What if you lost $$$ in 2005?

[JoeyNoOne]

I know everyone here is a winning player. But lets just think about this.

Let me know my thinking in this general scenerio is correct.

Total Income my real job = 45k
Total Poker Winnings = 28k
Total Poker Losses = 31k
Assume I don't have any itemized deductions besides poker losses.

I report 28k on schedule C
I deduct 28k (only up to winnings amount)

My AGI would go from 45k-5k=40k to 45k+28k-28k=45k.

So now I have a new tax liability of 5k * tax rate.

Talk about adding insult to injury.

[JoshuaD]

[ QUOTE ]
I know everyone here is a winning player.

[/ QUOTE ]

lol

[recondite7]

stop playing poker if you are losing

[Vincent]

[ QUOTE ]
Don't stop playing poker if you are losing

[/ QUOTE ]

[JoeyNoOne]

I am not losing. But I or you may have a losing year in the future. So save your sarcastic remarks for anther post. This is a hypothetical question. I would appreciate an intelligent response.

Thanks

[Ron Burgundy]

You have a 73K income and 28K in itemized deductions.

[MatthewRyan]

[ QUOTE ]
You have a 73K income and 28K in itemized deductions.

[/ QUOTE ]

Could someone please explain how this is different than 45k income? perhaps show the two different calculations? Thanks in advance!

-Matt

[JoeyNoOne]

So by losing money playing poker I owe more in taxes. I'd love to argue that one in court.

[JoeyNoOne]

No Poker With Poker
Gross Income 45k 73k
Standard Deduction (5k) (0)
Itemized Deduction (0) (28k)

Total Taxable Income 40k 45k

So by losing 3k playing poker you owe taxes on 5k more income.

[MatthewRyan]

Oh, so the only real drawback to filing as 1. poker winnings and 2. poker loses (as opposed to a net winnings amount), is the that you lose the 5k standard deduction?
I was under the impression that the situation was worse than this.

[MNpoker]

[ QUOTE ]
Oh, so the only real drawback to filing as 1. poker winnings and 2. poker loses (as opposed to a net winnings amount), is the that you lose the 5k standard deduction?
I was under the impression that the situation was worse than this.

[/ QUOTE ]

Depends if you start hitting AMT or live in a state (like MN) where for AMT you can not even deduct the gambling losses from the wins.

People with homes and children have a much larger deduction than $5K that they lose, and they often are paying at a rate much higher than 15%.

[JoeyNoOne]

But why should you have to pay MORE taxes if you LOSE playing poker than if you don't play at all?

Basically, choosing to play poker during a given year (win or lose) will cost you $1400 (5000*28%).

Or even more if you have a bigger standard deduction and do not have itemized deductions > your standard deduction.

[Wake up CALL]

[ QUOTE ]
But why should you have to pay MORE taxes if you LOSE playing poker than if you don't play at all?



[/ QUOTE ]

Why is the sky blue? What is the meaning of life? You may as well ask, why do I breathe air and not water?

Now I ask, Why do people ask questions such as yours?

[recondite7]

[ QUOTE ]
I am not losing. But I or you may have a losing year in the future. So save your sarcastic remarks for anther post. This is a hypothetical question. I would appreciate an intelligent response.

[/ QUOTE ]

Here is an intelligent response and some intelligent advice to your "hypothetical" question. You are losing money playing poker you should probably stop playing.

If your losses for the year are in the thousands this is bad. If you are worried about deductions realize that the US tax law is not written to favor an online poker player. The way I understand it (and I have just read what others have posted in these forums) is that if you win 100k one year and lose 100k the next year you have to pay taxes on your earnings and cannot deduct the losses of the next year. This sucks. To avoid this you can do a few things to stop having a losing year. First off you need to learn how to accept the fact that you aren't a winner at your current game and either move down to a lower limit or quit all together. While doing this read these forums and learn how to play poker better. I am guessing your main problem is bankroll management.

[JoeyNoOne]

If you read above you will realized that I am not a losing player. This is a hypothetical situation that could occur to you or to myself. If you had one losing year would you quit. I seriously doubt it. Have I had losing months, YES. Could I lose in 2006, I sure hope not. But, I certainly wouldn't quit.

As far as bankroll management. Two years ago I started with a $200 bankroll. Today, with no additions other than poker winnings, I have 35k. If by 12-31-2006 it was 33k, would that be grounds for quitting. NO.

[Kurn, son of Mogh]

Gotta love that US tax code. Now if you live in MA, you can't deduct your losses, so you'd also technically owe 5% on the wins.

[recondite7]

[ QUOTE ]
If you had one losing year would you quit. I seriously doubt it

[/ QUOTE ]

I would quit. I would also quit if I made half as much as I did last year, because there are better things to do with my time then play poker poorly at a rate per hour that I am not happy with. If i'm losing money multitabling at the low stakes then I must be playing really bad.

If you turn $200 into 35k in two years and then lose 2k the next year this would be HORRIBLE!!!! If you moved up to higher limits it would be horrible because you managed your bankroll poorly, If you are losing at the same stakes you won at then your game has changed for the worse. I play this game for $ first and fun second and although I need to have fun to keep playing I would easily quit if I had a losing period that lasted for one year.

[leehrat]

hopefully this link will help everyone out:

http://www.irs.gov/publications/p501/ar01.html#d0e253

if you have earned less than $8200 over the past year, you do not have to file taxes. so, if you are a college student and the combined sum of your poker losses and job income is <$8200, you are NOT obligated to file that year. and anyone who declares poker income when they were a net loser is a total moron.

[Wake up CALL]

[ QUOTE ]
hopefully this link will help everyone out:

http://www.irs.gov/publications/p501/ar01.html#d0e253

if you have earned less than $8200 over the past year, you do not have to file taxes. so, if you are a college student and the combined sum of your poker losses and job income is <$8200, you are NOT obligated to file that year. and anyone who declares poker income when they were a net loser is a total moron.

[/ QUOTE ]

Nice post but keep in mind gambling winnings is not earned income. You must file if your gross winnings were over the $8200 threshold, before deducting your losses.

[TomBrooks]

[ QUOTE ]
[ QUOTE ]
if you have earned less than $8200 over the past year, you do not have to file taxes.

[/ QUOTE ]
Nice post but keep in mind gambling winnings is not earned income. You must file if your gross winnings were over the $8200 threshold, before deducting your losses.

[/ QUOTE ]
On what basis do you figure your winnings and losses? Annually, monthly, monthly by poker site, monthly by site and limit, or every hand of poker you played?

The smaller the segments you break it down into, the higher your winnings go and the higher your losses go. Imagine if you added up the winnings of every pot you won and subtracted the losses from every hand you lost. These would both be big numbers while the net of winnings - losses could be a small or even a tiny number.

[lala]

also remember that if you are a dependent you must file if you have $400 or more in self-employment income