More tax questions

[2kji8]

Ok so as a lot of people are I'm very unknowledgable when it comes to taxes. I haven't kept any records (well aside from PT, but having gone through a few computers most of that information is lost) or anything.

For most of last year I was staked by a friend, and some of the profits I made went into things like a computer/laptop, some monitors, and other misc. things. I probably profited about 12k until I had a big downswing in November where I lost 8k.

But here's one interesting detail. The day Party Poker announced its departure from the US, I cashed out everything straight into my bank account, probably about 11k. I eventually had to send about 3k to my staker, and about 4k of it I send to a friend in exchange for FTP money. The rest was spent on things I mentioned earlier. But it might look to the government like I made 10-15k because of it hitting my bank account when in actuality most of it was not profit and I took some money from the account and put online only to lose it.

So basically I didn't profit all that much in 2005 altogether. Probably about 2-3k, much of that money spent already. I'm not really sure what I owe to the government but don't want to not file and get in trouble at the same time.

Anybody have any suggestions of what I should do? Thanks.

[2kji8]

Oh and I obviously meant 2006, not 2005.

[Mr_Donktastic]

Did you have a job in 2006?

[2kji8]

Good question, no I did not have a job in 2006.

[jively]

It doesn't sound like you owe a lot of tax, but you probably owe tax. If you paid someone who staked you, it doesn't really matter what it looked like; you have the truth to back you up.

If you are filing as a professional, I guess you just subtract out the net amount you gave back to the person who staked you. I am not sure what you do if you file as a non-professional...

-Tom

[plasphemy]

Here is my non-professional opinion:

First, file an extension immediately... don't get a penalty if you can't complete your return by Tuesday.

File professionally:

Try to get a statement from the poker site with To/From table amounts. This can help you build a win/loss statement which you need in order to file taxes correctly. Not sure if you can get this or not from most sites.

If you don't have win/loss records, you have to reconstruct your winnings in some way. The best way would be to use your deposit/withdraw amounts in Neteller and/or your bank statement, since this is what an audit would look at.

Although netting your winnings is not the correct way of doing taxes, you don't have a much of a choice so net your winnings when you file Schedule C.

The amount you were staked should go under Other Expenses. You should get a letter of some kind from the person that staked you now so you'll have it in case of problems. Claiming the return of the stake as an expense will be better than deducting it under your winnings. You want that 11k and any other withdrawals to be fully declared under Income on the Schedule C. And don't forget to claim the original stake under Income! They should cancel each other out.

Be very careful depreciating your computer equipment on Schedule C as this can draw alot of attention. Use turbotax.com or get a cpa.

I have read some books on taxes and filing as a pro and haven't been audited yet, but please don't take my advice to heart, I'm not a CPA /images/graemlins/smile.gif

[crzylgs]

[ QUOTE ]
Here is my non-professional opinion:

First, file an extension immediately... don't get a penalty if you can't complete your return by Tuesday.


[/ QUOTE ]

If you do this, remember that a filing extension is not an extension of the payment due date.