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#1
03-20-2007, 01:23 AM
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AUDIT
Does anyone know if/what/how the IRS audits recreational players who pay their taxes on their winnings? I mean do they ever audit people who don't claim deductions or file as pro? If so, what do they do and look at in the audit? If you pay your taxes, is there anything to worry about? Any records to be sure to have?
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#4
03-20-2007, 03:29 AM
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Re: AUDIT
[ QUOTE ]
Probably a totally different title would be best. Titles shouldn't read like Fox news promos: "COMMON HOUSEHOLD PRODUCT WILL KILL YOUR BABY - find out which one at 11". [/ QUOTE ] I agree, definately feel cheated.
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#5
03-20-2007, 05:21 AM
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Re: AUDIT=DEATH
Its just that simple.
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#7
03-20-2007, 12:30 PM
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Re: AUDIT
Pretty hard to answer your question since the IRS doesn't publicize their audits unless they are high profile. Years ago I was audited and they never checked my bank account. I just had to show proof on one of my deductions. My girlfriend a few years back had to claim $60,000 in gambling winnings, showed $60,000 in gambling losses and was never audited. In 2003 I deposited into my Bank account a check for $75,000 from gambling winnings, never reported it and was/still not audited. You never know what/who comes for IRS audits and what they want when they do.
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#8
03-20-2007, 01:52 PM
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Re: AUDIT
agreed...this is difficult to give an accurate answer to...
it is entirely possible that you could be audited regardless of your deductions or filing as a pro. The IRS can audit whoever they want and apparently part of their formula is to perform some of their audits completely at random. I don't know how true this really is in practice, but it's feasable that anyone can be audited poker or not. At the same time I think most everyone will agree that the more abnormal your filing is, the more likely your return may peak their interest. Claiming a lot of income or deductions that's not from a "regular" type of job might increase your chances of an audit. If you are audited I think what they look for will depend on what is specifically on your return. If you claimed 100k in deductions, they may want some justification/proof of why you felt entitled to such deductions. On the flip side if you didn't claim any deductions at all (say you netted your winnings) they probably aren't going to be real happy about that. It is a clear violation of tax code. My CPA's advice has always been real clear on this point. Your bank records need to agree with what you are telling them. Not that you should report wins/losses by bank transactions but if they want to know why there was a 15k withdrawl on such and such date or if they do look at your bank activity for that year, you should be prepared to justify that. So let's say you accurately netted your winnings and reported that as income. For the sake of discussion we will say that number is 25k. But your bank records show 40k in witdrawls. There are several logical ways in which this can happen even if your report is entirely accurate. However, if you say " but look, I have 15k in deposits as well so I subtracted that" this will show that you didn't report your income according to their code and possibly get you in some hot water. If you are audited you should probably be prepared to show your bank records and detailed session by session records of your wins/losses. They may or may not ask you for that specifically but I would think it's the most likely starting point. I can't think of anything that you would be worse off if you didn't have because they are giong to shift a lot of the burden of proof on you. My CPA always looks at my total poker account balances for the beginning and end of the year as well as my bank records for that year before doing my filing to verify they are in line with my records. They seem to give me the impression that in the event of an audit one of the first places they are going to look is at your bank records. Disclaimer: I am not a tax professional so please take any of the above advice with a grain of salt. If you are unsure what to do it would be best to get advice from a tax professional. Hope that helps at least a little bit...
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#9
03-20-2007, 01:57 PM
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Re: AUDIT
[ QUOTE ]
Mods please place a "?" on Mr. Jeter's thread title. TY. [/ QUOTE ] OP has been added to my "I" list. cheers Boon
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#10
03-20-2007, 05:08 PM
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Re: AUDIT
Most of the information I have gotten suggests that pro players will get audited far more than recreational players.
Any business that deals primarily in cash, which includes everything under the gambling code, has an increased chance of audit. However, I'm seeing reports that recreational players are getting a letter audit for SE tax, but that is still better than a general audit. Be careful with deducations, don't go crazy on a home office deduction, for example. Other things are not controlable -- some cities have higher audit rates. I've read some aritcles online that say it is better to file late and to not file electronically -- probably speculation.
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