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#32
07-23-2007, 10:37 AM
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Re: Just won six figures, need financial/tax advice
For all you people who say he needs to make quarterly estimates are wrong. This is only if he is filing as a PRO GAMBLER. HE has a job outside of poker and this would be deemed as "other income". I had some scores in vegas last year and I just put my money in a CD and settled up at tax time. There were no penalties and I did not have to pay quarterly estimates b/c I didn't file as a pro gambler.
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#33
07-23-2007, 03:10 PM
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Re: Just won six figures, need financial/tax advice
[ QUOTE ]
For all you people who say he needs to make quarterly estimates are wrong. This is only if he is filing as a PRO GAMBLER. HE has a job outside of poker and this would be deemed as "other income". I had some scores in vegas last year and I just put my money in a CD and settled up at tax time. There were no penalties and I did not have to pay quarterly estimates b/c I didn't file as a pro gambler. [/ QUOTE ] I'm not a poker tax expert by any means, but I'm not sure this is correct information and I'd investigae further before acting on this advice. The IRS requires quarterly taxes on 1099 income because Employer Payroll Taxes (SS, Medicare, SUTA, FUTA, and Workers Comp) are not withheld automatically from 1099 income like they are for W-2 income. So people earning non-W-2 income (1099 income) are on their own to pay the appropriate taxes (in this case it's Self-Employment taxes which are the same as above but without the FUTA, SUTA, and WC and applying to 92.65% of their net business income). It should make no difference if you file as a pro gambler or not. So basically, if you're making significant 1099 income, the IRS wants you to be paying SE taxes on it quarterly. surfinillini, if you didn't have a problem doing it your way, that's fine... but it more likely means you simply didn't get audited rather than you did things the right way. Matt
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#34
07-23-2007, 03:55 PM
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Re: Just won six figures, need financial/tax advice
[ QUOTE ]
[ QUOTE ] For all you people who say he needs to make quarterly estimates are wrong. This is only if he is filing as a PRO GAMBLER. HE has a job outside of poker and this would be deemed as "other income". I had some scores in vegas last year and I just put my money in a CD and settled up at tax time. There were no penalties and I did not have to pay quarterly estimates b/c I didn't file as a pro gambler. [/ QUOTE ] I'm not a poker tax expert by any means, but I'm not sure this is correct information and I'd investigae further before acting on this advice. The IRS requires quarterly taxes on 1099 income because Employer Payroll Taxes (SS, Medicare, SUTA, FUTA, and Workers Comp) are not withheld automatically from 1099 income like they are for W-2 income. So people earning non-W-2 income (1099 income) are on their own to pay the appropriate taxes (in this case it's Self-Employment taxes which are the same as above but without the FUTA, SUTA, and WC and applying to 92.65% of their net business income). It should make no difference if you file as a pro gambler or not. So basically, if you're making significant 1099 income, the IRS wants you to be paying SE taxes on it quarterly. surfinillini, if you didn't have a problem doing it your way, that's fine... but it more likely means you simply didn't get audited rather than you did things the right way. Matt [/ QUOTE ] Yeah, I'm not going to pretend to have anything more than a rudimentary knowledge of tax law, but as a general rule, the IRS wants their cut the moment you earn the income. So again, as a general rule, if you more than $1000 above and beyond what's already withheld, you're supposed to file quarterly and pay whatever the tax burden is immediately. I posted above that there does seem to be a loophole for windfall events like lottery winnings (I think a big poker tournament score would qualify here), *but* I obviously can't say if the OP is eligible. Given that the OP won a substantial amount of money and will probably have to see an accountant either way, I think the most prudent advice is to go see one now rather than at the beginning of 2008. Seeing a good tax preparer now will give OP all of the available options; waiting to see one could close off some avenues he may want to pursue in the meantime. tl;dr summary: IRS WANT MONEY NOW, so see a good accountant to make sure you get settled up with Uncle Sam if necessary.
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#37
07-24-2007, 01:08 AM
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Re: Just won six figures, need financial/tax advice
[ QUOTE ]
File as a pro- and open a SEP to deduct up to $45k this year. It also grows tax free until retirement. $45k will be a sick amount by the time u retire. [/ QUOTE ] Financial Advisor here - good idea, but you can only defer 20% net earnings as "self employed" in your own SEP, up to a max of $45k this year. If you net $100k (after deductions, employement taxes etc), I'm afraid you'll only get a deductible contribution of $20k unless you can take down another. Still a great way to save for retirement and you won't have to pay taxes on it until you take it out. (But you pay taxes and penalty if you take it out before age 59 1/2.) Make sure you won't need the money until retirement. Find a good advisor to help you invest properly.
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