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- - paying taxes (http://archives1.twoplustwo.com/showthread.php?t=193229)

you guys pay quarterly tax estimates?

i just talked to a tax attorney today who says I will need to pay every 1/4 and that my wins/losses will offset previous payments so in the end of the year I will get a refund/owe more which seems kind of rediculous. isnt it just easier to pay it all in the end of the year? or will I get penalties for this?

also, how is the IRS supposed to know if I my "income/winnings" is still in the poker site?

Re: paying taxes

fock it, i'll just move to europe

doesn't the fact that 50% of your winnings go to uncle sam upset you guys?

i mean that basically means that if I play 10-20 and win 2k that I really just played 5-10 and won 1k.

lameeeeeeeeeee

Re: paying taxes

[ QUOTE ]
fock it, i'll just move to europe

doesn't the fact that 50% of your winnings go to uncle sam upset you guys?

i mean that basically means that if I play 10-20 and win 2k that I really just played 5-10 and won 1k.

lameeeeeeeeeee

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dude, talk to an accountant, we're just a bunch of degenerate gamblers

Re: paying taxes

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50% of your winnings

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What?

Re: paying taxes

Grim,

I spend 30 days/year in the USA, and send the government 33% of my winnings.

Re: paying taxes

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you guys pay quarterly tax estimates?

i just talked to a tax attorney today who says I will need to pay every 1/4 and that my wins/losses will offset previous payments so in the end of the year I will get a refund/owe more which seems kind of rediculous. isnt it just easier to pay it all in the end of the year? or will I get penalties for this?

also, how is the IRS supposed to know if I my "income/winnings" is still in the poker site?

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Talk to an accountant that understands taxes for gamblers as there are different rules depending on if you are pro or not. Also, many people may think they are 'pros', but aren't according to the IRS definition.

With any form of earning where you don't have taxes taken out of the income (e.g. consulting, 1099 earnings, gambling etc...) you should pay a quarterly tax estimate. If you don't, you are subject to penalty when you do your yearly filing.

Basically, the IRS doesn't want to give consultants and the like a free loan for the year by allowing them to pay their tax obligation all on April 15th w/o penalty while Johnny Punchclock has his money taken out every week. So, you should pay quarterly tax estimates. If you don’t, you will have to pay penalties that are going to be higher than the interest you may have made holding the money all year. Penalties are calculated based on when you earned the income. So if you decide not to pay estimates, you will pay a higher penalty if you were running hot in the first quarter than if you ran hot in the last.

At the end of the year, you do your tax return and figure out how much you owe. Then you get a refund/owe more depending on how your actual tax obligation compares to your estimated payments. Estimate high and you get a refund. Estimate low and you owe more. Calculate your tax obligation each quarter and pay that amount. This can be a little tricky if you don’t understand taxes very well because you’ll have to do things like prorate your non-gambling deductions (eg take ¼ of your mortgage interest payment), estimate what your tax rate will be for the year, include FICA deductions etc… Remember, unlike a W-2 employee, you are responsible for ALL your Social Security and Med payments (employers pay half for their W-2 employees.) Also, what deductions you are allowed regarding gambling expenses depends on if the IRS sees you as a pro or not (only pros can deduct gambling related expenses. E.g. A trip to Vegas can be deductible for a pro but not for an armature.)

An interesting note: you won’t get penalized as long as you pay in estimated taxes as much as you owed the previous tax year. So an easy way to do this is let’s say you paid 40,000 in taxes last year. This year, if you pay 10,000 each quarter in estimated tax payments, you won’t have to pay any penalties even if you end up owing 80,000 in taxes. Upside is you keep that $40k in an account earning you interest. Down side is you have to write a big check at the end of the year. Some people are not disciplined with their money enough to save what they need to pay off their taxes.

Pro status also determines how your calculate your AGI (for non-pros, all winning sessions are considered income for AGI and losing sessions are taken as a deduction. Pros calculate AGI as winning sessions less losing sessions. So non-pros have a higher AGI, which can hurt them if they take other non-gambling related deductions that are limited by AGI.)

I don’t believe the IRS cares if your winnings are in the Poker site or in your bank account. Personal income taxes are paid on a cash basis (as opposed to accrual.) So the instant the cash is available to you, you have earned it as far as they are concerned.

I know paying 50% of your earnings to Uncle Sam sucks, but join the club! We all do it. Between by business and personal taxes, I pay more than most people on this site earn each year. It’s sickening. One prominent economist once said if everyone was forced to pay estimated taxes instead of having it automatically taken out of their pay check, there would be a tax revolt in this country. The sheeple don’t notice their hard earned money being siphoned away as its taken out of their weekly checks. But if everyone got paid their gross wage then had to write a check each quarter to the IRS, they would freak.

Seek professional advice on all of the above, as I am not a tax pro just took a couple advanced tax MBA classes. I’ve just gotten so much good info from all your posts I wanted to give a little back. God knows I couldn’t offer you any useful poker advice!

Re: paying taxes

Grim,

If you didnt pay taxes last year, you dont have to pay estimated payments this year.

Re: paying taxes

I go with the strategy of report what i feel like reporting to get in-state tuition, dont report the rest. IRS has no way of really knowing since most of the money stays in PartyPoker's hands anyway and they cant access those records.

Then again I have no moral qualms against cheating the govt. out of any money I think I can cheat it out of.

Re: paying taxes

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I go with the strategy of report what i feel like reporting to get in-state tuition, dont report the rest. IRS has no way of really knowing since most of the money stays in PartyPoker's hands anyway and they cant access those records.

Then again I have no moral qualms against cheating the govt. out of any money I think I can cheat it out of.

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You do realize the IRS will pay people to report you. This is just stupid to post on a public forum.

Re: paying taxes

Do they really pay people to report others? That seems kind of sketchy policy. Grim, I would never try to cheat the US government. Your penalties are VERY harsh.

Btw there is always applying for Swedish citizenship. Keep your money online for 3 years until you get it. I dont see anything positive with being american these days anyway. Atleast not if you like to travel abroad.

Re: paying taxes

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Grim,

I spend 30 days/year in the USA, and send the government 33% of my winnings.

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What? Where do you live, Canada? Why not just become a full citizen of the country you reside in 11 months of the year?

Re: paying taxes

I have never heard of this crap. What a joke. It's not enough to tax something that you're trying to prevent people from even doing. The IRS gets a free loan from most people when it deducts taxes from every paycheck, since almost everyone has their withholding set too high. It's not enough to take a chunk out of everything I earn, they want to take it before I even get a chance to make use of it. Screw them.

NT

Re: paying taxes

"What? Where do you live, Canada? Why not just become a full citizen of the country you reside in 11 months of the year?"

I would never be able to legally return to the USA.

Re: paying taxes

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I would never be able to legally return to the USA.

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[img]/images/graemlins/confused.gif[/img] [img]/images/graemlins/confused.gif[/img] [img]/images/graemlins/confused.gif[/img]

Re: paying taxes

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"What? Where do you live, Canada? Why not just become a full citizen of the country you reside in 11 months of the year?"

I would never be able to legally return to the USA.

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I assume you got a good CPA to do your taxes? Because it sounds like you shouldn't be paying any taxes on the first 85K and probably a lot less than you might think on the rest, if you are doing them yourself.

Re: paying taxes

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Do they really pay people to report others? That seems kind of sketchy policy. Grim, I would never try to cheat the US government. Your penalties are VERY harsh.

Btw there is always applying for Swedish citizenship. Keep your money online for 3 years until you get it. I dont see anything positive with being american these days anyway. Atleast not if you like to travel abroad.

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You don't think the IRS will stoop to low levels to get paid? Wait til the [censored] really hits the fan. If they had any brains they already have someone snooping these forums to find guys saying things like "I won 200k this year and not paying a penny in taxes. Screw uncle sam!!"

Those guys are in some deep [censored] if the IRS gets hold of that document.

Re: paying taxes

Donk [censored] with the taxman. Governments will collect and it will suck.

Re: paying taxes

I've been told that, in the event of an audit, the IRS may be able to get access to Party account info (it is publicly traded on the British market and they may cooperate).

This was from a person I would say is very knowledgeable.

NT

Re: paying taxes

i was under the impression that it was ok if i just reported what earnings that i brought into my US bank account, and didn't have to report earnings that still sit in offshore poker accounts until i bring the money here. is this grossly incorrect?

Post deleted by Mat Sklansky

Re: paying taxes

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Grim,

If you didnt pay taxes last year, you dont have to pay estimated payments this year.

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Does this only apply to taxes payed on gambling winnings last year? i.e., do i have to pay estimated payments this year up to the amount I paid in taxes from my 9-5 job?

Re: paying taxes

Does ANYONE have resources for Canadian poker players concerning whether or not we have to pay taxes?

Re: paying taxes

This advice is the nuts. And be sure to use a CPA that is familiar with gambling income, as most would not be. The easy definition of a pro is one who receives all his income from gambling. If you receive a W-2 then you would be a semi-pro.

Re: paying taxes

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is this grossly incorrect?

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This is almost certainly against the law.

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Not necessarily. Until that money is in your hand/bank account, its an unrealized gain. Its like not reporting stock market gains until the time of sale.

Re: paying taxes

Totally wrong, try again

Re: paying taxes

All,

If you think a publicly trading corporation on the London Stock Exchange is not going to cooperate w/ IRS info requests and subpoenas when the time comes, you are kidding yourselves.

Oh, and they already have access to Neteller info.

Re: paying taxes

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Do they really pay people to report others? That seems kind of sketchy policy.

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Yes it is true.

The IRS will pay you a percentage of what they collect.

Re: paying taxes

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doesn't the fact that 50% of your winnings go to uncle sam upset you guys?

[/ QUOTE ]

It really shouldn't be anywhere near 50%, especially if you aren't classifed as a pro, because then you do not have to pay Social, only the straight income tax percentage.

Re: paying taxes

I think I will be classified as a pro due to how much I have made even though I am still a student/only 19/etc.

i that if I earned 400,000$ by the end of '06 I would owe approx 175,000$ in taxes (fed, state, SS, medicade) which seems redic!

he did tell me i could put some $ in a SEP IRA which would remain untouchable. btw, what kind of interest do you earn on that? i'm assuming it's better than what the bank normally pays for accounts/CDs/etc.

Re: paying taxes

you invest money in an IRA in normal financial instruments. Just google this stuff or check out the finance and investing forum on here.

Re: paying taxes

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Grim,

If you didnt pay taxes last year, you dont have to pay estimated payments this year.

[/ QUOTE ]

Does this only apply to taxes payed on gambling winnings last year? i.e., do i have to pay estimated payments this year up to the amount I paid in taxes from my 9-5 job?

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If you have W-2 income you are not required to file quarterly. Your income is taxed as you receive it. Gambling income would be listed on your 1040.

Re: paying taxes

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Grim,

If you didnt pay taxes last year, you dont have to pay estimated payments this year.

[/ QUOTE ]

Does this only apply to taxes payed on gambling winnings last year? i.e., do i have to pay estimated payments this year up to the amount I paid in taxes from my 9-5 job?

[/ QUOTE ]

If you have W-2 income you are not required to file quarterly. Your income is taxed as you receive it. Gambling income would be listed on your 1040.

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Understood, but this wasn't my question. My question is this:

Do you have to report your gambling income quarterly this year even if you only payed W-2 income taxes in the previous year?

Re: paying taxes

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Grim,

If you didnt pay taxes last year, you dont have to pay estimated payments this year.

[/ QUOTE ]

Does this only apply to taxes payed on gambling winnings last year? i.e., do i have to pay estimated payments this year up to the amount I paid in taxes from my 9-5 job?

[/ QUOTE ]

If you have W-2 income you are not required to file quarterly. Your income is taxed as you receive it. Gambling income would be listed on your 1040.

[/ QUOTE ]

Understood, but this wasn't my question. My question is this:

Do you have to report your gambling income quarterly this year even if you only payed W-2 income taxes in the previous year?

[/ QUOTE ]

General Rule
You must pay estimated tax for 2006 if both of the following apply.

You expect to owe at least $1,000 in tax for 2006, after subtracting your withholding and credits.

You expect your withholding and credits to be less than the smaller of:

90% of the tax to be shown on your 2006 tax return, or

100% of the tax shown on your 2005 tax return. Your 2005 tax return must cover all 12 months.

Sounds to me like you need a good tax professional familiar with gambling.

Re: paying taxes

Do something good for your community and open up some churches.

Re: paying taxes

i havent been to church in over 5 years