IRS Audit

[neverforgetlol]

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Wow, the IRS is worse than the mafia.

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obv.

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lol you don't think so?

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No, I was agreeing with you. lol, non-sarcastaments?

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oh lol auditaments

[squeek12]

This is the first year I'll be filing. I lost just about all of my pokertracker records when my laptop went down. I plan to request all neteller statements for the year. This, in addition to the money I received from rakeback via epassporte, will be what I report on my tax return.

In total, I made about $25K playing poker. Even if this documentation isn't enough and the IRS digs deeper, I don't see how they can prove I made much more than what I will report. If they find an extra couple thousand bucks, I'll pay for it. Doesn't seem in my case there is much more to worry about than relatively little back taxes and penalties. I'm not trying to cheat, I just didn't realize I'd make as much money as I did and did a poor job of documenting the income. Am I way off base here?

[Barretboy]

If you've made a mistake on your return, most likely the IRS won't fine or jail you for it. You will have to refile your tax return with the correct amounts, however. You can ask for an extension, up to 6 months. The IRS is mainly concerned with fraud, not unintentional misstatements.

[HiddenOuts]

Let's say that last year we didn't know that we were supposed to pay taxes on gambling income. Is it a good idea to file an amendment, and if we do what will be the consequences? Back taxes plus interest?

I assume it's better to correct the mistake yourself than let the IRS find out about it first, right? At least they will know you're not trying to cheat and now that you realize your mistake you're trying to correct it.

[Barretboy]

That would be the best thing to do, legally. Like i said, they only look at 2% of the returns. So often, people play the 'tax lottery'. The odds are that they won't even notice it, but it's probably better to be safe than sorry.

[squeek12]

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If you've made a mistake on your return, most likely the IRS won't fine or jail you for it. You will have to refile your tax return with the correct amounts, however. You can ask for an extension, up to 6 months. The IRS is mainly concerned with fraud, not unintentional misstatements.

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Well, I am to blame for not documenting my income correctly. What I was trying to get across is that I will be able to put together enough documentation to get within a couple thousand dollars or so of the exact amount. It just seems that if one makes a good faith effort to report to the best of his ability, and get pretty darn close, he doesn't have anything serious to worry about. Maybe I'm being naive.

[Barretboy]

I would say that the worst case scenario here is that they make you pay backtaxes, but I wouldn't worry about paying any fines or jail time. Like I said, the IRS may be ruthless in most cases, but they understand good faith efforts. Remember, auditors are people too.

I mean, I'm an auditor and I'm a person.

But don't worry, I don't work for the IRS.

[adanthar]

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lol at people taking me seriously

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I was gonna post a 3rd level disclaimer, but I figured why bother since it wouldn't be particularly funny to mislead anyone into losing their house

durrrrrr

[SmackinYaUp]

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Wow, if you're [censored] dumb enough to think that the people you see on COPS represent a good sample of the people in the United States...You might be able to sum up the south that way...

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lol, please stay on whore island

[Python49]

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To be completely honest, someone who just never pays taxes on poker and completely ignores gambling income is probably better off than someone who transfers all their money out through Neteller or into a second bank account or something or just does 8k cashouts from cardrooms and then reports a small fraction of their total winnings. If caught, the first person can say "wtf? i am supposed to pay taxes on poker winnings are you serious?" and will likely just have to pay back taxes and penalties (which are mainly just interest and a small fraction of the back taxes), while the second person will quite likely pay huge fines for tax evasion and possibly serve a little time too (unlikely unless for huge amts).

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Diablo,

I believe you've got it backwards from what ive read and the CPAs ive talked to, could be wrong. The person who just choses to not pay anything is committing tax evasion which is a felony and punishable by jail time.. and the "i had no idea" argument will hold absolutely no weight if audited. The person who choses to report but reports incorrectly is cheating on their taxes and committing tax fraud which is much different. Tax evasion carries much stiffer penalties and the person who reports but incorrectly will be the one who just owes back taxes and fines.