Never paid taxes before... how much should I expect to pay?
 

I am planning on talking to a tax accountant (which is the same thing as a CPA, correct?), but the answer to this question affects how I should manage my bankroll. Also, I'm curious how much I'm getting screwed out of. [img]/images/graemlins/tongue.gif[/img]

So far this year I've made about $50K from poker, plus $10K in bonuses and rakeback. From what I've read, the IRS is pretty strict about letting people file as pros, so I'm going to assume by default that I will not be able to file as one. FWIW, I've played about 500 hours this year, and poker has been my only source of income.

I know that if I don't file as a pro, I can't net my winnings. So, unless someone knows an easier way with Poker Tracker, I'm just going to have to add up all the winning sessions/tables, and add up all the losing sessions/tables. Right now I'm going to take a very wild guess and say I've won $250K and lost $200K (does this sound like it could be about right?). Can anyone give me a rough estimate on how much I'm going to have to pay in taxes?

Thanks a ton.

Re: Never paid taxes before... how much should I expect to pay?
 

You are a "PRO"...RB and Bonus are income..Since you will be able to file as a "pro" attach print out from PT and add in your RB + Bonus...You will also be able to take deductions..When taking deduction be sure to document everything...

Re: Never paid taxes before... how much should I expect to pay?
 

If you made $60K in income and have no deductions or exemptions other than a single personal exemption (after taking the gambling loss deduction), you would have a federal tax liability of around $10,500.

My understanding is that if you file as a pro, you would have to pay self-employment payroll tax. I'm sure this amount would be much larger than anything you would save by netting your wins and losses and taking the standard deduction. So I'm not sure why you would want to file as a pro.

Re: Never paid taxes before... how much should I expect to pay?
 

[ QUOTE ]
Also, I'm curious how much I'm getting screwed out of.

[/ QUOTE ]

Sneak peek at the new IRS Poker Tax Form:

Q1. How big is your bankroll? $ _________.__

Send ALL it in!


D$D

Re: Never paid taxes before... how much should I expect to pay?
 

[ QUOTE ]
You are a "PRO"...RB and Bonus are income..Since you will be able to file as a "pro" attach print out from PT and add in your RB + Bonus...You will also be able to take deductions..When taking deduction be sure to document everything...

[/ QUOTE ]

Damn. Really? 10,500? Jesus my whole net worth will be my bankroll because I'm going to have to take everything else out lol

Re: Never paid taxes before... how much should I expect to pay?
 

the IRS may make you file as pro as many non pros have been getting letters to file schedule C and pay self employment tax due to their gambling wins. So if you want to file as pro, that shouldn't be a problem.

Re: Never paid taxes before... how much should I expect to pay?
 

$10,500 = 17.5%. That isn't anywhere near as bad as I expected. I thought I'd have to be paying something like at least 30%. I've never had a "real" job so I really don't know anything about this stuff. What's a "single personal exemption"?

I think it'd be pretty cool to be recognized by the government as a pro, but obviously that's not worth it if I have to pay more. I don't know whether I'll have to file as a pro or not, so I'll just cross that bridge when and if I come to it (when I talk to a CPA, right?)

Re: Never paid taxes before... how much should I expect to pay?
 

Yeah, basically, those that have never paid taxes on their poker winnings are the ones that exaggerate how much you'll pay. I get deductions for my internet bill, any meals I order and eat while playing, any books or dvd's (don't get these anymore, but have in the past) any new cpu stuff...etc. Even deductions on my electric bill and stuff. Just like a personal business. You do have to pay higher taxes on social security and what not...but after deductions, you'll pay about 25-28 percent depending on how you end up for the full year. And yeah, its not bad at all...fair and square and you are paying your fair share of the taxes to society.

So, yeah, get a cpa (accountant) and get this stuff going. Its not nearly as painful as all these others make out (again, odds are, they aren't paying their taxes and have no idea-I'm referring to no one in this particular thread btw).

Kodfish

Re: Never paid taxes before... how much should I expect to pay?
 

[ QUOTE ]
What's a "single personal exemption"?

[/ QUOTE ]

Basically, you get one exemption for each of yourself, your spouse, and your dependents (usually your children). So an unmarried person with no children gets one exemption. For each exemption, a certain amount of your income is not taxed at all. This amount changes every year...I believe for 2007 it is $3400. The exemptions can be generally be taken regardless of any other deductions taken, although I think it gets phased out at very high income levels.

So if you made $60K, you are only taxed on $56.6K after the exemption.

Re: Never paid taxes before... how much should I expect to pay?
 

Has anyone ever been audited for not paying taxes on their poker earnings? I have recently been way more succesful and am starting to worry about the amounts I am not being taxed on.