ddubois
04-06-2007, 07:10 AM
I was a full-time poker player the last three months of 2006 (and a normal salaried programmer the first nine months).
The IRS doesn't expect me to file 3/4ths one way, and 1/4th the other, do they? What I mean is, they don't expect me to net my results and pay self-employment tax on the money made Oct-Dec, but itemize session wins/losses on the Jan-Sep poker, do they? Because that would be unbearably complicated.
Anyway, I ran the TaxCut software both ways.
As a recreational gambler, I lose my standard deduction and owe the feds 20.5k. Also, my AGI got artificially exploded such that the Roth contributions my wife and I made back in January are illegal or whatever, so I guess I have to take that money out and pay a penalty.
As a self-employed gambler, I owe 21k. But if I put 17k into a SEP IRA, that drops down to 16k. I'm assuming my 4k in the Roth, the 4k in my kids' Education IRAs (aka Coverdell), and my 15k in the 401k from the programming job, are perfectly fine to "stack" with a 17k SEP IRA deposit. Please correct me if that assumption is wrong!
Is this as much of a no-brainer decision as it appears to be?
The IRS doesn't expect me to file 3/4ths one way, and 1/4th the other, do they? What I mean is, they don't expect me to net my results and pay self-employment tax on the money made Oct-Dec, but itemize session wins/losses on the Jan-Sep poker, do they? Because that would be unbearably complicated.
Anyway, I ran the TaxCut software both ways.
As a recreational gambler, I lose my standard deduction and owe the feds 20.5k. Also, my AGI got artificially exploded such that the Roth contributions my wife and I made back in January are illegal or whatever, so I guess I have to take that money out and pay a penalty.
As a self-employed gambler, I owe 21k. But if I put 17k into a SEP IRA, that drops down to 16k. I'm assuming my 4k in the Roth, the 4k in my kids' Education IRAs (aka Coverdell), and my 15k in the 401k from the programming job, are perfectly fine to "stack" with a 17k SEP IRA deposit. Please correct me if that assumption is wrong!
Is this as much of a no-brainer decision as it appears to be?