QUOTE ]
Some of the posts in this thread seem downright silly because of the misinformation and assumptions stated as facts.

[/ QUOTE ]

After reading your post, the irony of this statement nearly brought tears to my eyes.

[ QUOTE ]
If you don't like the idea of paying taxes on poker winnings my advice would be to simply not report it. Your odds of being caught are very slim unless we are talking about a lot of money.

[/ QUOTE ]

Do you know what a SAR is? Research it. A bank will submit a SAR anytime there is an unusual, non-payroll deposit to your account. I've heard of one being triggered for as little as $1000. It depends on what the bank considers as unusual.

If you get a half dozen SAR's in a year, what do you think is going to happen?

[ QUOTE ]
Bottom line,

[/ QUOTE ]

Bottom line -- you're an idiot.

[/ QUOTE ]

Yes I do know what an SAR is there Mr 46 posts, so bottom line, you are a freakin retard. How do you know so much about SAR's? Do you work in a bank? For the government? Or are you just some [censored] college kid who is too smart for his own good? Let me guess, you hear about that $1000 deposit triggering an SAR from a friend of a friend of a firends ex boyfriend who knew this dude who worked in a bank.

I did some research, and things are still not very clear.
IRS link for SAR regulations (http://www.irs.gov/businesses/small/article/0,,id=154555,00.html)

It looks like the transaction threshold is $2000 minimum. From what I read, it seems like there needs to be a pattern that would indicate suspicious activity in order for an SAR to be generated. I find it hard to believe that a bank would fill out and submit an SAR form for every single non-payroll deposit in excess of $2000. That would probably be a mind boggling amount of paperwork. That's right, paperwork, there is a form that needs to be filled out. With the volume of checks processed every day, most small, infrequent deposits will go under the radar.

Here's a better link for SAR requirements from the IRS.

SAR requirements (http://www.irs.gov/compliance/enforcement/article/0,,id=113003,00.html)

Again, I stated in my post that someone who is not a big winner (or I implied a professional gambler) really shouldn't worry about big brother knocking their doors down and dragging them off to jail just because they didn't claim $5000 in poker winnings on their taxes. If gambling winnings are a substantial amount of your income, or you are moving thousands of dollars around regularly, then it sure is better to be safe than sorry. Also I still beleive that if you want to "cheat" the system, you are better off simply reporting no gambling winnings than you are to do something stupid like claim $100,000 in winnings and a $90,000 loss to avoid paying the full amount you owe, because in the latter case, Mr Taxman is gonna want proof that you lost $90,000. I guess the bottom line is, either don't do it, or doi it right. Making a half-assed attempt at being legit is going to be more likely do bring down scrutiny than simply omitting your winnings.

[Sniper]

Aces, did you also do research into the potential penalties for telling people on an internet site to not pay their taxes properly and completely???

[Mitch Evans]

[ QUOTE ]
I still beleive that if you want to "cheat" the system, you are better off simply reporting no gambling winnings than you are to do something stupid like claim $100,000 in winnings and a $90,000 loss to avoid paying the full amount you owe,

[/ QUOTE ]

No one ever suggested to claim a fraudulent loss. Furthermore, anyone that would claim an incorrect loss amount probably wouldn't claim anything at all, so that's a moot point. The issue was if you really did collect 100k winnings and incur a 90k loss, if you only report the net of that win, 10k, you are [censored] IF you are audited.

[Mitch Evans]

[ QUOTE ]
Yeah i'm sure the people that win money at the lotto are also reporting the tickets that didn't win them anything.

[/ QUOTE ]

The difference is they are not declaring the net of that win. If they spent $2k on tickets during the year and score $50k on one ticket, the IRS wouldn’t care if they show the loss or not, just so long as they don’t declare only $48k.


[ QUOTE ]
Whose to say you couldn't have just won a big donkament online? Or whose to say that you didn't just play for a day online and run incredibly lucky at 50/100 nl? If you put down that you won such and such amount and are audited and produce a "journal" that you kept for that day you won all that money... how can they refute this in any way assuming online sites are not giving out any records?


[/ QUOTE ]


I never said it wasn’t possible to cheat the IRS…just that showing wins only looks suspect to them, and they may investigate further. So, okay, you win a donkament. You get your neteller check for 100k, and deposit it into the bank. During the year you lose 30k, and declare 70k. If they choose to audit you, they will find those EFTs or checks. Year after year if you are showing gambling gains and no losses I think they might get a little curious, especially for the 6-fig guys.

[Lottery Larry]

"you are a freakin retard. "

Personally, I save this type of retort for people who advise other people to commit tax fraud in the US, especially anonymously.

If you expand your business to advise people on the risks of starting up a home meth lab, please let us know.

[Lottery Larry]

Why don't you just ASK the IRS what appropriate records are? There is info on their website about it.

Online gambling is no different than B&M gambling, from what I understand.

[Lottery Larry]

"The CPA I went and talked to on 3 different occasions as I was growing my bankroll "

I hope we're not to infer that said CPA was advising you that you don't need to report your gambling income, because you were "unlikely" to get caught?

[Lottery Larry]

Why does it seem as if everyone is so eager to find a way to not report gambling income, as required by IRS regulation, and is looking for justification? Or.... should those kinds of things be in BB&V?

[RoundGuy]

[ QUOTE ]
Yes I do know what an SAR is there Mr 46 posts

[/ QUOTE ]
One thing I've noticed on this forum, is that increased post counts do not decrease stupidity, as is obvious in your case.


[ QUOTE ]
How do you know so much about SAR's? Do you work in a bank? For the government?

[/ QUOTE ]
The fact that SAR's are confidential, and that disclosure of certain specific details of SAR's is a federal offense -- combined with the fact that I "know" that one was triggered for $1000 -- should answer your question.

[ QUOTE ]
It looks like the transaction threshold is $2000 minimum. From what I read, it seems like there needs to be a pattern that would indicate suspicious activity in order for an SAR to be generated.

[/ QUOTE ]
There is no minimum. And yes, the $1000 triggered a SAR because of a "pattern". It looked like the depositor was structuring -- a very big no-no.

I suspect that a good number of poker players take withdrawals from sites, Netteller, etc. that could easily be perceived as structuring. This is not something that anyone should take lightly.

[ QUOTE ]
I find it hard to believe that a bank would fill out and submit an SAR form for every single non-payroll deposit in excess of $2000.

[/ QUOTE ]
What you "believe" and what is reality are two very different things. Which was the reason for calling you out on your first post. You are clueless. The tools available to the IRS to catch tax cheats is mind boggling.

To come on a public forum and advise others not to pay their taxes is the height of stupidity.

You, Mr. Big Poster, are a complete idiot.

[g-p]

if you want to report all wins and losses, would breaking it down by month be better than breaking it down by session?

[Lottery Larry]

[ QUOTE ]
if you want to report all wins and losses, would breaking it down by month be better than breaking it down by session?

[/ QUOTE ]

No, at least as per IRS regulations on session records as I understand them.

Now, those regulations were crafted pre-Internet. Maybe your local IRS office has better information now, or at least some informal guidelines.

[WordWhiz]

Can someone explain to me what the danger is in just reporting your net winnings if you still pay the correct amount of taxes? Let's say I make 30k playing poker one year. The IRS wants me to report it as 150k in gambling winnings and 120k in gambling losses or whatever. If doing so will not actually affect what I pay in taxes compared to just reporting an additional 30k in income (a big if, indeed), and I later get audited, what are they going to nail me for?

[RoundGuy]

[ QUOTE ]
Can someone explain to me what the danger is in just reporting your net winnings if you still pay the correct amount of taxes?

[/ QUOTE ]
If you net your winnings, you will not be paying the correct amount of tax. The amount of tax will be different than if you report total winnings and deduct losses.

[aceupthepants]

How much different?

[RoundGuy]

[ QUOTE ]
How much different?

[/ QUOTE ]
That depends on about two dozen or more things, such as:

Total winnings
Total losses
Regular income
Other income
Whether you itemize deductions
Whether you have children
How many exemptions you claim
Do you have education credits
Are you blind
Do you want to contibute to the Presidential Election Campaign Fund
Etc., etc......

That's why there are accountants in the world. You should talk to one.

[imsobroke]

DNG - 1 session = 1 DNG or what?

[Python49]

[ QUOTE ]
python, if you are signed up at a poker site (against their T&C) with a fraudulent name, for the purpose of cheating on your taxes... you should not be posting about it on an internet message board.


[/ QUOTE ]
Um, no. I say this because I know of plenty of players who are not even playing under their own name and it's not because of tax reasons, its more because of rakeback reasons and I was wondering how this affects the whole tax situation. What if the poker account you are playing under isnt even in your name and the account which you are cashing your money out to is a joint bank account? There are lots of hypothetical situations id be interested in finding out more about.

[ QUOTE ]
Aces, did you also do research into the potential penalties for telling people on an internet site to not pay their taxes properly and completely???


[/ QUOTE ]
This is becoming close to paranoia, so clearly the IRS is doing a good job with the scare factor. Is someone going to report to the IRS that this online guy with the user name Aces is typing out information on taxes that most people could find out if they researched into it themselves some? Even if someone were to send an IP address, what proof is there that the person at that address actually posted it? What if he's on a college campus and they all share the same IP address or is using some public computer.

[ QUOTE ]
I hope we're not to infer that said CPA was advising you that you don't need to report your gambling income, because you were "unlikely" to get caught?

[/ QUOTE ]
At the time with the amount that I had made he basically told me that since I like to make positive expectation gambles for a living that I should just go do some calculations on % chance of being caught, amount owe'd in fines/penalties/back taxes if caught, % not getting caught with amount saved on not paying, and go make a decision on what I wanted to do. He didn't "recommend" anything to me, he simply told me odds of being caught are less than 1% and in the event I were, i'd just owe what I would to begin with along with fines and penalties as someone else suggested earlier in the thread. The way he said it though made it pretty obvious what he was getting at however. I ended up making alot more though than I had planned on so will be reporting anyway.

[orange]

Hey, sorry I got here late... a few quick questions:

At what point in a player's poker career should they start paying taxes? Surely a small stakes player shouldn't worry about uncle sam tracking them down, right? What money amount should people start to pay taxes?

Also, in my situation...I keep most $ online, making only about 1k-2k withdrawls to my bank (via neteller-->EFT-->bank). Is this warrent for suspicion?

[RoundGuy]

[ QUOTE ]
At what point in a player's poker career should they start paying taxes? Surely a small stakes player shouldn't worry about uncle sam tracking them down, right?

[/ QUOTE ]
If you file a tax return, you run the risk (however small) of being audited. There's really no "tracking down" involved.

[ QUOTE ]
What money amount should people start to pay taxes?

Also, in my situation...I keep most $ online, making only about 1k-2k withdrawls to my bank (via neteller-->EFT-->bank). Is this warrent for suspicion?

[/ QUOTE ]
If you are audited, the first items they will ask for are your bank statements (if they don't have copies already /images/graemlins/shocked.gif). You will need to account for every deposit made.

Yes, they will care about the 1-2k deposits.

If you are making a number of these small deposits over a short period of time, your bank may have already alerted the feds to your activity.

Pay your taxes, and sleep well at night.

[Eaglesfan1]

Can the IRS go into your safe deposit box if they suspect a large amount of money in there?

[Joe Camel]

[ QUOTE ]
Can the IRS go into your safe deposit box if they suspect a large amount of money in there?

[/ QUOTE ]

The IRS will dig up your lawn if they think you buried money there.

[aces_full]

[ QUOTE ]
[ QUOTE ]
Yes I do know what an SAR is there Mr 46 posts

[/ QUOTE ]
One thing I've noticed on this forum, is that increased post counts do not decrease stupidity, as is obvious in your case.


[ QUOTE ]
How do you know so much about SAR's? Do you work in a bank? For the government?

[/ QUOTE ]
The fact that SAR's are confidential, and that disclosure of certain specific details of SAR's is a federal offense -- combined with the fact that I "know" that one was triggered for $1000 -- should answer your question.

[ QUOTE ]
It looks like the transaction threshold is $2000 minimum. From what I read, it seems like there needs to be a pattern that would indicate suspicious activity in order for an SAR to be generated.

[/ QUOTE ]
There is no minimum. And yes, the $1000 triggered a SAR because of a "pattern". It looked like the depositor was structuring -- a very big no-no.

I suspect that a good number of poker players take withdrawals from sites, Netteller, etc. that could easily be perceived as structuring. This is not something that anyone should take lightly.

[ QUOTE ]
I find it hard to believe that a bank would fill out and submit an SAR form for every single non-payroll deposit in excess of $2000.

[/ QUOTE ]
What you "believe" and what is reality are two very different things. Which was the reason for calling you out on your first post. You are clueless. The tools available to the IRS to catch tax cheats is mind boggling.

To come on a public forum and advise others not to pay their taxes is the height of stupidity.

You, Mr. Big Poster, are a complete idiot.

[/ QUOTE ]


LOL at you. Seriously, the only reason I responded to you is because YOU are the one who started this by calling me an idiot. If you must reply to a post by starting out name calling, then obviously you are either a freakin moron or a total troll. Even in your second response, you gain zero credibility, you just make yourself look more like an idiot because you claim to be "in the know" Give me a [censored] break!! If you really know what you are talking about, what are your credentials? You conveniently didn't answer that the first time I asked you. Do you work in the banking Industry?Accountant?IRS employee?FBI agent? What do you bring to the table as far as credibility? I admitted right out that I don't work in any related industry, but that I have done research into these topics. All you offer is "I know this and I know that" Really? How do you know these things? Or are you just a stupid troll?

People far overestimate how likely they are to get caught by the IRS for cheating on their taxes. Come on, in 2006 over 100 MILLION tax returns were filed in the US, and out of that, only about 1.3 million returns were audited. Do you know what the tax gap is smart guy, since you seem to "know" so much? It's the difference between what the IRS collects in taxes and the amount of tax actually owed. It's in the millions, if not billions. The IRS does not have the manpower or the resources to keep 100% track of over 100 million returns. The way our tax code is set up is that certain items are simply a matter of honesty and playing the odds-especially if you are self employed or work in a cash business. This is why the IRS takes a more careful look at filers who are self employed, and I said repeatedly that if you are playing poker as your sole source of income that you would be foolish not to report your winnings/losses correctly. I just think people are overly paranoid here.

I don't want this to turn into a personal flame war, so if you are not a troll, please provide evidence as to why what you are saying is true. I at least made an effort to post links to IRS web pages, all you do is simply state: "I know this to be true."

[aces_full]

[ QUOTE ]
Aces, did you also do research into the potential penalties for telling people on an internet site to not pay their taxes properly and completely???

[/ QUOTE ]

Are you for real? Maybe if I were a lawer or certified tax professional I might have cause to worry about giving bad advise/advising you to break the law. If I tell you to go jump of a bridge am I guilty of murder if you are dumb enough to go do it? enough said.

[Poker_Ace]

I am an attorney and real estate investor and I have been doing my own taxes for years. FWIW, Aces is absolutely correct and sniper, Roundguy, et al. are, to be blunt, arrogant morons. Even a few minutes of research on Google will support aces' analysis. For example, the IRS won a lawsuit in which it obtained the names of all Visa customers who were using Visa cards to repatriate money held offshore for tax avoidance. It turned out that there were tens of thousands of people doing this. Guess how many criminal cases the IRS has pursued after obtaining this list? Bottom line is that the IRS has limited resources, the tax gap is huge, and the risk that a semi-professional poker player would owe anything other than interest and penalites on unreported poker winnings is next to zero, and the chance of getting caught in the first place is a small fraction of 1%.

[RoundGuy]

[ QUOTE ]
I don't want this to turn into a personal flame war, so if you are not a troll, please provide evidence as to why what you are saying is true.

[/ QUOTE ]
I don't post any personal information on a public message board -- ever. If that makes me a troll in your eyes so be it.

Others can read your posts, and mine, and come to their own conclusions. It's what makes this world great.

[RoundGuy]

[ QUOTE ]
I am an attorney and real estate investor and I have been doing my own taxes for years. FWIW, Aces is absolutely correct

[/ QUOTE ]
Well, I can't speak for sniper, but I feel much better now. I'm gonna run right out and start cheating on my taxes....

[Poker_Ace]

Links for any interested:

This is an independent research group that tracks IRS audit statistics:

http://www.trac.syr.edu/tracirs/index.html

Essentially, the IRS inflates its audit statistics to make audits appear to be much more of a risk than they really are. For example, if you neglect to report $10 in interest income on your return, the IRS matches your return with the 1099-int sent by you and sends you a letter and counts that as "an audit." The risk of what most people think of as an audit is tiny.


Tax Analysts is the leading source for tax news:

http://www.taxanalysts.com/


Good source for news on tax scams:

http://www.quatloos.com/tax_scams.php

The IRS has been spending a lot of enforcement resources going after tax protestors; e.g., people who argue that taxes are voluntary, etc.


DOJ press releases relating to both civil and criminal enforcement efforts:

http://www.irs.gov/compliance/enforcement/article/0,,id=152463,00.html

(you have to type in the last part of the link manually). Note that netting of poker wins and losses does not appear to be a current enforcement priority. In fact, for any of you out there worried about going to jail for netting your poker sessions, compare that with what the people referenced in the press release have done and you will get some idea of how paranoid the "pay your poker taxes -- and do not net your winnings -- or go to jail" posters are. It really is not even a close call.


Excellent book for those who are interested:

http://www.amazon.com/Perfectly-Legal-Ca...TF8&s=books (http://www.amazon.com/Perfectly-Legal-Campaign-Benefit-Everybody/dp/B0008102D6/sr=8-1/qid=1164935224/ref=pd_bbs_sr_1/102-0753586-6047355?ie=UTF8&s=books)

Among other things, the author documents how the IRS does not have the resources to enforce the tax laws and must, therefore, get a lot of publicity be going after a few people to make an example of them in order to scare others into compliance. Richard Hatch comes to mind.

A couple of other books:

http://www.amazon.com/Great-American-Tax...TF8&s=books (http://www.amazon.com/Great-American-Tax-Dodge-Destroying/dp/0520236106/sr=8-1/qid=1164935745/ref=sr_1_1/102-0753586-6047355?ie=UTF8&s=books)

http://www.amazon.com/Sink-Jeffrey-Robin...TF8&s=books (http://www.amazon.com/Sink-Jeffrey-Robinson/dp/1841198803/sr=1-1/qid=1164935781/ref=pd_bbs_1/102-0753586-6047355?ie=UTF8&s=books)

This last one is not directly related to taxes, but it underscores how powerless the U.S. government is to monitor offshore financial transactions; e.g., Bodog et al. will continue to thrive, recent legislation notwithstanding. This book, by the way, was recommended to me by a private investigator friend of mine who does all the background checks for most of the poker sites, including Party and Stars.


Bottom line: if one's poker winnings are small (less than 10k) and would not represent more than 25% of one's tax liability (the unofficial target used by DOJ), the failure to report, EVEN IF DISCOVERED, would not result in anything other than interest and penalties. For others, netting should be fine.

[RoundGuy]

What is it, exactly, that you are trying to say, or what idea, exactly, are you trying to promote Poker Ace?

[dtan05]

Poker, say I make 100k+ (which I plan to do NEXT year), would it still be okay to net them?

and to Round, if I use winnings - losses, won't I be moved up brackets to pay more tax? What is the highest tax bracket?

sry, I'm 18 and pretty new to poker/taxes.

[Poker_Ace]

As I understand the regs (and I have not studied them in detail), "session" is not defined such that some sort of netting should be okay (the regs were written long before online poker). If you make 100k net and declare 100k of poker income and pay taxes on that, you should be fine. As a practical matter, unless you play in tournys where the tourny 1099s you, you could probably get away with not declaring you income, but you run the risk of getting in trouble if you are caught. The risk is small, but the potential consequence is big (assuming 100k in unreported income). If, on the other hand, you make 100k in your day job and have 5-10k in unreported poker winnings, not a big deal even if you are caught.

The highest bracket is 35%, though as your income goes up the actual rate goes up due to exemption/deduction phaseouts. Helpful link:

http://turbotax.intuit.com/tax_help/

Also, you owe 7.65% for FICA and double that if self-employed in addition to income tax.

[dtan05]

oh I meant 100k in poker, as a sole income source. I should report it then? ( because I mean 100k is a bit suspicious /images/graemlins/tongue.gif)

[Sniper]

[ QUOTE ]
[ QUOTE ]
Aces, did you also do research into the potential penalties for telling people on an internet site to not pay their taxes properly and completely???

[/ QUOTE ]

Are you for real? Maybe if I were a lawer or certified tax professional I might have cause to worry about giving bad advise/advising you to break the law. If I tell you to go jump of a bridge am I guilty of murder if you are dumb enough to go do it? enough said.

[/ QUOTE ]

Please do not tell people that they should not follow the rules of filing and pay their taxes properly, because they are unlikely to get caught.

If you have any questions, please review this site's T&C.

[topAir]

First, sorry for the ignorance... Do bonuses count any different than winnings? Also, when people suggest professional help, does the average guy at H&R Block or whatever know this stuff or would you need to look for some sort of specialist?

Thanks.

[lambchop]

[ QUOTE ]
First, sorry for the ignorance... Do bonuses count any different than winnings? Also, when people suggest professional help, does the average guy at H&R Block or whatever know this stuff or would you need to look for some sort of specialist?

Thanks.

[/ QUOTE ]

Bonuses, rakeback, and casino comps are all considered winnings and you can deduct your gambling losses against these in addition to your gambling winnings. If you have a "regular" job and just some poker income (meaning not complicated), H&R Block should be fine or just buy Turbo Tax. If your filing as a professional you might want to go somewhere else.

[topAir]

Thanks for the reply. I'm assuming, with Turbo Tax, that I would file my gambling the same way I did a 1099 a couple years ago? I'll have to figure out the deduction part, but Turbo Tax is pretty simple. If you have done this before, any insite would be appreciated.

Also, I didn't notice any replies to the guy that didn't know how to easily figure out his gross income and total amount of loses. As long as you have PT, there is an easy way. You could go through your whole Session tab but a couple SQL statements would be a lot easier. I'll take a minute or two this weekend and show how to do it. I plan on converting to Postgres this weekend and will be playing around with it anyway.

Thanks again.

[RoundGuy]

[ QUOTE ]
Poker, say I make 100k+ (which I plan to do NEXT year), would it still be okay to net them?

[/ QUOTE ]
Netting your wins/losses is absolutely against IRS rules. Regardless of what others are saying in this thread about the chances of getting caught, don't do it.

[ QUOTE ]
and to Round, if I use winnings - losses, won't I be moved up brackets to pay more tax? What is the highest tax bracket?

[/ QUOTE ]
There a couple of other threads going on dealing with this issue. I believe the AMT thread has the info you're looking for. The short answer is - maybe. It depends on other factors.

[ QUOTE ]
sry, I'm 18 and pretty new to poker/taxes.

[/ QUOTE ]
Tax accountants are our friends. You should find one.

[dtan05]

Round, what's AMT?

edit nm found it

[tempogain]

what about schmucks who want to file but haven't kept any records? what are their possible courses of action?

[RED_RAIN]

And as we go on this rant about paying taxes, pay them correctly meaning document sessions and pay the right #s

[amazinmets73]

im gonna be the idiot here.... say i win 100K+ over the next year and dont pay taxes.... what happens?

[geormiet]

As far as my knowledge goes, you will be chastised by everyone here and face a ~2% chance of going to jail.

[amazinmets73]

what about rakeback? is that reported too?

[geormiet]

[ QUOTE ]
what about schmucks who want to file but haven't kept any records? what are their possible courses of action?

[/ QUOTE ]

Use your electronic records like bank statements and credit card statements and neteller history to create records...

[amazinmets73]

sounds worth it

[geormiet]

Yes you are supposed to report rakeback.

The easiest way to explain this is imagine a site quadrupled its rake and also started paying out 4x more in rakeback to compensate. You're making exact the same amount as before, why should your tax burden be lightened?

[amazinmets73]

about going to jail say the person who made over six figures threw his hands up and said, "alright, you got me, ill pay up now". still going to jail?

[5thStreetHog]

[ QUOTE ]
about going to jail say the person who made over six figures threw his hands up and said, "alright, you got me, ill pay up now". still going to jail?

[/ QUOTE ]No,its the same as murder.If you admit you did it when you get caught,all charges have to be legally dropped because you were a good sport after you got nailed.

[RoundGuy]

[ QUOTE ]
about going to jail say the person who made over six figures threw his hands up and said, "alright, you got me, ill pay up now". still going to jail?

[/ QUOTE ]
Probably. You were intentionally evading a big tax bill. The IRS doesn't like that very much...

Oh, and your back taxes, interest, penalties, and fines will well exceed your $100,000.

Pay your taxes.

[roy_miami]

[ QUOTE ]
about going to jail say the person who made over six figures threw his hands up and said, "alright, you got me, ill pay up now". still going to jail?

[/ QUOTE ]

From Wikipedia

[ QUOTE ]
Hatch faced up to 13 years in prison and a fine of $600,000. On May 16, 2006 he was sentenced to 51 months in prison, plus three years of supervised release after serving his sentence. He began serving his sentence at the Plymouth County Correctional Facility in Massachusetts. In July, 2006 he was moved for a short period of time to the Federal Transfer Center in Oklahoma City, Oklahoma.[1] before being placed at the Federal Correctional Institution in Morgantown, West Virginia on August 2, 2006. His inmate number is 05559-070. After sentencing his lawyer Michael Minns added: "It's bad for Richard, who is an outdoor person."

[/ QUOTE ]

[EMc]

[ QUOTE ]
what about rakeback? is that reported too?

[/ QUOTE ]

Rakeback and comps are both reported as gambling income. They can be offset by losses.

[chigger]

The only netting I do is within a day.

I really don't see how the IRS is going to have a fit when I 4-table NL50 6max for 3 hours straight and call it 1 session.

If I switch to O8 - new session.

If I switch to NL25 - new session.

Really I think you could argue that even different limits and games could be considered 1 session if it really is all done in one sitting. And getting up to go to the fridge or the can shouldn't counted as breaking into a new session even if you do click the "sitout" button.

I just think there are so many gray areas within the framework of 1 day that one could argue back and forth about what can and can't be lumped into a session. Bottom line, its all poker regardless of the variation or limit. I think is just silly that If I switched games and limits often enough in a day that it should end up costing me more in taxes if I really just broke even.

I think most peoples problem with paying their taxes is that the government makes it so freaking complicated and full of inequities that they'd rather just avoid it altogether.

I think it would be much fairer and easier if you could just net your wins and losses for the year. If I make X amount overall for the year charge Y% of X based on the bracket it puts you in and be done with it. But this is America and I've come to expect our government to be anything but fair and easy lately.

Rant over...

[prodonkey]

I agree with you.. I think everyone defining 1 sng as a session is looking at too small a picture. I personally think if you had to show the IRS your records and showed them something with 146k sessions in it, they might find that odd. The people who 12 table sng's might have over a million in wins and a similar huge amount of deductions. From what I've read that would almost guarantee an audit, at least to the fact that the person would need to provide proof showing this stuff. The IRS hasn't got around to defining what it considers a session as this whole internet thing is still new to all the old people in the government. Remember that the internet is a series of tubes, and poker chips can clog it. If your are playing at a casino it's pretty easy to define a session, when you are playing 6 sngs and 5 ring games it's not really that easy. You'd need an assistant to keep track of everything. I personally believe netting the wins/losses for the day or week is perfectly fine. I have my poker tracker numbers, but I also play on sites such as Bodog where I can't get those numbers. So i just fill in my +/- in an excel spreadsheet and there you have it.

Similarly for everyone using poker tracker.. how hard is it to fudge something? Delete a few winning sessions, delete a day of sngs. It's easy.

I also believe however that your "winnings" don't necessarily become "income" till you have cashed them out or in some other way have access to them. No one has really talked a lot about this.. but what if I report 60k in income.. and I've only cashed out 5k. Yes I'm still up 60k, but the other 55k is kinda in a state of limbo, you're not really liquid in it. No one but the poker site and you know about it. I'm not suggesting using this to hide it.. but couldn't you hold this income over to the next taxable year where maybe you would have some more losses to even it out. I believe the money you have online is very similar to money invested in stocks. If you buy/sell those you're not subject to a tax liability until you actually sell the instrument netting a profit or loss correct??

[Wake up CALL]

[ QUOTE ]
correct??



[/ QUOTE ]

No, the IRS code has explicit language stating otherwise.

[SuaSponte]

the money in your stars or full tilt account is yours, and should not be thought of in the manner you're suggesting, prodonkey. money in an account that you exercise dominion and control over is yours for tax purposes. any offshore account containing 10k or more must be reported to the IRS.

[amulet]

i know that if you own stock in any offshore based company you must check a box and give info when filing. i also thought that if you had ANY offshore (overseas) bank account the same applies. am i incorrect?

[EMc]

[ QUOTE ]
i know that if you own stock in any offshore based company you must check a box and give info when filing. i also thought that if you had ANY offshore (overseas) bank account the same applies. am i incorrect?

[/ QUOTE ]

I have offhand heard that anything less than 10k doesnt have to be reported if in a bank account, but have not verified that claim yet.

Im bored so ill look it up in a few.

[EMc]

http://www.irs.gov/pub/irs-pdf/f90221.pdf


The instructions tell all.

[chief444]

I'm pretty sure there is a limit...10k USD sounds right. But if I remember right the limit is for the combined value of all financial accounts...and if over the limit at any time throughout the year then all must be reported. But poker sites aren't finanial accounts and accounts such as Neteller are debateable. I just filed the form because I have both US and Canadian bank accounts. I didn't bother before actually having the bank accounts offshore.

[prodonkey]

http://www.gambling-law-us.com/Articles-Notes/Gambling-Session.htm

http://www.onlinepokerfaq.com/guide/tax-professional.html

The first link gives a long explanation of what a session is or could be. The short version is basically use common sense, if you're playing the same game for a period of time.. it's all one session, if you play 100 sngs in a 4 hour session, I'm gathering this would be one session.

If you're playing a billion sngs a year I'd hope you're making money, so it would probably be better for you to file as a pro. You don't have to gross your wins and itemize your losses then, but then you have to pay SS tax and Medicaid.

Am I the only one that if the IRS audited me I could come up with more than I made in losing sports betting tickets?? Guess it pays to have friends as degenerate gamblers.

[N 82 50 24]

[ QUOTE ]
any offshore account containing 10k or more must be reported to the IRS.

[/ QUOTE ]
I actually think you report it to the treasury dept. http://www.offshorepress.com/tdf90221.htm

Also, to all the people worrying about sessions:

If you're really worried about keeping tracking of your play that specifically, you'll be fine. The most important thing to do is report your overall net winnings accurately. Back it up with the best session records you have. Do that and you'll be fine. There's no way the IRS is going to bitch about splitting up sessions here and there as long as you have a decent log and your financial records conform to your reported income.

[greyhawke54]

Avoiding taxes is the American thing to do. Remeber our country was founded by people that were sick of paying their taxes

[BeatPurdue]

Okay, I need this explained to me like I am a two year old.

Let's say I make $50,000 this year as a professional online poker player. If I file as a pro, how much will I have to pay on taxes?

Also, when do I have to report my taxes? If I have never filed my poker winnings before, is it okay to wait until April 15th, even if from now until then I am making $500-$1,000 transactions from neteller to my bank account?

[Kurn, son of Mogh]

Another misconception to clear up: If you get caught, you probably are not going to jail or even be charged with anything. The IRS just wants the taxes owed plus interest and fines.

This is accurate as far as it goes. If you win, say, $20K online and bring it all to your account in one lump sum, then not report it, that is exactly what would happern. Interest and penalties would be added, but you could set up a payment plan.

If, however, you were to bring over that $20K in, say, 5 deposits of $4K each and were to subsequently get caught, you would be guilty of "structuring" and would most certainly go to jail.

[amulet]

if you knowning file a fraudulent return you can be charged with criminal penalties (and go to prison).

[Kurn, son of Mogh]

Technically, yes. In reality, the IRS' primary responsibility is to collect the money, so that's their usual course of action when the taxpayer claims ignorance.

[amulet]

probably. however, they like to make examples as they get into a new or high profile area. going after a few online poker players would get them publicity - which they love.

[Kurn, son of Mogh]

[ QUOTE ]
probably. however, they like to make examples as they get into a new or high profile area. going after a few online poker players would get them publicity - which they love.

[/ QUOTE ]

Again, completely dependent on how much is owed. It probably costs the IRS a minimum of $50K per case to prosecute.

If its a case of structuring, its easy, the actions of the accused speak for themselves. If its just failure to report income, they'll just try to collect first and only get nasty once they see a continuing attempt to dodge the bill.

The IRS does not pursue revenue negative paths just for PR.

[hoppscot22]

[ QUOTE ]
This is accurate as far as it goes. If you win, say, $20K online and bring it all to your account in one lump sum, then not report it, that is exactly what would happern. Interest and penalties would be added, but you could set up a payment plan.

If, however, you were to bring over that $20K in, say, 5 deposits of $4K each and were to subsequently get caught, you would be guilty of "structuring" and would most certainly go to jail.

[/ QUOTE ]

Im not sure about that... seems to be the same thing unless within those 4k deposits you were trying to move the money around to avoid GETTING caught, there is nothing wrong with not withdrawing all of your winnings at once, the criminal penalty comes into play when you try to AVOID taxation KNOWINGLY

[amulet]

they use how much is owed. but they absolutely target certain sectors when it seems they are missing something.

and they LOVE pr. if it makes news it increases the likelihood of tax payers who are aware of a high profile case reporting and pay correctly - in every sector - across the board..