Online poker tax advisor recs?

[tekmo7]

hi, can anyone recommend a good tax advisor/preparer who is knowledgable about filing online poker winnings? is h & r block a good place to use? i appreciate any help. thanks.

[Henry17]

You should mention what country you reside in.

[tekmo7]

i reside in california, USA...thanks

[spkid]

I am a CPA outside if Philadelphia and would suggest that you make sure to report your poker winnings as though poker is a business for you. Of course, only if your winnings are significant.

The last thing you want to do is report winning sessions as other income and report losing sessions on Schedule A. This in normally how gambling winning and losses are reported. This is very bad for the taxpayer as losses are subject to limitations and may be altogether ignored depending on the taxpayer's situation. There is case law, however, that supports a position that playing poker for a living is a business.

More specifically, if you do take the necessary steps to report this in this manner you should probably go ahead and form an LLC or S-corporation thereby signifiacntly cutting your self-employment taxes.

Again, this is advice for people who are really making a living playing poker, not because you won $1,500 last year and don't know how to report it. I would say that finishing the year $10,000 or more ahead would fall into this category.

Many of the things you would never consider can be deductible including your computer, desks & chairs, certain software, possibly even utilities (the portion related to your "office" area if that room is used only to play poker and not also a bedroom or living area...).

I've set up many different types of businesses and do work for people as far away as you are. I have clients in Oklahoma and California. In 2005 and 2006 when I first became part of the poker community I contemplated offering my services to poker players who were making enough money to warrant having an accountant, and this year I may very well do that. I'm not sure really how to go about it as I am sure that I can't advertise in a post.

If you have any questions PM me and hopefully the moderator won't delete this post. If the moderator has any information on advertising here at 2+2 I would be interested.

Another CPA may try to tell you that this is an aggressive stance. I will tell you that an aggressive stance is the only kind you should take with the IRS. Only if you are committing crimes (for purposes of this discussion playing poker is not a crime) should you be worried about IRS scrutiny.

Thanks and good luck!

[Sandviper23]

Have the laws changed? You cannot write off expenses during your 1st 3 years. The government doesn't consider you a pro until then and therefore looks at it as gambling.

[Henry17]

That doesn't really make sense. Granted I am Canadian so our laws are different but I did take enough tax law in law school to have some understanding of the US system.

I don't see how the government could tax the income from gambling and not allow you to write off losses and expenses against those winnings. I realize Cali is one of the strangest legal jurisdictions but that seems to have blatant fairness issues.

Also and while I would certainly not encourage people to avoid taxes with online play no one is reporting your income to the government so other then just being very honest and civilly minded I don't see how the government would ever find out about this income.

[thing85]

[ QUOTE ]
but I did take enough tax law in law school to have some understanding of the US system.


[/ QUOTE ]

You might want to go back and take another class. You're subtly suggesting tax evasion, which, as someone who studies law, surely you can see that is illegal. The government DOES allow you to write off your losses, but as others have stated, there are a couple guidelines:

1) You can only claim losses to the extent that you have winnings.

2) You must report the losses as itemized deductions rather than deductions for adjusted gross income.

Gambling losses aren't the only itemized deduction (there are many), so it's not inconceivable that the IRS takes this approach.

And no, the IRS doesn't have radar tracking your every move online (at least we hope not), but in the context of an audit, yes, the government/IRS can and would find out about your gambling income.

[Sandviper23]

it not about guys making a few thousand a year.

Its about the guys that buy houses and cars without showing any income.

[Henry17]

In Canada we don't pay taxes on gambling income unless it is engaged in as a business venture. The onus is on the government to prove that which rarely happens.

The IRS is probably more vigilant then RevCan but I can honestly say I have a "friend" who drives a Porsche, pays $2700 / month in rent (and claims the rental credit on his taxes), has a condo in the Mediterranean while always reporting an income of less then $500 a year. But like I said Canada does not consider gambling as income under normal circumstances.

[thing85]

It's clear that Canada's tax law and enforcement is VERY different from the US's, given your situation.