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#1
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For 2006 I was just getting started in my online career, and was a break-even player for all of 2006 (actually lost $20 total). I have other income of around $10,000 from an internship that taxes were automatically withheld from. I know that I must report my poker winnings (a few thousand) and itemize my losses (again a few thousand). But does this income change my tax bracket at all in some way by making it look like I made more money than I did from my internship? Also, since itemizing cancels out the $5000 standard deduction, I won't really be getting a refund on the $10,000 that already is reported (as opposed to getting about $600-700 back), so what are some of the deductions that most students should be able to claim (not looking at fraudulent things, just legitimate things that I might not realize are)? My school is paid for all on loans, which are not yet in repayment, so I do not have any interest deductions (I believe the interest is tax deductible when due?)
Basically, what is the purpose of reporting the income just to offset it with losses - does it raise my taxable income into higher tax brackets, and I can't think of any itemizable deductions to help offset the taxes I paid on the $10k I made. Thanks for the help. |
#2
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Its not going to put you in a higher tax bracket, but unless you have enough deductions to get over the $5K you were already going to get for the standard deduction, effectivley you are losing the ability to write off the couple thousand in losses. So you will be paying tax on money you didnt even really make.
If you have more than $5K in dedcutions, then reporting the income and wiring off the equal number of losses will have almost no bearing on your bottom line. |
#3
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[ QUOTE ]
If you have more than $5K in dedcutions, then reporting the income and wiring off the equal number of losses will have almost no bearing on your bottom line. [/ QUOTE ] I'm confused about this - if I made $10k and let's say never played poker, I can take the $5000 standard deduction. Taxable income is now $5000, in the 10% tax bracket = $500 federal owed. I had about $1300 deducted, so an effective refund of $800. Now with poker $10,000 regular income plus $9000 poker winnings (estimate) and $9000 in losses. $19000 income minus $9000 deductions = $10000 taxable income, first $7,xxx @ 10% next $3,000 at 15%, now I owe about $1150 in taxes with my poker "income" factored in. So by playing and not making money I now have a refund of $150 coming instead of $800. While getting a refund sure as hell beats paying, I don't understand how it's almost the same? Please let me know if I'm wrong somewhere. edit: and for tax purposes my parents still claim me as a dependent since my permanent residence is their house when I'm not at school, so no $3,200 exemption for me. |
#4
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You said you made "a few thousand" and lost " a few thousand. I wouldnt call 9, "a few". I thought you meant more like 3 or 4.
Either way, all you have to do is get turbo tax and put the numbers in both ways and you will have your answer. |
#5
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OK gotcha - like I said the $9k is just an estimate, it was pretty much up $100, down $100 all year so I haven't added up the "ups" and the "downs" so there's a good possibility it's less, but I'm going to say more than $5k.
I'm used to reading about person X making $200,000 from poker a year, which makes my $9k offset win/loss seem like a "few" I guess. |
#6
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Have you made any withdrawals. If not I would not worry about taxes on your poker losses.
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#7
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Yeah, I turned a profit in 2005 that I reported and paid taxes on, I ended up withdrawaling just under $2000 in 2006 from the 2005 profits.
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