#41
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Re: Never paid taxes before... how much should I expect to pay?
Filing as a Poker Pro is no different from any other business. You should declare all winnings/assets and then try your best to maximize deductions legally. Good record keeping is critical in unlikley case of audit. Many businesses do not declare some cash payments and exaggerate deductions to reduce tax burden but this is a decision each individual must make.
As for recreational players, it's simply two tax lines (declaring winnings and declaring losses). Some online players don't declare anything assuming minimal risk since IRS will not have any record of winnings. Others declare estimates of wins and losses and keep poor records. Still others have meticulous records and declare every last penny. Each individual must choose their own course. |
#42
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Re: Never paid taxes before... how much should I expect to pay?
I go to work and make income which I am taxed on - there is my contribution to society. I come home and play in a poker game for which I am taxed again on my winnings? Stand up for what is you feel is right, no matter the cost...not in today's society
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#43
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Re: Never paid taxes before... how much should I expect to pay?
[ QUOTE ]
I go to work and make income which I use to support myself and my family and do not ask others to pay my way - there is my contribution to society. [/ QUOTE ] fyp You've fulfilled your part of the social compact before the taxes part. |
#44
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Re: Never paid taxes before... how much should I expect to pay?
[ QUOTE ]
As for recreational players, it's simply two tax lines (declaring winnings and declaring losses). Some online players don't declare anything assuming minimal risk since IRS will not have any record of winnings. Others declare estimates of wins and losses and keep poor records. Still others have meticulous records and declare every last penny. Each individual must choose their own course. [/ QUOTE ] I'm going to post this question once more and hope to get a decent answer. You talk about some people not declaring any money assuming minimal risk. How minimal? People keep talking about avoiding jail by declaring their winning. I doubt a jail sentence would be handed out for not declaring 20-30k in online poker winnings. Am I wrong, what penalties will be given out if caught? |
#45
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Re: Never paid taxes before... how much should I expect to pay?
No one knows for certain. However, assume you never declared 20k poker winnings in 2006. Circumstances cause govt. to seize records of big payment company (neteller). IRS reviews individual records and sees lots of withdrawals to your bank. They decide to audit (doesn't matter if it's 1% or 5% chance). You claim ignornace of law, cry a lot and are 24 yrs old with no criminal record. My guess is that you will pay huge fine and they'll scare the &%$%^ out of you with threats of imprisonment (which is within the bounds of the law for willful tax evasion).
On the other hand, assume you declare your winnings, offset most of it with losses (which you can't prove) and get audited for same reason. You have no records to speak of. You'll be fined but at least you declared. The IRS will take their tax cut plus some penalty/interest. |
#46
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Re: Never paid taxes before... how much should I expect to pay?
20-30K! That might not be enough to get jail time, but is certainly enough to get a case going against you, and resolving that case will cost you far more in fines, interest, and legal fees than 100 CPAs.
Also, it depends on where you are, smaller jurisdictions give more attention to smaller amounts. And it depends on how blatant you are in failing to pay. A good faith mistake never results in an actual prosecution, just a bill for what you owe; deliberately failing to report almost always gets a prosecution, though it may take a bit more than 30K to get jail, but probably not much more. Skallagrim PS - and oldnantucket is absolutely right about the benefits of coming clean - you file and plead stupidity, you pay some money; dont file and either dont get caught or be prepared for the hassle of your life. |
#47
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Re: Never paid taxes before... how much should I expect to pay?
[ QUOTE ]
What's the IRS definition of a professional gambler? Is it based on how much you play? Whether you have another primary occupation? I believe you must file a schedule C for a sideline business, even if you make more in a full-time job. What makes playing poker a business vs a hobby? I'm modestly profitable this year, have spreadsheets and Pokertracker as record-keeping, and want to stay legal. It's still small-change compared to my full-time job, though. [/ QUOTE ] What makes someone a professional gambler is a complex legal question, and there is no definitive answer. Most of what you read on the Internet on this topic is either completely or partially wrong. If you have a full-time job and don't want to file as a professional and your poker earnings are small in relation to your job earnings, you shouldn't have a problem. If you do want to file as a professional (which would only make sense if you have significant poker expenses to deduct), you should probably seek the advice of an attorney as to whether you can do so. I've heard stories from different people, in similar circumstances to each other, being told by the IRS that they should/should not have filed as a professional. Unsurprisingly, the IRS often takes the position that you should have done whatever maximizes your taxes, regardless of the underlying facts. |
#48
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Re: Never paid taxes before... how much should I expect to pay?
[ QUOTE ]
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 [/ QUOTE ] Thank you for the response to my question Skallagrim. I appreciate it. |
#49
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Re: Never paid taxes before... how much should I expect to pay?
[ QUOTE ]
[ QUOTE ] What's the IRS definition of a professional gambler? [/ QUOTE ] What makes someone a professional gambler is a complex legal question, and there is no definitive answer. Most of what you read on the Internet on this topic is either completely or partially wrong. If you have a full-time job and don't want to file as a professional and your poker earnings are small in relation to your job earnings, you shouldn't have a problem. If you do want to file as a professional (which would only make sense if you have significant poker expenses to deduct), you should probably seek the advice of an attorney as to whether you can do so. I've heard stories from different people, in similar circumstances to each other, being told by the IRS that they should/should not have filed as a professional. Unsurprisingly, the IRS often takes the position that you should have done whatever maximizes your taxes, regardless of the underlying facts. [/ QUOTE ] Thanks for your response. What would constitute significant poker expenses? Would this include items like poker books and internet connection? Those are the only items that occur to me at the moment, and likely wouldn't amount to much for me. Unfortunately the last line does not surprise me either. |
#50
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Re: Never paid taxes before... how much should I expect to pay?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] What's the IRS definition of a professional gambler? [/ QUOTE ] What makes someone a professional gambler is a complex legal question, and there is no definitive answer. Most of what you read on the Internet on this topic is either completely or partially wrong. If you have a full-time job and don't want to file as a professional and your poker earnings are small in relation to your job earnings, you shouldn't have a problem. If you do want to file as a professional (which would only make sense if you have significant poker expenses to deduct), you should probably seek the advice of an attorney as to whether you can do so. I've heard stories from different people, in similar circumstances to each other, being told by the IRS that they should/should not have filed as a professional. Unsurprisingly, the IRS often takes the position that you should have done whatever maximizes your taxes, regardless of the underlying facts. [/ QUOTE ] Thanks for your response. What would constitute significant poker expenses? Would this include items like poker books and internet connection? Those are the only items that occur to me at the moment, and likely wouldn't amount to much for me. Unfortunately the last line does not surprise me either. [/ QUOTE ] Most significant poker expenses are incurred by live players who travel -- airfare, hotels, meals, etc. If you're only playing on the net, you won't have anything of any significance. |
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