Tax Questions

[bluffe]

Hi,

I am planning to start paying taxes in the US (I used to live in another country and I am not a US citizen). My entire income has come from on-line poker for the last five years.

1) I live in California. If I file as a professional player (and I am going to), how much would I pay in taxes? It is my understanding that the federal tax is will be around 15%, but I also have to pay state tax, right?

2) Do those of you who file as a pro in a state without state income tax (like Florida or Texas) only pay the federal tax?

3) If 2 is true, shouldn't all professional internet poker players move to these states, if their situation permits it?

I have tried to find the answer to this in the archives and in the rest of the "series of tubes".

[Zele]

1. The 15% (up to your first $94K of income) is your "self-employment tax", which is in addition to your federal income tax. Federal tax is progressive, i.e. the more you make the higher a percentage you pay. It currently ranges from 10% to 35%. You will also have to pay state tax.

2. Again, the SE tax plus the federal income tax.

3. States get their money somehow, through a combination of income tax, sales tax, property tax, etc. I'm currently in Oregon, where we have no sales tax but the income tax is huge. From what I remember, Texas property taxes are rather high.

[adanthar]

Bluffe,

Assuming you made exactly 100K, your tax bill would look roughly like this:

15.3% on the first 94,000, +2.9% on the last 6,000 (however, half of the 15.3% is deductible from income, so your adjusted gross income would only be ~92,500)

plus

federal income tax (in 2006, $22,332)

plus

CA income tax (for anyone making over 40K, this is a flat 9.3%, or 9300)

So, as you can see, you owe in the neighborhood of 45K in taxes. Yes, this provides a solid incentive to move to (in your case) Nevada or Oregon.

[David LoPan]

dude, goto an accountant, don't be a cheap m'fer

lol @ asking for tax advice on 2p2

even the guy who wrote that article didn't know wtf he was talking about...goto a cpa who knows what hes doing

[bluffe]

[ QUOTE ]
Bluffe,

Assuming you made exactly 100K, your tax bill would look roughly like this:

15.3% on the first 94,000, +2.9% on the last 6,000 (however, half of the 15.3% is deductible from income, so your adjusted gross income would only be ~92,500)

plus

federal income tax (in 2006, $22,332)

plus

CA income tax (for anyone making over 40K, this is a flat 9.3%, or 9300)

So, as you can see, you owe in the neighborhood of 45K in taxes. Yes, this provides a solid incentive to move to (in your case) Nevada or Oregon.

[/ QUOTE ]

Thank you adanthar, this was exactly the kind of response i was hoping for. Yes that would mean more than 45k taxes for me (if previous years have been any indication). And I thought that US was a low tax country. [img]/images/graemlins/smile.gif[/img]

[bluffe]

[ QUOTE ]
dude, goto an accountant, don't be a cheap m'fer

lol @ asking for tax advice on 2p2

even the guy who wrote that article didn't know wtf he was talking about...goto a cpa who knows what hes doing

[/ QUOTE ]

So much noise on 2+2 these days.