To File Or Not To File....Plz Help

[Skallagrim]

Your winnings are income. You can (at least at the Federal level) deduct your losses up to the amount of your winnings. Unless you gamble so much that the amount of winnings would put you in a higher tax bracket, the IRS could really care less about your reporting that you won 2000 and lost more than 2000 over the year because discovering this fact does not get them any more money from you. But if you are an overall winner of any decent amount, you should include it in your taxes. Not reporting income is a crime.

[srcartman]

Let's say, you're someone who's played a lot recreationally over the last few years, and don't keep any records (other than each site's transaction history).

What advice would their be to someone like that in terms of filing?

[Skallagrim]

[ QUOTE ]
Let's say, you're someone who's played a lot recreationally over the last few years, and don't keep any records (other than each site's transaction history).

What advice would their be to someone like that in terms of filing?

[/ QUOTE ]

If you made any decent profit in any of those years, see an accountant and file. By decent I mean over $1000. Thats a pretty conservative figure, as it would proably take 10x that amount to get the IRS interested, but you will feel a lot better about yourself [img]/images/graemlins/smile.gif[/img].

If you overall lost money, dont worry about it unless you gamble at the level of a vegas whale and if you have that much money why are you posting here for advice?

As for actually filling out the return, just use the numbers from the transaction history as the form wants a yearly number for tax purposes. So if you history shows a 1500 profit, either list the profit alone, or guess at a number for overall winnings and then put 1500 less than that as an itemized deduction. Although this record keeping will be insufficient for an audit, as it is a fair way to determine total tax liability you wont get in any real trouble. NOTE THIS ADVICE IS NOT LEGAL ADVICE AND IS BAD ADVICE FOR ANYONE MAKING A SERIOUS YEARLY PROFIT! If thats you get a real accountant and keep "session records."

[frommagio]

My first post was a cute joke. Here's a more serious post to make up for it!

I feel that many people here have a tendency to post overly authoritative statements of what the law mandates. Witness the endless "what is a session" debate, where no shortage of posters claim to hold the definitive answer - many of them absurd, in my opinion. And yet, in reality, the topic is completely uncharted territory in the internet venue.

In fact, there is quite a bit of gray area in the tax law, as there is in most law. You need to read it for yourself, and take a mature, reasoned position that you feel comfortable defending.

For example: I could easily imagine that many internet and/or casino poker players (quite possibly including the OP), fall under the true spirit and definition of "hobby income", in which case netting wins and losses to report profit should be perfectly acceptable. Heresy?? Not really, but rather a quite reasonable approach.

I know that many of you will disagree, and will argue that the only options are either gambling + itemizing losses or else professional status with netting. But it's really not that clear-cut. After a complete and open-minded reading of the relevant code, you might easily decide that the definition of hobby income is the right description for your own activity. My feeling is that anybody who simply dismisses hobby income as a legitimate avenue doesn't really understand law.

Law is a skeleton that requires reasonable interpretation, and fleshing out with the circumstances. It is typical for the law to inadequately describe and categorize human endeavors, and the law can never keep up.

You need to do what's reasonable. Don't rely solely on the experts here (or anywhere). The "experts" are frequently the last ones to know, because they often find themselves trapped by their own misconceptions - to the exclusion of common sense.

Check out whether your poker hobby qualifies as hobby income. You may find that category fits best.

[boondoggle]

If you have made money from poker and its in an ewallet or pokerroom then you still need to declare it as winnings. This idea of having to declare only on what you withdraw is really bad advice.

cheers
Boon

[frommagio]

[ QUOTE ]
If you have made money from poker and its in an ewallet or pokerroom then you still need to declare it as winnings. This idea of having to declare only on what you withdraw is really bad advice.

cheers
Boon

[/ QUOTE ]

I agree totally, that's certainly not my advice!

[CharlieDontSurf]

what happens if u play in a $1000 entry FFB league and hold all the money in neteller that year then transfer the winnings at the end of season?

[NickMPK]

[ QUOTE ]
what happens if u play in a $1000 entry FFB league and hold all the money in neteller that year then transfer the winnings at the end of season?

[/ QUOTE ]

Holding money for someone is not income. This would be be income to the winner in the year that he receives the prize money (or has the right to receive the prize money), and is nothing to the person who holds the money. But for the winners this might be more appropriately filed as hobby income. So I'm not sure if the $1000 everyone else paid to enter would be a gambling loss that one could deduct from other gambling winnings, or a hobby loss.

[gringo]

IMO - Tag has best answer for OP and did so with very few words. Good job.