This should end all of the false claims about paying US taxes on poker
 

Hopefully this gets stickied.

http://www.twoplustwo.com/magazine/current/Fox0207.html

Re: This should end all of the false claims about paying US taxes on poker
 

This one doesn't make sense:

"Myth #6. I can net my wins and my losses. Unless you’re a professional, the sum of your winning sessions are Other Income (line 21, Form 1040); your losing sessions, up to the amount of your winning sessions, are an itemized deduction taken on Schedule A. Professionals do get to net their results and file using Schedule C (Profit or Loss From Business). Professionals, though, must pay self-employment tax on their net income, at 15.3% of the first $94,000 of net income, and 2.9% above this (2006 numbers). While half of the self-employment tax is a deduction (line 27 of Form 1040), unless the professional earns a substantial six-figure income, he can pay more in tax."

So say a player plays ~5/10 NL 500,000 hands in year. Is he supposed to declare that he won $4,000,000 and lost $3,500,000? That is just rediculous. How the heck would you even keep track of all this? I mean yea you might have PT, but when you play on a different computer/different site?

Re: This should end all of the false claims about paying US taxes on poker
 

Our tax code isn't exactly a shining example of common sense....

Re: This should end all of the false claims about paying US taxes on p
 

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This one doesn't make sense:


So say a player plays ~5/10 NL 500,000 hands in year. Is he supposed to declare that he won $4,000,000 and lost $3,500,000? That is just rediculous. How the heck would you even keep track of all this? I mean yea you might have PT, but when you play on a different computer/different site?

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This is not difficult. You bust out a little program called Excel and record the results of every session on every site. I keep track of time played, beginning balance and ending balance for the session. Very simple.

Re: This should end all of the false claims about paying US taxes on poker
 

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This one doesn't make sense:

"Myth #6. I can net my wins and my losses. Unless you’re a professional, the sum of your winning sessions are Other Income (line 21, Form 1040); your losing sessions, up to the amount of your winning sessions, are an itemized deduction taken on Schedule A. Professionals do get to net their results and file using Schedule C (Profit or Loss From Business). Professionals, though, must pay self-employment tax on their net income, at 15.3% of the first $94,000 of net income, and 2.9% above this (2006 numbers). While half of the self-employment tax is a deduction (line 27 of Form 1040), unless the professional earns a substantial six-figure income, he can pay more in tax."

So say a player plays ~5/10 NL 500,000 hands in year. Is he supposed to declare that he won $4,000,000 and lost $3,500,000? That is just rediculous. How the heck would you even keep track of all this? I mean yea you might have PT, but when you play on a different computer/different site?

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In that example, you should use a schedule C.

Re: This should end all of the false claims about paying US taxes on p
 

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In that example, you should use a schedule C.

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But you can only use a Schedule C if you're a professional.

It's possible for some online gamblers to have fairly ridiculous "Other Income" and "Gambling Loss" deductions. Take an online SNG player, who plays 30 $100 SNGs a day. He could have $100,000 in income and $80,000 in losses. Suddenly some deductions that individual (who hypothetically can't file as a professional) had are gone.

The Tax Code isn't fair. But how you are supposed to treat gambling for the non-professional is very, very clear.

-- Russ Fox
co-author, "Why You Lose at Poker"

Re: This should end all of the false claims about paying US taxes on p
 

Another article which states the letter of the law but takes no account of how things work in the real world. I again ask what if you multitable and count each table as a session and count breaks. Does that mean reporting 200 sessions a day? What if I have a full time job but play lots of onine poker and end up with $1,000,000 in wins and $999,000 in loses? What if I make some money but the site folds and I never recieve it?

P.S. Stop throwing around prison. No one goes to prison for reporting their income incorrectly. Truthfully, few go to prison even in blatant cases of fraud. The IRS just wants, and tends to get, its money. Contact a tax professional. They live in the real world.

Re: This should end all of the false claims about paying US taxes on poker
 

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Our tax code isn't exactly a shining example of common sense....

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QFT

Re: This should end all of the false claims about paying US taxes on p
 

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This one doesn't make sense:


So say a player plays ~5/10 NL 500,000 hands in year. Is he supposed to declare that he won $4,000,000 and lost $3,500,000? That is just rediculous. How the heck would you even keep track of all this? I mean yea you might have PT, but when you play on a different computer/different site?

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This is not difficult. You bust out a little program called Excel and record the results of every session on every site. I keep track of time played, beginning balance and ending balance for the session. Very simple.

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This is not a "very simple" thing to do. Do you even play poker? I am only declaring my net because it's the only thing that makes sense.

Re: This should end all of the false claims about paying US taxes on p
 

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He could have $100,000 in income and $80,000 in losses. Suddenly some deductions that individual (who hypothetically can't file as a professional) had are gone.

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For those who are younger and will be filing taxes for the first time as well as for a few ignorant elders (I'm 35 and never even seen a tax return of mine other than to sign it), can you please discuss the implications of this - perhaps an example of the effect thereof?

Re: This should end all of the false claims about paying US taxes on p
 

There's a thing called the alternative minimum tax that can sometimes cause you to lose some of your income tax deductions particularly in cases where your total deductions are very large. Also, if you don't itemize other areas, you can lose some deductions in the example given. Such as:

You are single, and don't own your own home. Thus you would normally take the standard deduction on your income taxes (lets say it's 8K for this example). Now you have a regular job but you play poker on the side. You also "win" 100K in poker, and "lose" 80k for a net win of 20k. However, to get credit for the 80K in losses you have to itemize deductions. You've now lost the 8k standard deduction you would have gotten. Say at your job you made 50k. Now you have 150k in income, and 80k in standard deductions or 70k in taxable income. If you could net, you'd have 70k in income, less 8 for deductions or 62k. Now you've lost some. This is fairly moot if you own a home or could otherwise itemize deductions without the gambling losses

Re: This should end all of the false claims about paying US taxes on p
 

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This is not a "very simple" thing to do. Do you even play poker? I am only declaring my net because it's the only thing that makes sense.

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Ok. Have fun explaining that to the IRS.

IRS: Why are you not showing any gambling losses?
Hero: Because I netted my wins and losses
IRS: You can't do that.
Hero: But it's the only thing that makes sense.
IRS: But, you can't do that.
Hero: But it makes sense.
IRS: But you can't do that.

Gee, I wonder who's gonna win this argument....

Re: This should end all of the false claims about paying US taxes on p
 

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In that example, you should use a schedule C.

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But you can only use a Schedule C if you're a professional.

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Someone grossing $4M playing poker better damn WELL be taking advantage of being a professional.

Re: This should end all of the false claims about paying US taxes on p
 

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He could have $100,000 in income and $80,000 in losses. Suddenly some deductions that individual (who hypothetically can't file as a professional) had are gone.

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For those who are younger and will be filing taxes for the first time as well as for a few ignorant elders (I'm 35 and never even seen a tax return of mine other than to sign it), can you please discuss the implications of this - perhaps an example of the effect thereof?

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Talk to a tax professional

TALK TO A TAX PROFESSIONAL!

Re: This should end all of the false claims about paying US taxes on p
 

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This is not a "very simple" thing to do. Do you even play poker? I am only declaring my net because it's the only thing that makes sense.

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This is a VERY simple thing to do, you just don't want to spend the effort on doing it.

And if you're expecting some mercy from the IRS, just because online poker is much more involved to do this for.... well, my bridge is still for sale.

Re: This should end all of the false claims about paying US taxes on p
 

Last year I filed for tax's as just recreational, they took my total wins which equaled around 150,000. Then I deducted my loss, 120,000. For a net of around 30k. Payed like 3-5k in tax, cant remember the exact numbers.

Re: This should end all of the false claims about paying US taxes on p
 

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P.S. Stop throwing around prison. No one goes to prison for reporting their income incorrectly.
They live in the real world.

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I'll visit your world sometime and find out why you claim things you obviously know nothing about.

BTW, Ed Miller's betting against your claim, as is the author of the article in my original post. And Al Capone's ghost would like to talk to you.

Re: This should end all of the false claims about paying US taxes on p
 

Stop being bitter at the people that actually have a positive net to declare

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

Re: This should end all of the false claims about paying US taxes on p
 

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Stop being bitter at the people that actually have a positive net to declare

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

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ppllllllbbbbhhhhh!!!

Re: This should end all of the false claims about paying US taxes on p
 

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Last year I filed for tax's as just recreational, they took my total wins which equaled around 150,000. Then I deducted my loss, 120,000. For a net of around 30k. Payed like 3-5k in tax, cant remember the exact numbers.

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Pretty simple, ain't it? Why would people not want to follow the rules? I just don't get it.

Re: This should end all of the false claims about paying US taxes on p
 

maybe they think netting is way cheaper than not doing so

Re: This should end all of the false claims about paying US taxes on p
 

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maybe they think netting is way cheaper than not doing so

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Yeah, and it would be even cheaper if they filed no tax return at all. Hmmm. Let's try that....

Re: This should end all of the false claims about paying US taxes on p
 

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Take an online SNG player, who plays 30 $100 SNGs a day. He could have $100,000 in income and $80,000 in losses.

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This goes back to the issue of what constitutes a "session." The predominant view I've seen here is the most restrictive: each SNG=1 session, regardless of number played during one time at the computer, multitabling, or whatever.

Tis makes a certain amount of sense in a B+M casino; after all, you sit down at a table, play, then physically get off your arse and wait for the next one. This is NOT the case of internet player who's consistently playing >= 1 SNG for 5 hours straight.

To the best of my knowlege, this has yet to be challenged in court. I'd be willing to believe that a more liberal interpretation of a session might prevail.

Note that, to get in trouble for using this definition of a session, the IRS would have to:
1. Take exception to your figures
2. Audit you
3. Challenge whatever piece of paper you show them
4. Obtain contrary information
5. Take you to court
6. Win

I plan on counting continuous time spent logged on to a website as a "session." I seriously doubt any repurcussions.

Note that the law technically requires a losing player (who may never have even cashed out) to declare winnings. Do you think 1 in 500 do so?

Re: This should end all of the false claims about paying US taxes on p
 

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P.S. Stop throwing around prison. No one goes to prison for reporting their income incorrectly. Truthfully, few go to prison even in blatant cases of fraud. The IRS just wants, and tends to get, its money. Contact a tax professional. They live in the real world.

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That defense didn't work so well for Al Capone.

Re: This should end all of the false claims about paying US taxes on p
 

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I again ask what if you multitable and count each table as a session and count breaks. Does that mean reporting 200 sessions a day? What if I have a full time job but play lots of onine poker and end up with $1,000,000 in wins and $999,000 in loses?

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Well, I've written an article about what a session is. Although you won't like my conclusions, a tournament is a session. For those who play lots of SNGs, they have lots of sessions. That's the law.

If you want to evade the Tax Code, and the regulations promulgated thereunder, that's your issue. I am a professional tax preparer, and if you think I'm going to advise anyone to evade the law, you're nuts.

Indeed, a SNG player could have your theoretical $1 MM in wins and $999k in losses. I've seen (and prepared) some strange looking returns for people impacted by the Alternative Minimum Tax (AMT). The Tax Court has repeatedly ruled (as have the Courts of Appeal) that the AMT causes some extremely unfair taxation issues, but that it's the law and only Congress can change it. I'm sure that if this issue appeared in front of them, they'd say the same thing.

Lots of things in tax have shades of gray--they're open to interpretation. But if you're an amateur player, you can't net your wins and losses. That's black and white, and there's no way around it.

And just so you know, if you knowingly evade the Tax Code, you've committed tax fraud. That's a felony. Yes, most people don't go to prison. But do you want the hassles: the extra penalties, interest, and costs (in both time and money) or would you rather prepare your return correctly?

As I said in the article, the Tax Code isn't fair. Some parts are stupid. But only Congress can change it.

-- Russ Fox (EA)
co-author, "Why You Lose at Poker"

Re: This should end all of the false claims about paying US taxes on p
 

For B&M poker, why isn't one single hand a session? So, if I play 8 hours, and 250 hands, I should record each separately.

Because if one single hand isn't a session, then a session is determined by when I get up and when I sit down. If I get up to go to the restroom, does that end one session and start a new one? If not, then why can't I say that 8 hours of sleep was just a break in a single session rather than the dividing line between two separate sessions?

Re: This should end all of the false claims about paying US taxes on p
 

If you make enough, pay some guy to find an offshore loophole and use your OSA debit card. If not, don't pay tax. Pretty simple.

Re: This should end all of the false claims about paying US taxes on p
 

If it is my first time filing as a professional, am I required to have already payed quarterly installments on my 2006 poker income?

Re: This should end all of the false claims about paying US taxes on p
 

Russ,

As a professional tax preparer, how do you advise losing recreational gamblers to report their gambling winnings/losses?

For example:
If someone takes a weeklong trip to Vegas, where they play fifteen sessions of blackjack, with a total of $10,000 in winning sessions and $11,000 in losing session, would you force them to report that $10,000 as income and then give up the standard deduction in order to offset this in losses?

What about someone who buys lottery tickets every day, with $1800 in losses and $600 in wins. Do they have to pay tax on the $600 if they want to take the standard deduction?

I think 95% of these people don't have any record of their "sessions". Aren't most people who do any gambling violating the law when they prepare their taxes?

Re: This should end all of the false claims about paying US taxes on p
 

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This is not difficult. You bust out a little program called Excel and record the results of every session on every site. I keep track of time played, beginning balance and ending balance for the session. Very simple.

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Please tell me how you define a session. The term is undefined by the IRS. Is it every hand, every year, or something else?

Re: This should end all of the false claims about paying US taxes on p
 

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Aren't most people who do any gambling violating the law when they prepare their taxes?


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I think most people prepare their taxes correctly.

Re: This should end all of the false claims about paying US taxes on p
 

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P.S. Stop throwing around prison. No one goes to prison for reporting their income incorrectly. Truthfully, few go to prison even in blatant cases of fraud. The IRS just wants, and tends to get, its money. Contact a tax professional. They live in the real world.

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That defense didn't work so well for Al Capone.

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Wow, had to pull out Capone. I did say very few go to prison for blatant fraud. Perhaps i should have said one? Live in the real world. Interest, penalties possible for incorrect reporting. Absolutely possible. Prison isn't, so stop lying.

Re: This should end all of the false claims about paying US taxes on p
 

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Note that the law technically requires a losing player (who may never have even cashed out) to declare winnings. Do you think 1 in 500 do so?


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If you never cash out why would you declare anything. The IRS will only care if money is coming into your bank account and not being accounted for. The IRS cares about W2G income and unaccounted for deposits to your account. Same as in a B&M.

Re: This should end all of the false claims about paying US taxes on p
 

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If you never cash out why would you declare anything. The IRS will only care if money is coming into your bank account and not being accounted for. The IRS cares about W2G income and unaccounted for deposits to your account. Same as in a B&M.


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Simply horrid information!!!!!

Re: This should end all of the false claims about paying US taxes on p
 

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If you never cash out why would you declare anything. The IRS will only care if money is coming into your bank account and not being accounted for. The IRS cares about W2G income and unaccounted for deposits to your account. Same as in a B&M.

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Please explain why you would post such crap?

If you are completely ignorant of a given topic (which is obvious in this case), please shut up, read, and learn.

Re: This should end all of the false claims about paying US taxes on p
 

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Aren't most people who do any gambling violating the law when they prepare their taxes?


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I think most people prepare their taxes correctly.

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OK. Almost no one declares cash wins in casinos or even keeps track or wins or losses. If they win a slot jackpot or something they pay tax on that. I am not talking about people who gamble everyday or derive income from gambling but recreational gamblers.

Re: This should end all of the false claims about paying US taxes on p
 

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I think smart people prepare their taxes correctly.

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FYP [img]/images/graemlins/smile.gif[/img]

Re: This should end all of the false claims about paying US taxes on p
 

you are the ignorant one. go to vegas or AC and ask random people if they keep track of wins and losses and report them. You will be lucky if you find 1 in 100 who do. We are talking about the real world not your fantasy land.

Re: This should end all of the false claims about paying US taxes on p
 

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P.S. Stop throwing around prison. No one goes to prison for reporting their income incorrectly.
They live in the real world.

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I'll visit your world sometime and find out why you claim things you obviously know nothing about.

BTW, Ed Miller's betting against your claim, as is the author of the article in my original post. And Al Capone's ghost would like to talk to you.

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You guys are so paranoid. Al Capone intentionally didn't report his income. That is tax evasion and is the only way you end up in jail. If you make a good faith effort to pay your taxes properly, YOU WILL NOT GO TO JAIL. The worst thing that will happen is that you will owe interest and possibly penalties on any amount not paid.

Re: This should end all of the false claims about paying US taxes on p
 

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you are the ignorant one. go to vegas or AC and ask random people if they keep track of wins and losses and report them. You will be lucky if you find 1 in 100 who do. We are talking about the real world not your fantasy land.

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Dude, you're an idiot.

We are in a poker forum, dedicated to regular, consistant poker players. Many of us win. Most of us are not stupid.

You are stupid. And if you continue to post your stupid "advice" you will continue to be called out.

Please google: "constructive receipt" and come back with your [censored] advice about what the IRS cares about.