Tax question

Blowup Doll · #1 07-23-2006, 05:54 PM

Let's say i win $9.5k this year in cash games and then enter the WSOP $10k event and bust out. Can i claim on my taxes that i'm an overall loser and not owe tax on the cash winnings?

The tax situation in Illinois is so sucky that i might be +EV by just spending all my winnings on a tourney.

DING-DONG YO · #2 07-23-2006, 10:08 PM

Federal: Short answer, yes if you file as a pro. I would think a tourney entry counts as a loss if you don't come in in the money. If you do not file as a pro (winnings in other income, losses as itemized), you will only have to pay extra if 9.5K pushes you into a higher tax bracket than you are already in (say 5K of your 9.5K is taxed at 26% and everything else at 24% since you went 5K over the other bracket. You will pay the extra 2% on the 5K)

State: IL sucks. No state deduction for losses. You pay state tax on the whole 9.5K winnings (assuming that is your gross winnings) regardless.

Hope that helps. Let me know if any of this is unclear.

Niediam · #3 07-23-2006, 10:11 PM

You owe federal taxes on all your winning sessions. If you want you may then deduct your lossing sessions.

For IL state tax you out taxes on all your winning sessions with no option to deduct losing sessions.

Unless you can file as a professional in which case you can just net your win/loses.

Blowup Doll · #4 07-25-2006, 02:39 AM

Ok, but the reason why i asked is because TurboTax says that you only need to claim gambling winnings if your net winnings is greater than $500.

I called their tech support and they said that was correct. I even gave them this hypothetical scenario, and they told me that if my net was below zero, then i didn't need to even mention it in my taxes.

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

Niediam · #5 07-25-2006, 05:30 AM

[ QUOTE ]
Ok, but the reason why i asked is because TurboTax says that you only need to claim gambling winnings if your net winnings is greater than $500.

[/ QUOTE ]

That is simply incorrect.

DING-DONG YO · #6 07-25-2006, 09:48 AM

[ QUOTE ]
[ QUOTE ]
Ok, but the reason why i asked is because TurboTax says that you only need to claim gambling winnings if your net winnings is greater than $500.

[/ QUOTE ]

That is simply incorrect.

[/ QUOTE ]

However, you could probably document what you saw in Turbo Tax help, document who you spoke with at TT support and when, not report it and call it a day.

At that point, you've done your diligence and made a good faith effort to do what is right. The IRS isn't going to rake you over the coals for it if you get audited.

Wools · #7 07-25-2006, 03:13 PM

I'm in Illinois also and I'm clueless about taxes. I saw some threads earlier in the year with suggested literature, but the search function yielded no meaningful results. Do you guys know any relevant literature that I can read?

I file through a CPA, but this is the first year I'm making money from poker and dont know how familiar he is with respect to gambling issues. I had a day job through April 1, but it's been poker only since as I'm going back to school in the fall. Dont know if I should file as a pro or not, but I do want to send off some quarterly payments to the IRS because I have a few transactions from NT to my bank that are over $1k and will continue to withdraw.