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

[genesisgkh1]

The IRS has not defined a poker session. As far as I know, there are no hard and fast tax rules regarding reporting wins and loses by session, then having your poker site close down before you can cash out your winnings. By the letter of the law, if you play poker regularly, you must report it on your tax return, win or lose. Yet no losing poker player reports anything on their taxes, and NONE of them are in jail. Online poker is new and there are gray areas with regard to the tax code. Too many in this forum claim black and white and only they are correct, but just saying it don't necessarily make it so. DO NOT listen to anyone who says online poker income is not taxable. DO NOT listen to anyone who says you must report $1,000,000 in income and put the $999,000 under itemized deductions. DO NOT listen to anyone who talks about putting someone in jail if they made a good faith effort to pay their taxes. Contact a tax professional.

[Russ Fox]

Estimated taxes are, in general, based on the lesser of 90% of the current year's taxes or 100%/110% of the prior year's taxes. If you had no tax last year (note: this isn't whether you got a refund or not, it's your total taxes), you don't have to make estimated payments. There's also a safe harbor rule (if your taxes total less than $1000, you don't have to make estimated payments). Most, but not all, states follow the federal rules for estimated taxes.

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

[Zele]

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you are scaring people who make no money gambling online.


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In some ways, accurate records are more important for net losers. There are several examples of losing gamblers who hit a big, documented jackpot and were forced to pay taxes on it even though they were net losers for the year, since without records they could not prove any losses.

[Wongboy]

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Very true.

I didn't say what I should have: the law is that you must report by session (my response was to an individual claiming that he could net everything, which, of course, isn't the case). The definition of a session doesn't exist. Indeed, that was the premise of the article I wrote on what is a gambling session.

Actually, the IRS' view (which has been made clear to me from the audits I've been to) is much more restrictive than my own view. The IRS examiners I've dealt with have said that a session is your play at any one table at any one set of limits. If you're in a must move game, and you're moved, that's a new session. I think that's ridiculous, but that's what they've tried to use.

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Under that IRS definition, if an online player stays seated at the same table, then they are still in the same session, correct?

BTW, do you have a link to your article on the definition of a session? I would be very interested in reading your take on this. Personally, my wife and I are both CPA's and we have another CPA do our taxes (we both have a non-tax focus).

Our tax CPA pushed back hard when I told him that we needed to report gross wins and losses, and also when I told him that I had >$5,000 in net winnings and no W-2G. He told me that he had never had a client report any gambling winnings unless they were straight from a W-2G. I really do not think he is alone in that experience, which is why the earlier post that claimed most (aka > 50%) people prepare their taxes correctly struck me as ludicrous.

If everyone was 100% legit, then it would be a tragedy to get drunk while gambling and forget the exact results of every "session" that you experience in the process of blowing $300 on Blackjack, tips, and booze. In fact, most casino's do not even allow you to take written notes of your results at the Blackjack table.

[NickMPK]

Has anyone ever been convicted of tax evasion because they netted their wins and losses rather than reporting session wins and deducting session losses?

I'm not acquainted with the specific regulations regarding session reporting, only the statutes to the extent I learned them in one semester of income tax in law school. But it seems to me that one could mount a serious challenge to these regulations as unconstitutionally vague if they cause almost every recreational gambler in the county to account for their taxes incorrectly.

[genesisgkh1]

BTW, in the future American companies will run taxed, regulated online poker sites for profit in our country. IMO, if you lose, nothing will be reported to the IRS and you receive no forms. If you win, a W-2 will come to your house and go to the IRS with your net winnings as income. They will want taxes paid on that amount. I doubt they are going to send you session breakdowns every year. This is just speculation, I could be wrong.

[Lottery Larry]

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BTW, in the future American companies will run taxed, regulated online poker sites for profit in our country. IMO, if you lose, nothing will be reported to the IRS and you receive no forms. If you win, a W-2 will come to your house and go to the IRS with your net winnings as income. They will want taxes paid on that amount. I doubt they are going to send you session breakdowns every year. This is just speculation, I could be wrong.

[/ QUOTE ]

If this comes to pass, you will be VERY wrong.

[RoundGuy]

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Our tax CPA pushed back hard when I told him that we needed to report gross wins and losses, and also when I told him that I had >$5,000 in net winnings and no W-2G. He told me that he had never had a client report any gambling winnings unless they were straight from a W-2G.

[/ QUOTE ]
Wow. Just.....wow.

A note to winning poker players: It pays to get a CPA that actually knows what the IRS rules are. Seriously. It's not their ass when the [censored] hits the fan....it's yours.

[Lottery Larry]

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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.

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Well, now you know one recreational gambler who does keep track AND reports it.

[dollerAday]

Did you also believe that Y2K was going to be the end of the world? How is life in the bunker?