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finknik
Three of a Kind
Joined: 11 Jan 2009
Posts: 78
Location: San Diego, CA
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 Posted: Tue Nov 03, 2009 2:40 pm Post subject: Taxation in the Poker World |
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Hello, I'm considering turning to poker full time. I was wondering how taxes work with this. I live in the United States.
I plan to make monthly withdraws. Will I be required to pay taxes on these? Or would I not have to, based on the fact that I won the money at a site not based in the United States?
If am required to, could I create a bank account in another country that doesn't tax, and make my withdraws to that?
Thanks for the help. |
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nilgiri
Message Board Junkie
Joined: 11 Jan 2007
Posts: 4007
Location: Massachusetts
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| Posted: Tue Nov 03, 2009 4:06 pm Post subject: Re: Taxation in the Poker World |
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DISCLAIMER: All of the following information is based on my own experiences and may not be accurate. There are a lot more resources out there. You should go look them up on Google or wherever.
| finknik wrote: |
| I plan to make monthly withdraws. Will I be required to pay taxes on these? Or would I not have to, based on the fact that I won the money at a site not based in the United States? |
You are required to pay taxes on all of your winnings. The amount you withdraw has nothing to do with taxes.
Your winnings will also far exceed your net profit. If you make $50k next year, you need to declare your income as the total of all of your winning sessions. This will be much larger than $50k, and likely put you into a higher tax bracket than if you declare your income as $50k. You then deduct all of your losing sessions. So you are not paying taxes on your net $50k, you are paying taxes on your winnings with deductions for your losses.
You can request all of your session information from your poker site(s). Be forewarned that the information will not come in an immediately useful format, and you will have to add up numbers on your own. For example, if you auto-rebuy, each rebuy will show up as a separate transaction -- but obviously rebuying is part of a session. Also, each table is counted separately, so when you play multiple tables during a session you will need to figure out what your session total was based on all the different transactions for each table.
You will also need to declare to the US Treasury that you have a foreign bank account (form TD F 90-22.1), assuming you keep over $10k on your various poker sites (which I would expect you will, since you are planning to play full time).
Finally, if you don't pay quarterly taxes you will end up paying a penalty at the end of the year (although the penalty typically is fairly small).
| Quote: |
| If am required to, could I create a bank account in another country that doesn't tax, and make my withdraws to that? |
What are you asking? If it is possible to break the law? Yes, it is possible to break the law. There are also consequences for breaking the law, and those can be pretty bad. Taxes suck, but not paying taxes -- especially not paying taxes on gambling winnings -- is pretty stupid IMHO.
There is good bit of information at this forum, and I would recommend you search for threads there: http://forumserver.twoplustwo.com/57/poker-legislation/ |
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bubulone
Full House
Joined: 16 Sep 2009
Posts: 163
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| Posted: Tue Nov 03, 2009 4:32 pm Post subject: |
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I don't think that's accurate.
If I win 130.000 dollars at poker tomorrow and keep them there for a month, then lose half of it the next month and the other half one month later, I don't think I should be paying any taxes.
It's not really an "income" because you don't get it, the site keeps it until you withdraw. |
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TinkyTyler
Message Board Junkie
Joined: 15 Jun 2008
Posts: 1964
Location: Toronto
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| Posted: Tue Nov 03, 2009 4:54 pm Post subject: |
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| bubulone wrote: |
I don't think that's accurate.
If I win 130.000 dollars at poker tomorrow and keep them there for a month, then lose half of it the next month and the other half one month later, I don't think I should be paying any taxes.
It's not really an "income" because you don't get it, the site keeps it until you withdraw. |
So what? You won the money... then you decided to spend it playing poker. You still earned the 130.000 dollars. Just because you didn't withdraw it doesn't mean its not income... just think of your online bankroll as another bank account. You decided to use the funds in that bank account to play poker and lost some money. You still need to pay taxes on what you won.
Makes sense to me.. |
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bubulone
Full House
Joined: 16 Sep 2009
Posts: 163
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| Posted: Tue Nov 03, 2009 4:58 pm Post subject: |
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Ok, let's take another example ... you have a stock portfolio and your stocks are worth 100.000 dollars more then last week.
Do you pay taxes for that ?
You didn't sell the stocks yet to get the money.
I still don't think it's accurate what you say. |
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TinkyTyler
Message Board Junkie
Joined: 15 Jun 2008
Posts: 1964
Location: Toronto
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| Posted: Tue Nov 03, 2009 5:04 pm Post subject: |
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| bubulone wrote: |
Ok, let's take another example ... you have a stock portfolio and your stocks are worth 100.000 dollars more then last week.
Do you pay taxes for that ?
You didn't sell the stocks yet to get the money.
I still don't think it's accurate what you say. |
Dude.. your online bankroll is money. Its not some stock portfolio. If you have a winning session, you won money. Its your choice whether to use it to play more poker or not. You haven't "invested" it in anything until you sit down at another table.
Anyways, look around online and you should see what nilgiri said is the case. You have to pay taxes on your winnings. The link he provided is helpful. |
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bubulone
Full House
Joined: 16 Sep 2009
Posts: 163
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| Posted: Tue Nov 03, 2009 5:10 pm Post subject: |
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You do have to pay taxes for your winnings, but you'll have to pay them when you withdraw, when the money reaches your bank account. Full Tilt Poker is not related to the government.
I'll pay the income tax in Romania when I get an income. When money comes my way. For now my money is in my poker account. When I withdraw, the bank will ask me what's the transfer for, and I'll have to go pay taxes for it. But until I withdraw I don't have to pay any taxes.
Full Tilt Poker owns the money until you withdraw it. |
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Nukking Futs1
Straight Flush
Joined: 22 Jun 2009
Posts: 401
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| Posted: Tue Nov 03, 2009 5:17 pm Post subject: |
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Your winnings must be reported, but you may also offset your winnings with your losses. You must report the net of what you have won reguardless if you withdrawn the money from your account. Both the IRS and the States tax gross income form whatever source worldwide. You can offset your winnings with your losses and expenses related to the income. If you become a profesional gambler you must keep great records for your expenses. The online poker sites can send you a statement of winnings and losses.
You even have to report all income from ileagal business, like if you are a drug dealer. |
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TinkyTyler
Message Board Junkie
Joined: 15 Jun 2008
Posts: 1964
Location: Toronto
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| Posted: Tue Nov 03, 2009 5:17 pm Post subject: |
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| bubulone wrote: |
You do have to pay taxes for your winnings, but you'll have to pay them when you withdraw, when the money reaches your bank account. Full Tilt Poker is not related to the government.
I'll pay the income tax in Romania when I get an income. When money comes my way. For now my money is in my poker account. When I withdraw, the bank will ask me what's the transfer for, and I'll have to go pay taxes for it. But until I withdraw I don't have to pay any taxes.
Full Tilt Poker owns the money until you withdraw it. |
If you insist. |
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marsupial311
Royal Flush
Joined: 14 Oct 2008
Posts: 738
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| Posted: Tue Nov 03, 2009 5:18 pm Post subject: |
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Just make poker your legal profession. Then your buyins are business expenses and you'll be subject to the laws of all self employed individuals in the country.
Your winnings are revenue. Your buyins are expenses. If you don't know how to do taxes for a small business, hire someone to figure it out for you but yes, you have to at the very least report your revenue and expenses to the government and then pay taxes depending on the exact numbers. |
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Nukking Futs1
Straight Flush
Joined: 22 Jun 2009
Posts: 401
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| Posted: Tue Nov 03, 2009 5:20 pm Post subject: |
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| Tinky and I are only talking about the USA. Other countries have other rules, if you live in a different country other then the USA then contact your goverment taxing agency and ask them. Finknik lives in the USA and the answers we gave are correct for him. |
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nilgiri
Message Board Junkie
Joined: 11 Jan 2007
Posts: 4007
Location: Massachusetts
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| Posted: Tue Nov 03, 2009 5:20 pm Post subject: |
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| bubulone wrote: |
| I don't think that's accurate. |
The law doesn't care what you think. Go look up the laws yourself if you think what I said is incorrect.
| Quote: |
| If I win 130.000 dollars at poker tomorrow and keep them there for a month, then lose half of it the next month and the other half one month later, I don't think I should be paying any taxes. |
Assuming this happens within a single tax year, then you wouldn't be paying any taxes, because your deductions would be equal to your income.
You often will effectively be paying taxes only on your net profit, because that's the amount you'll be left with after to deduct your losses from your income. But it isn't the same.. There is lots of tax stuff that say things like, "If your income was more than X," or "If your income was less than X," and your income is not your net profit.
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| It's not really an "income" because you don't get it, the site keeps it until you withdraw. |
Lol. Try telling that to the courts and see what they say.
| bubulone wrote: |
Ok, let's take another example ... you have a stock portfolio and your stocks are worth 100.000 dollars more then last week.
Do you pay taxes for that ?
You didn't sell the stocks yet to get the money. |
You can't compare trading and gambling. The government doesn't believe they are the same thing, whether or not you do.
And your analogy is messed up anyway. The money in your account on a poker site is actual, real money. It doesn't suddenly come into existence when you withdraw. Not only that, but because the poker sites are (all?) operated outside of the U.S., the government considers these sites to be foreign bank accounts.
| Quote: |
| I still don't think it's accurate what you say. |
And it still doesn't matter what you think. Go do some research on actual tax laws and stop telling us your own personal feelings on the matter. At best it's just dumb, and at worst you may actually get someone in trouble if they listen to you. |
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nilgiri
Message Board Junkie
Joined: 11 Jan 2007
Posts: 4007
Location: Massachusetts
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| Posted: Tue Nov 03, 2009 5:22 pm Post subject: |
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| finknik wrote: |
| I live in the United States. |
| bubulone wrote: |
| I'll pay the income tax in Romania when I get an income. |
Seriously, wtf are you even doing giving tax advice to U.S. players? |
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JDizzzle72
Message Board Junkie
Joined: 01 Mar 2008
Posts: 5117
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| Posted: Tue Nov 03, 2009 5:29 pm Post subject: |
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| nilgiri is as far as i know part right. i'd encourage you to seek an accountant experienced in filing taxes for gamblers though to be on the safe side. laws vary state to state and year to year |
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jeffr8
Inspector Gadget
Joined: 22 Oct 2006
Posts: 3639
Location: On a boat
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| Posted: Tue Nov 03, 2009 5:29 pm Post subject: |
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Nilgiri knows what he's talking about.
If you're playing professionally you're probably better off getting a professional tax-doer who specializes in gambling to figure out how much you owe. |
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