Taxes - Need help.

[AggieYank]

Indiana, how much money did you get caught not filing for? And what happened?

[Quanah Parker]

OK, 1st off, admittedly I'm a newbie.
I've been playing for 1 year and I don't think I made much if any $ in '05. So I only paid taxes for my "real" job.
'06 has been differnt, though, and after reading these posts, I'm planning on paying the man.

Here's my question. Isn't online poker illegal?
Wouldn't claiming cash from an illegal activity be like a mobster claiming taxes for the cash he got jacking that 18 wheeler full of cigarettes?

[Indiana]

[ QUOTE ]
Indiana, how much money did you get caught not filing for? And what happened?

[/ QUOTE ]

When I was first out of graduate school and started buying stocks on Etrade in 2002 I was lucky enough to pick up NT (Nortel Networks) at .47/share. I put just about everything I had on it. I had no idea it was going to explode to >$7 per share and make me mucho coin at the time. Make a long story short, I never filed this gain because I thought that the IRS would never know. Well, that was stupid because Etrade auto reports to the IRS and its automatic that you will be audited if u dont file. On the other hand, Party and Stars do not report to the IRS so they will not be able to "auto" catch you like they got me.

Basically, they chared me 3% interest and no penalties. I told them that it was a mistake and they let me slide after paying the back tax. I'll never do anything like that again myself and I have been careful with my taxes since.

Moral of the story here, you are not going to jail for not reporting your poker income. 99% that you will not get audited or even noticed in your life if you NEVER file, but you should file to sleep well at night. If the OP comes out and reports, say, something like 25K from poker income he'll prolly go unnoticed. Now, if he's made over 100K then there could be some issues but not JAIL time.

Indy

[Wake up CALL]

[ QUOTE ]
Here's my question. Isn't online poker illegal?
Wouldn't claiming cash from an illegal activity be like a mobster claiming taxes for the cash he got jacking that 18 wheeler full of cigarettes?


[/ QUOTE ]

Asked and answered dozens of times but since you asked so nicely. [img]/images/graemlins/smile.gif[/img] The IRS is prohibited from releasing your tax records to any law enforcement agency without a subpeona from said agency. In other words they have no interest in your illegal activities as long as you pay your taxes and are prohibited from volunteering that information. This has been upheld by the US Supreme Court.

[Teph]

First: Thank you mods for helping me with the redirect to legislation.

Thanks to everyone that responded so far. I appreciate the advice. I am curious, are audits done at random, at sign of a red flag (if so what would a possible red flag be), or what?

FWIW, I am asking out of curiosity, not because I intend on evading taxes.


[ QUOTE ]
Moral of the story here, you are not going to jail for not reporting your poker income. 99% that you will not get audited or even noticed in your life if you NEVER file, but you should file to sleep well at night. If the OP comes out and reports, say, something like 25K from poker income he'll prolly go unnoticed. Now, if he's made over 100K then there could be some issues but not JAIL time.

[/ QUOTE ]

So you think if I just claim my earnings (less than 25k even) it will be fine from here on out? I am just trying to clerify what you meant there, thanks.

[Quanah Parker]

Thanks for the info Wake up Call.

That makes the whole thing make alot more sense.