My Accountant says I owe 50% of my winnings to Uncle Sam! F' that!

[Jurollo]

[ QUOTE ]
15% off the top, then taxed at 35% is only 30% overall.

[/ QUOTE ]
heh?

[Foucault]

[ QUOTE ]
[ QUOTE ]
15% off the top, then taxed at 35% is only 30% overall.

[/ QUOTE ]
heh?

[/ QUOTE ]

If it's 15% of his profit, then 35% of the remaining 85%, that's only 30% overall.

[Jurollo]

Gotcha now.
~J

[UMTerp]

.15 + .35(.85) = .4475

How do you get 30% out of that?

[Exitonly]

this hsould be a good therad to start a list of things we can deduct.

also, will IRS look at sites like Hendonmob/cardplayer, do those #'s there mean anything to them? what about overseas? What about overseas where you didnt tell customs about the cash in your bag?

[Foucault]

Write Off

[adanthar]

[ QUOTE ]
this hsould be a good therad to start a list of things we can deduct.

[/ QUOTE ]

As a pro, you can deduct plane trips/hotels, every other travel expense, computer equipment (x % that you use it for poker), home office space (don't do this though, that's a sure audit), any poker books/gear that you buy and pretty much anything else related to poker. If you use your car to drive to a casino every day you can deduct mileage and wear and tear, and if you take a cab there you can deduct the fare. Basically, if you're really aggressive, you can claim stuff most people wouldn't think of (dinner with 2+2'ers discussing poker and you pick up the tab = writeoff.) Of course, if you take it too far, it's probably audit time.

In any case, keep good records, especially for B&M trips (because most sites can give you complete records of your play, but the best proof that you won/lost $ at B&M is stuff like ATM receipts, bank account withdrawals and detailed journal entries.) Especially document your losses, b/c the IRS is good at asking 'but how much did you really lose' and they'll want some kind of evidence, even if it's an Excel spreadsheet + bank statements.

edit: also keep in mind that at least one state does not allow you to deduct gambling losses *at all* - in Illinois and maybe others, they just count your gross. In other words, if you claim 200K - 100K on your federal return (for 100K total), Illinois will then go ahead and tax you on 200K. This is a very good reason to move out of Illinois and whatever other states might do this.

[kolotoure]

We don't have to pay taxes on gambling winnings here

[amaranto]

[ QUOTE ]
.15 + .35(.85) = .4475

How do you get 30% out of that?

[/ QUOTE ]

Not to argue with OP, but there might be a couple things wrong with the advice that he received.

Self-employment tax is 15.3% * .9235 * net profit from self-employment up to $94,200 (in 2006). Above that, self-employment tax is 2.9% * .971 * self-employment net income.

While you can deduct 1/2 of your SE tax, income tax is an entirely separate calculation. Also, there isn't any way you could be in the 35% bracket with $125k in income (unless you have considerable income from other sources). Also, since your average tax rate would be much lower than your marginal tax rate, you should pay less income tax than 35%.

Any chance the accountant just thought you were a dirt bag for gambling so much and didn't take the time to understand what you were saying? Find a younger CPA and explain to him/her that you want to report your income fully, but also maximize your legal deductions. You may find that you get a more thoughtful response.

Also, definitely report your gambling winnings fully. You can try to be aggressive with your deductions within reason (and the law), but don't fall into the error of not fully reporting your winnings. In an audit, they'll have the right to request bank records, etc and unreported income won't be looked on favorably.

One other note related to SE tax. If you had, for example, $50k of wages, only the next 44.2k would be subject to the 15.3% SE tax. After that, it would be subject to 2.9% SE tax.

[skylos]

Dude just go to the track and pick up a couple hundo k of those losing tickets people throw away to use as reciepts and say "Yeah I won a bunch playing poker but I went crazy and lost it all back on the ponies!"