tax question- filing as a professional and self-employment tax

[ActionJeff]

I obviously need to speak to an accountant, but here it is

I have to pay something like 15.3% self-employment tax to file as a professional poker player, which is a very healthy sum. As a U.S. citizen and resident, is there any way around this? Could I state I am a student and poker is a hobby, and still be able to deduct losses/ just pay taxes on my overall profit, without the self-employment tax? Any ideas on this?

Commentary from any other professionals or players deriving a lot of income from poker would be appreciated- there have to be some tricks that I'm missing here that save a lot of money.

-Jeff

[Fat Nicky]

not sure if you realize this, but 1/2 of your self employment tax is deducted on the front page of your 1040.

also, you're probably better off filing as professional, because then you can deduct expenses related to your poker playing (travel expenses, internet bill, etc.)

[adanthar]

AIM me about this at some point.

[ActionJeff]

[ QUOTE ]
not sure if you realize this, but 1/2 of your self employment tax is deducted on the front page of your 1040.

also, you're probably better off filing as professional, because then you can deduct expenses related to your poker playing (travel expenses, internet bill, etc.)

[/ QUOTE ]

I did not realize this at all. However, not 100% on your second statement. If someone had $1M a year in taxable income, $20k or so in business expenses wouldn't come anywhere close to the 15.3% for self employment.

Adanthar,

will do. I forget your AIM, pm me pls

[Russ Fox]

FYI, the self employment tax is 15.3% for the first $94,200 of income ($97,500 in 2007); after that, it's 2.9%.

Can you say you're a student? Sure, if you are one.

Of course, the money you put into the self-employment tax is supposed to be used for your social security & Medicare when you retire. But our legislators in Washington use the social security trust fund as a piggy bank to fund various things and make the budget deficit look smaller.

Unfortunately, American gamblers aren't treated well by the Tax Code.

-- Russ Fox

[Zele]

Different tax professionals will tell you different things about this. Mine pointed out that just not having a job and having poker income does not necessarily mean that one is a professional poker player.

[frozzor]

don't file as a professional, it is almost never better. if you have a job/or are a student just say that if you're audited.

[TheMetetron]

Filing as a professional is so much better for me it isn't even close. Some of you guys are just making stuff up.

Don't forget SEP-IRAs or Individual 401ks. And there are more expenses than you realize.

[Poker CPA]

In addition to the expenses, retirement plans and shifting of income options; there is the frozen Neteller funds issue. The professional has a wide variety of options in dealing with this problem, that is not available to the "student" or "recreational" player. The pro, if he plays his cards right, could postpone paying income taxes on these funds until April 15, 2009, if Neteller delays beyond its current "75-day" promise.

[Joeflex]

nm