Poker Income...Help!

WangTactics · #1 07-12-2007, 11:45 AM

I'm new to this forum, but I have a huge question for anyone that can help me out. I play almost exclusively 5cd on Poker Stars, and 99.9% of the time it's PL. The issue I'm running into is this: After quad-tabling for 6 months or so and playing any limit with donks at the table, I've cleared almost $25,000 in profit into my pocket. Now the main question.

I'm basically on pace to make $40,000 to $50,000 in profit this year. Is there any way I can get this money tax free in a legal way??? I do know I am allowed to gift up to $10,000 per child per year, and I have 2 kids, so I believe I'll be able to keep $20,000 of it tax-free...but what about the rest? Am I going to have to pay out taxes to the government on it? I reside in the USA, by the way.

MarkGritter · #2 07-12-2007, 12:12 PM

[ QUOTE ]
Is there any way I can get this money tax free in a legal way???

[/ QUOTE ]

No.

There is no deduction for gifts, either. (There is an exclusion from the gift tax up to $12,000 per year, but that just means you don't have to pay more taxes.)

From the IRS's "Estate and Gift tax page":
[ QUOTE ]

No Income Tax Deduction
Making a gift or leaving your estate to your heirs does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than gifts that are deductible charitable contributions). If you are not sure whether the gift tax or the estate tax applies to your situation, refer to Publication 950, Introduction to Estate and Gift Taxes.

[/ QUOTE ]

You can reduce your income tax liability through charitable donations, documented gambling losses, or other deductions--- if you itemize deductions.

I would suggest you start paying estimated taxes. (But I am not a tax professional and this is not professional advice.)

Russ Fox, however, really is a tax professional:
http://www.taxabletalk.com/posts/chain_1123805977.shtml

mindflayer · #3 07-12-2007, 12:34 PM

The 10k per child is Canadian.
What is your citizenship? very important.
My brother is Canadian but resides in the US.

WangTactics · #4 07-12-2007, 01:26 PM

US Citizen, live in US

WangTactics · #5 07-12-2007, 01:31 PM

I think the only way I would have to pay tax is if I claimed it on my tax report. So, I know it's shady, but if i didn't claim it, they would never find out...unless I got audited...and I know Poker Stars doesn't report it to the feds because they don't send a W-2G in the mail with the check...

DeathDonkey · #6 07-12-2007, 02:12 PM

[ QUOTE ]
I think the only way I would have to pay tax is if I claimed it on my tax report. So, I know it's shady, but if i didn't claim it, they would never find out...unless I got audited...and I know Poker Stars doesn't report it to the feds because they don't send a W-2G in the mail with the check...

[/ QUOTE ]

You're a genius, I'm sure nobody has ever considered simply not claiming their income before. You're talking about committing felonies on a public messageboard, you're posting about it in the wrong forum (god knows what the right one is), and you've already been given the right answer by Mark (hint: tax free gift for a child is tax-free for the CHILD on already taxed money). Somebody lock this thread please.

-DeathDonkey

iron81 · #7 07-12-2007, 02:22 PM

Well, the right forum for tax stuff is Legislation. No one is going to lock this thread because there is no moderator and it isn't quite stupid enough for me to bother Ryan about.

Al Mirpuri · #8 07-12-2007, 03:32 PM

[ QUOTE ]
I think the only way I would have to pay tax is if I claimed it on my tax report. So, I know it's shady, but if i didn't claim it, they would never find out...unless I got audited...and I know Poker Stars doesn't report it to the feds because they don't send a W-2G in the mail with the check...

[/ QUOTE ]

Al Capone found out the hardway that you have to pay taxes on ill-gotten gains...

WangTactics · #9 07-19-2007, 10:01 PM

Sorry guys...you're right Donk...my earlier post was ignorant...

*TT* · #10 07-20-2007, 02:30 AM

[ QUOTE ]
I think the only way I would have to pay tax is if I claimed it on my tax report. So, I know it's shady, but if i didn't claim it, they would never find out...unless I got audited...and I know Poker Stars doesn't report it to the feds because they don't send a W-2G in the mail with the check...

[/ QUOTE ]

Surprise! Neteller just agreed to provide transaction details to the Feds. What do you think the Feds will do with this data? Can you spell AUDIT?

and if you don't think the poker rooms may be forced to do the same at a later date then I have a bridge to sell you in Brooklyn.