Never paid taxes before... how much should I expect to pay? - Page 3

jeffreyjjj · #21 10-29-2007, 01:45 PM

I claimed for the first time last year and made roughly the same. I paid quarterly this year but the 10k was about what I paid in taxes and soc security and medicare w/h. I did put 10k into a SEP IRA and 5k into an HSA account to lower mhy taxes. Also deducted home mortgage interest, charitable contributions, and flight travel for the six or so live events I played in. Hope that helps.

justaPlayer · #22 10-29-2007, 05:16 PM

I'm glad I found this thread, because I have several questions of my own I'd like to address to those who might be able to answer them in this thread. Hello Engineer, Skallagrim, obg, by the way, and thank you for your continued insights and advancement of our cause.

I am sort of "just starting out" as a full-time (professional) player, and early this year I had a few crap jobs, but I've been playing as my only income since July. Next year I will be a full-time professional and will file as such. However, my plan for THIS year is to just meet with a CPA around when I get the W2s from the grinds and explain my situation and let them do my return and help me plan a strategy for filing in future years as a pro. Will this be acceptable in the eyes of the IRS, since I had the jobs earlier in the year and thus could not rightly file as a professional this year?

Also, the method of accounting I am using is a spreadsheet I designed myself which is very in-depth and will cover all aspects of my future Schedule C earnings. I do not use Pokertracker; the IRS does not stipulate it by name as the only accepted record-keeping instrument, I hope? In my own spreadsheet, every session on every table is recorded complete with buy-in, stakes, and final amount, and netted to show a profit or loss, which is also recorded. I just keep a notebook beside me and record all my activities by hand and transfer them later to my database. If anything, I would think this would actually be preferable to the IRS, as I will be able to produce not only a computerized record of my quarter's profits, but also a hard (handwritten) copy which will match it to the cent. Does this sound legit?

Anyway, if anybody has even read this long post, I'd appreciate any useful comments or criticisms from any more experienced professionals (or any serious players well-versed in the tax issues associated with winning play) in this forum, or any helpful ideas generally. I'm going to bed now, but I'll check back in later, prolly with some more long-winded questions. Thx everybody. Peace.

Skallagrim · #23 10-29-2007, 05:23 PM

Your record keeping process sounds pretty good to me. The daily notebook alone should stop any IRS audit in its tracks.

Do talk to a CPA, however, there are things like offshore account reporting, estimated taxes, Alt. Min. Tax, self employment tax, and a host of others that you will need to be aware of. Plus any 1/2 decent CPA will find you more in deductions than the cost of their service.

Very good start IMO.

Skallagrim

bad_carma · #24 10-29-2007, 05:43 PM

What are the penalties for not Paying taxes on amounts around 20k?

NickMPK · #25 10-29-2007, 07:23 PM

This forum needs to have a ban on posts that either suggest or ask for suggestions on how to commit blatantly illegal acts.
Poker players do not help their cause by implying that they wish to participate in tax evasion.

bad_carma · #26 10-29-2007, 08:03 PM

[ QUOTE ]
This forum needs to have a ban on posts that either suggest or ask for suggestions on how to commit blatantly illegal acts.
Poker players do not help their cause by implying that they wish to participate in tax evasion.

[/ QUOTE ]

What cause are you referring too? These posts are viewed by other poker players, not people that regulate the legality of online poker. What other people do with their money should be none of your concern.

NickMPK · #27 10-29-2007, 09:33 PM

[ QUOTE ]
[ QUOTE ]
This forum needs to have a ban on posts that either suggest or ask for suggestions on how to commit blatantly illegal acts.
Poker players do not help their cause by implying that they wish to participate in tax evasion.

[/ QUOTE ]

What cause are you referring too? These posts are viewed by other poker players, not people that regulate the legality of online poker. What other people do with their money should be none of your concern.

[/ QUOTE ]

People not paying their taxes should be a concern of everyone else in the country. DUCY?

DMoogle · #28 10-29-2007, 09:39 PM

Out of curiosity, where'd you get $10.5K from? I asked someone (not someone particularly knowledgeable, but nonetheless someone who pays their taxes), and they said that I should be looking at paying about a third of my income.

21CUP · #29 10-29-2007, 09:43 PM

I think the 10.5k is just federal taxes. State taxes are on top of that 10.5k number.

NickMPK · #30 10-29-2007, 09:52 PM

[ QUOTE ]
Out of curiosity, where'd you get $10.5K from? I asked someone (not someone particularly knowledgeable, but nonetheless someone who pays their taxes), and they said that I should be looking at paying about a third of my income.

[/ QUOTE ]

I got that number by looking up the current federal income tax rates and exemptions and applying them to an income of $60K. This information is easily accessible on the web.

As someone else noted, you will also probably have to pay state income tax, which varies widely by state (although this will be substantially less than your federal tax, and a few states have no income tax). If you file as a pro, you will also need to pay payroll tax, which most people have to pay on all of their wages.

The person who cited the 1/3 figure was probably thinking of either the total of all these taxes combined, or the marginal tax rate on your highest level of income. But the federal income tax only hits 1/3 on taxable income over $160,000 per year.