Matt24-
A few notes:
1) The tax consequences are different for a "professional" player and a "recreational" player but both must pay tax. The recreational player does get to deduct his losses and is taxed on the net winnings.
2) The IRS does not care how you "earned" the money as long as you pay tax on it. The legality of it or lack thereof is moot.
If you have concerns, talk to a tax advisor.
My guess is that 99.9% of recreational poker and sports players do not pay tax for a few reasons, few of them actually show a net positive at the end of the tax year and those who do decide not to pay due to ignorance, personal stance on what is in effect double taxation, or tax avoidance.
A few notes:
1) The tax consequences are different for a "professional" player and a "recreational" player but both must pay tax. The recreational player does get to deduct his losses and is taxed on the net winnings.
2) The IRS does not care how you "earned" the money as long as you pay tax on it. The legality of it or lack thereof is moot.
If you have concerns, talk to a tax advisor.
My guess is that 99.9% of recreational poker and sports players do not pay tax for a few reasons, few of them actually show a net positive at the end of the tax year and those who do decide not to pay due to ignorance, personal stance on what is in effect double taxation, or tax avoidance.
Personally speaking I'd report none of it, or if anything a small portion of it to make things look less suspicious....bring it in or spend it in small amounts, stay low key and don't do anything to draw unneccessary attention to yourself...
No reason to give the government any extra tax money until they learn how to correctly spend it...
No reason to give the government any extra tax money until they learn how to correctly spend it...
Personally, I report everything I make gambling and deduct my losses.
Some years I have reported close to 1,000,000 in winnings before deductions.
Have been doing that for the last 11 or so years as gambling as been my main income.
Will be more than happy to discuss this in detail at the bash in August.
Some years I have reported close to 1,000,000 in winnings before deductions.
Have been doing that for the last 11 or so years as gambling as been my main income.
Will be more than happy to discuss this in detail at the bash in August.
<BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by Matt24:
theswami, does that mean if you are a pro, you basically pay no tax? Because you get to deduct everytime you lost, that doesnt make sense to me, did I read that right?<HR></BLOCKQUOTE>
Matt-
I cannot speak from the pro angle since I do not gamble for a living. With that said, from a tax standpoint you are likely able to deduct other "stuff" if you are a "pro." The other deductions are things like transportation to the casino, the computer you use to play online/check lines, the desk you use would get depreciated, etc.
As a recreational gambler, you get to deduct your losses so you in effect only pay taxes on the net win. Where this sucks for losers is that say some guy wins huge playing horses or wins a big poker tournament one year. He will get to deduct his losing sessions that year against the win so he would only pay tax on the net. However, in coming years when he reverts to his mean and continues to lose, he cannot deduct his net losses against his regular income. The most you can deduct is the amount that you win. The system is VERY poor and unfair to honest people. Also, it is double taxation since someone already paid income taxes on the money a winning player wins.
It seems like you should speak with Fish about this since he's been doing this as his main income. Additionally, consult a tax advisor or go to irs.gov and do a search.
I'll start up my AIM next time I log on.
theswami, does that mean if you are a pro, you basically pay no tax? Because you get to deduct everytime you lost, that doesnt make sense to me, did I read that right?<HR></BLOCKQUOTE>
Matt-
I cannot speak from the pro angle since I do not gamble for a living. With that said, from a tax standpoint you are likely able to deduct other "stuff" if you are a "pro." The other deductions are things like transportation to the casino, the computer you use to play online/check lines, the desk you use would get depreciated, etc.
As a recreational gambler, you get to deduct your losses so you in effect only pay taxes on the net win. Where this sucks for losers is that say some guy wins huge playing horses or wins a big poker tournament one year. He will get to deduct his losing sessions that year against the win so he would only pay tax on the net. However, in coming years when he reverts to his mean and continues to lose, he cannot deduct his net losses against his regular income. The most you can deduct is the amount that you win. The system is VERY poor and unfair to honest people. Also, it is double taxation since someone already paid income taxes on the money a winning player wins.
It seems like you should speak with Fish about this since he's been doing this as his main income. Additionally, consult a tax advisor or go to irs.gov and do a search.
I'll start up my AIM next time I log on.
