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  #41  
Old 09-02-2007, 10:17 PM
jogsxyz jogsxyz is offline
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Default Re: IRS Withholding on US Tournament Winnings Starts in 2008

Poker being skill or luck is a different issue.
Golf and tennis has withholding.
Doesn't the IRS withhold now? Yang didn't get
his $8M. This a about at what dollar amount
should the IRS start withholding.
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  #42  
Old 09-05-2007, 09:13 AM
ShadowBJ21 ShadowBJ21 is offline
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Default Re: IRS Withholding on US Tournament Winnings Starts in 2008

As beeing not from the US I am curious how the tax return works for US residents.

Does this mean that even those who aren't professional poker players have to keep notes on all tournaments played and can deduct the buy-ins without ITM finishes from the whitholding? So if they can do so, what's about traveling costs etc.?

Thanks
Shadow
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  #43  
Old 09-05-2007, 09:22 AM
DeadMoneyDad DeadMoneyDad is offline
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Default Re: IRS Withholding on US Tournament Winnings Starts in 2008

[ QUOTE ]
As beeing not from the US I am curious how the tax return works for US residents.

Does this mean that even those who aren't professional poker players have to keep notes on all tournaments played and can deduct the buy-ins without ITM finishes from the whitholding? So if they can do so, what's about traveling costs etc.?

Thanks
Shadow

[/ QUOTE ]

For a non-professional gambler you can not deduct ofther expenses. You also can not "net" out your ITM vs. non-cash buy-ins. ITM cashes are net of the buy-in for that session. Each session is it's own event. All ITM cashes net of buy-in's are added to your gross income. All your buy-in where you didn't cash are added together and deductible up to the total of winnings but must be intemized. Even a break-even year yeilds a tax payment for most filers, in some cases a negative year can yeild a tax payment depending on your filing circumstances.


D$D
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  #44  
Old 09-05-2007, 11:39 AM
BBMW BBMW is offline
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Default Re: IRS Withholding on US Tournament Winnings Starts in 2008

Harry Reid, the Senate majority leader, is the senior senator from Nevada. I'm pretty sure there are a hell of a lot of tournament poker players in Nevada. If he started hearing from a large number of them, it might prompt him to put some pressure on the IRS to squash this.
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  #45  
Old 09-05-2007, 02:55 PM
ShadowBJ21 ShadowBJ21 is offline
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Default Re: IRS Withholding on US Tournament Winnings Starts in 2008

Thanks DeadMoneyDad!

So if I understand it correctly people don't have to pay more taxes due to the withholding. They just pay it at a different time then. At least those people that filed their tournament winnings correctly before.

Of course giving the IRS money (without interest) that can be partially returned after filing a tax report is a disadvantage in liquidity.

Shadow
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  #46  
Old 09-05-2007, 05:51 PM
DeadMoneyDad DeadMoneyDad is offline
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Default Re: IRS Withholding on US Tournament Winnings Starts in 2008

[ QUOTE ]
Thanks DeadMoneyDad!

So if I understand it correctly people don't have to pay more taxes due to the withholding. They just pay it at a different time then. At least those people that filed their tournament winnings correctly before.

Of course giving the IRS money (without interest) that can be partially returned after filing a tax report is a disadvantage in liquidity.

Shadow

[/ QUOTE ]

Yes that is pretty much it. The thought behind fighting this is an attempt to further the skills game arguement, because the reg is based on cites of wagering pools and other non-skill based gambling activities.

The interssting parctical effect is on satellittes. Under the current reg, if it holds up, a sponsor will either have to increase the prize amount to reflect the tax consequences. Thus steepening the payout structure, or they will have to make it clear that while you may win a seat you will be required to pony up the withholding to play in the main event.

How tourney operators are going to handle this matter I find quite interesting. Just wondering out loud but could an arguement be made that a satellite win to a main event was in effect a single session with any withholding done after the result of the main event. How this might fly with restrictions on third party registration bans that cause sponsors to offer prizes in cash instead of direct entry as well as on-line entry into major events, I don't know. But perhaps in this instance the interests of on-line and the B&M poker worlds just might interceede.


D$D
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  #47  
Old 09-05-2007, 05:54 PM
DeadMoneyDad DeadMoneyDad is offline
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Default A thought about liquidity.....

[ QUOTE ]

Of course giving the IRS money (without interest) that can be partially returned after filing a tax report is a disadvantage in liquidity.

Shadow

[/ QUOTE ]

If a poker player was a tourney specialist I would guess an arguement could be made that he or she would no longer be required to file quarterly payments or be able to severly reduce them, as the majority of their income will now be withheld at the time of earning!

Lets see how the IRS likes that one!

D$D
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  #48  
Old 09-05-2007, 06:04 PM
BigAlK BigAlK is offline
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Default Re: IRS Withholding on US Tournament Winnings Starts in 2008

[ QUOTE ]
How tourney operators are going to handle this matter I find quite interesting. Just wondering out loud but could an arguement be made that a satellite win to a main event was in effect a single session with any withholding done after the result of the main event. How this might fly with restrictions on third party registration bans that cause sponsors to offer prizes in cash instead of direct entry as well as on-line entry into major events, I don't know. But perhaps in this instance the interests of on-line and the B&M poker worlds just might interceede.

[/ QUOTE ]

Except (at least in the case of the WSOP) the ban on third party registration only applies to on-line. I believe B&Ms can still do third party registrations. I'm not sure of the ins and outs of claiming a sat and the event you're entered into as a single session. I believe this is somewhat gray and might depend on whether you had the option of taking cash in lieu of entry or transfering the seat. If the seat is non-transferable and you don't receive anything of value except the entry (no lammers that can be sold on the open market instead of used for entry) then it probably does count as one session. It depends on constructive receipt (I think that's the term) and receiving something that can be converted to cash is possibly no different than receiving the actual cash. (This goes to the discussion, I think in this thread, about receiving casino chips instead of cash.)
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  #49  
Old 09-09-2007, 07:08 PM
MLSchaff MLSchaff is offline
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Default Re: A thought about liquidity.....

[ QUOTE ]
[ QUOTE ]

Of course giving the IRS money (without interest) that can be partially returned after filing a tax report is a disadvantage in liquidity.

Shadow

[/ QUOTE ]

If a poker player was a tourney specialist I would guess an arguement could be made that he or she would no longer be required to file quarterly payments or be able to severly reduce them, as the majority of their income will now be withheld at the time of earning!

Lets see how the IRS likes that one!

D$D

[/ QUOTE ]

The IRS is completely fine with this. Estimated tax payments are required to avoid penalties for those taxpayers who are not subject to witholding. Under this new tax reg, tournament poker players will be subject to withholding. So if you have enough withheld from your tournament winnings to cover the estimated tax you would have to pay for that quarter, than you would not have to pay any additional estimated tax. And since tax payments are cumulative throughout the year, depending on your tax situation a major cash in the first quarter of the year from which 25% was withheld could be enough to cover your estimated taxes for the entire year. The problem is that you don't want to have more withheld than is required, so if you have another major cash you would be giving an interest free loan to the government, and then may get a refund when you file your taxes for the year.

If estimated taxes were not required, it would not be equitable to people on salary who are required to have taxes withheld from their paychecks. If no one had to pay estimates, salaried workers should be allowed to pay all their taxes at the end of the year as well.


The biggest issues I see are satellites and rebuy tournaments. In rebuy tournaments, the buy in amount is unknown for each individual player - so how is the net win for that tournament to be figured? For satellites, I think a reasonable argument could be made that a satellite win and the tournament for which entry is won are a single event. However, when sats are paid out with tournament entry chips that can be sold, you are actually receiving a negotiable instrument for the amount of the entry fee. If casinos were to instead register the player for the main event directly (obviously not possible online - lets stick with B&M here) and that registration was non-transferable, a solid argument could be made for no withholding on that amount based on constructive receipt. The sat winner never actually received his winnings in this case.
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  #50  
Old 09-10-2007, 12:23 AM
Jimbo Jimbo is offline
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Default Re: A thought about liquidity.....

[ QUOTE ]
The biggest issues I see are satellites and rebuy tournaments. In rebuy tournaments, the buy in amount is unknown for each individual player - so how is the net win for that tournament to be figured?

[/ QUOTE ]

Taxes are witheld from the gross win, not the net so it is irrelevant insofar as the tax witholding is concerned. As to figuring your year-end net I always get a receipt for my rebuys.

[ QUOTE ]
For satellites, I think a reasonable argument could be made that a satellite win and the tournament for which entry is won are a single event. However, when sats are paid out with tournament entry chips that can be sold, you are actually receiving a negotiable instrument for the amount of the entry fee. If casinos were to instead register the player for the main event directly (obviously not possible online - lets stick with B&M here) and that registration was non-transferable, a solid argument could be made for no withholding on that amount based on constructive receipt. The sat winner never actually received his winnings in this case.

[/ QUOTE ]

I disagree and am confident the IRS will as well. Suppose you win the sat and don't bother to show up to play in the tournament? Under your theory there would be no taxable income, do you really think the IRS would agree? Now a pro would not care one way or another since the net effect would be tax neutral but a "hobbyist" could have potential tax liability.

Jimbo
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