How much $ to set aside for next year taxes

[Banjo D]

I play full time and may qualify for pro status after this year. I need some advice on a rough estimate of what kind of percentages of my poker income should I be setting aside to pay taxes next year, assuming poker is only income and I have no deductions other than losses. thx

[1p0kerboy]

You need to be paying taxes quarterly if you are self employed.

[jively]

Download this tax form, complete it, and send in the estimated payments. Box 1 is estimated AGI. If professional poker is your only income, estimate how much you are going to win for the year. Make sure you completed self-employment tax on line 11.

You should also check your state to see if you will owe taxes there, go to their web site, and get the equivalent estimated taxes form.

You are allowed to annualize your estimated payments, so you could calculate your estimated AGI based on Jan-Mar 2007, and make your April 15, 2007 estimated payment based on that. Then re-calculate your estimated AGI based on Jan-Jun and make your June 15, 2007 estimated payment based on that. If you run hot or cold in the 2nd quarter, your second estimated payment may be higher or lower.

Good luck,

-Tom

[iceman5]

Use TurboTax. It will print out the forms you need and tell you how much to pay quarterly. Very simple.

[jively]

Note the calculation on lines 14a, b, and c. If you didn't pay a lot of income tax for tax year 2006, you actually don't have to make large estimated payments. However, these forms will give you an idea of how much tax you will have to pay, so you will know how much cash you'll have to "set aside." Please, take it out of your bankroll and save it in a money market account somewhere earning 4+% with no risk of loss.

-Tom

[Cubicle]

What if you don't file professionally? I am a student that plays part time. I don't have another job. If I pay say 5k in taxes, but do NOT file professionally do I have to pay estimated tax payments?

[jively]

[ QUOTE ]
What if you don't file professionally? I am a student that plays part time. I don't have another job. If I pay say 5k in taxes, but do NOT file professionally do I have to pay estimated tax payments?

[/ QUOTE ]
Maybe. Go to the same form I linked to above. Line 13c is your estimated tax for the year. 14a is 13c x 90%. 14b is 100% of the tax that was due in 2006. 14c is the smaller of those numbers. In line 15 you subtract estimated tax withholding to see how much is left.

In line 16b, it says if it's over $1,000, you have to file estimated payments.

Now, that calculation in 13 and 14 basically says that if your income is more this year than last year, you don't have to file estimated payments*. But if your income is the same or smaller than last year, you do.

So, if in 2006 you owed $0 tax, in 2007 you do not have to file estimated payments.

But if in 2006 you paid $5,000 in tax and in 2007 you estimate you will also owe $5,000 in tax, then yes you do have to make estimated tax payments.

-Tom

P.S. It wouldn't hurt to run this by a tax professional.

* As long as the IRS receives as much as 90% of what you owed last year.

[zombies kill]

darn it you guys... hes just asking for a rough % estimate. a safe general answer is 33% of your income.

[permafrost]

[ QUOTE ]
darn it you guys... hes just asking for a rough % estimate. a safe general answer is 33% of your income.

[/ QUOTE ]

Jively is giving good advice. Income taxes are generally paid as you earn. He may or may not need to make estimated payments in a few weeks along with 3 other payments later. Or does your SWAG of "33%" include enough for penalties and interest because he failed to pay properly???

[The Venetian]

The amount you earned/will earn is kind of important here. Google "tax tables", look at the first site, and make some assumptions.