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cannonwillow
Royal Flush
Joined: 13 Mar 2009
Posts: 962
Location: Faiview Heights, Illinois
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 Posted: Tue Nov 03, 2009 10:38 pm Post subject: |
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The more I read and think about the it the more confused I get...  |
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nilgiri
Message Board Junkie
Joined: 11 Jan 2007
Posts: 3790
Location: Massachusetts
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| Posted: Tue Nov 03, 2009 11:44 pm Post subject: |
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| finknik wrote: |
Thanks for all the replies.
I just don't see how it could be possible to keep track of all your winnings. When you raise, everyone folds, and you win the blinds, does that count as a profit? This would mean I would have to pay taxes on each pot I win? I just don't see how that could be. |
The government would probably be perfectly happy if you did that (your income would be astronomical!), but this is not required. All that is required is that you report each session's winnings as income (and then you can deduct the losses).
Of course, as dodge mentioned, defining a "session" in online poker is difficult -- the tax laws were written for B&M gambling, where a session is more obvious. There isn't anything clearly defined.
The way I did it was to count a session as "starting" as soon as I sat at a table, and to count it as "ending" as soon as I stood up from my last table. So whenever I had at least one table open, I was in the middle of a session, and when I had no tables open I was in between sessions. This meant that if I had a brief moment within a period of time when I was tabling selecting and closed all my tables for a few seconds before starting some more up, this counted as two separate sessions. But I felt this was the clearest way to do it.
You might instead use, say, HEM's definition of a session (not sure exactly what it is, but I think it is based on how long you have stopped playing). The difficulty here is that you need to make HEM's data jive with your account activity, which will be difficult if you play games that are not supported by HEM or if you otherwise have HHs that can't be read by HEM. Also, when you have connection issues or if you close a table before your hand finish (even though you've already folded), then HEM won't be able to record that HH. So you'll have to request all of your HHs from your poker sites, and this can be extremely time consuming to download and import when we are talking about hundreds of thousands of hands. |
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francois8
Message Board Junkie
Joined: 10 Jun 2008
Posts: 1932
Location: Conshohocken, PA
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| Posted: Wed Nov 04, 2009 1:22 am Post subject: |
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Honestly, compliance would increase 10-fold if they simplified the tax code so that you could take your poker wins minus poker losses and just write that number down somewhere. Having to record each session, putting down all of your winnings and then subtract all of your losses is just assinine imo. Also, the uncertainty as to what constitutes a session doesn't help any either. Even if they just said "a session is everything you play in a given day" that would be a start.
I actually keep track of all money that I sit at a table with, and what I get up with in a black notebook, it also helps to keep me from tilting away money since I know I'll be embarassed to read it later. |
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CoAz Kid
Straight
Joined: 06 May 2009
Posts: 116
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| Posted: Wed Nov 04, 2009 4:21 am Post subject: |
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| ScizoRShocK wrote: |
| isnt it if u live in las vegas that there r no taxes on gambling winnings? |
Dont confuse State taxes with Federal taxes. Nevada doesnt have a State Income Tax, but people who live in Nevada still have to pay Federal Income Tax.
The vast bulk of this discussion sounds to me like a discussion of Federal Tax, in addition to that, people will still also have to deal with their individual States tax laws.
Best bet, hire a professional. |
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finknik
Pair
Joined: 11 Jan 2009
Posts: 35
Location: San Diego, CA
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| Posted: Wed Nov 04, 2009 12:37 pm Post subject: |
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So nilgiri, from what I read, it sounds to me like by counting each session, it would come out the same as your net profit. Or am I missing something?
Say I make a $10K deposit. At the end of the quarter, I have $100K. Does it matter what happened each session? After I deduct each sessions losses from each sessions winnings, wouldn't that be the equivalent of my net profit?
Seems like if I just keep track of what I deposit (10K), and what I end up with (100K), I would be paying taxes on the net profit (90K). |
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cannonwillow
Royal Flush
Joined: 13 Mar 2009
Posts: 962
Location: Faiview Heights, Illinois
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| Posted: Wed Nov 04, 2009 1:00 pm Post subject: |
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| finknik wrote: |
So nilgiri, from what I read, it sounds to me like by counting each session, it would come out the same as your net profit. Or am I missing something?
Say I make a $10K deposit. At the end of the quarter, I have $100K. Does it matter what happened each session? After I deduct each sessions losses from each sessions winnings, wouldn't that be the equivalent of my net profit?
Seems like if I just keep track of what I deposit (10K), and what I end up with (100K), I would be paying taxes on the net profit (90K). |
Problem is if you do it your way you end up paying taxes on bonuses, rakeback, promotions, any money transfered to you (as a tester, side bets, gifts, creating sigs for donations, etc), etc.
(which I guess were supposed to pay taxes on also)
But then people could just tranfer their funds to another closely trusted friend or relative with a FT account, counting this as a lose. Someone that is in tax trouble anyway. Another problem is what about tournament dollars, how do they figure in...
these are some very complicated issues that need to be resolved |
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Sand Wedge_100
Message Board Junkie
Joined: 27 Sep 2007
Posts: 1545
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| Posted: Wed Nov 04, 2009 1:31 pm Post subject: |
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WOW guys there aint nothing complicated about it.
If you got more morey in your account on Dec 31 than you had Jan 1st deduct the amount you deposited from your home accnt, credit card etc. and pay taxes on the dif.
Now if you have less money then you lost money and don't owe taxes and can deduct the lose if you paid taxes last year up to a point.
Good grief its just that simple.
Now if they want to audit you then let them tell you what they want to see. |
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cannonwillow
Royal Flush
Joined: 13 Mar 2009
Posts: 962
Location: Faiview Heights, Illinois
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| Posted: Wed Nov 04, 2009 2:27 pm Post subject: |
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I guess withdrawing money during the year would help reduce my taxes Sand Wedge_100. I know you just forgot to mention it and gave me an opportunity to be a smart-azz  |
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nilgiri
Message Board Junkie
Joined: 11 Jan 2007
Posts: 3790
Location: Massachusetts
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| Posted: Wed Nov 04, 2009 3:41 pm Post subject: |
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| finknik wrote: |
So nilgiri, from what I read, it sounds to me like by counting each session, it would come out the same as your net profit. Or am I missing something?
Say I make a $10K deposit. At the end of the quarter, I have $100K. Does it matter what happened each session? After I deduct each sessions losses from each sessions winnings, wouldn't that be the equivalent of my net profit?
Seems like if I just keep track of what I deposit (10K), and what I end up with (100K), I would be paying taxes on the net profit (90K). |
It's not the same. Let's say your winnings are $500k (with $410k losses).
By paying taxes on your net profit, you are declaring an income of $90k. By paying taxes on your winnings (with deductions for losses), you are declaring an income of $500k. I can't remember off the top of my head when this difference matters (my wife did most of my taxes), but it did matter for my own taxes.
| Sand Wedge_100 wrote: |
WOW guys there aint nothing complicated about it.
If you got more morey in your account on Dec 31 than you had Jan 1st deduct the amount you deposited from your home accnt, credit card etc. and pay taxes on the dif.
Now if you have less money then you lost money and don't owe taxes and can deduct the lose if you paid taxes last year up to a point.
Good grief its just that simple.
Now if they want to audit you then let them tell you what they want to see. |
No. You can't just pay the taxes on the difference. You have to declare your winnings and deduct your losses, you can't just declare one single figure as profit.
Note that if you file as a professional gambler, I believe you can net your wins and losses. But most people will not be filing that way.
Here is a site that explains stuff. There are many more sites out there, go look them up:
http://www.gambling-law-us.com/Articles-Notes/online-gambling-tax.htm |
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finknik
Pair
Joined: 11 Jan 2009
Posts: 35
Location: San Diego, CA
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| Posted: Wed Nov 04, 2009 4:43 pm Post subject: |
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I'm lucky enough to be a tournament player, making it much easier to keep track of my winnings.
Let's say I play 10 Razz HU SNG's, with a buy-in of $100 each. If I win 8 out of 10, what would I be paying the tax on? The net profit of $600? Apparently not. Or is it the $800 that I won? I did indeed profit $800, and decided to spend $200 of it on my hobby of gambling.
Now if I get a deduction for the $200 loss, explain how that would work, and the final number that I would have to pay taxes on for that 10 game session. |
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JDizzzle72
Message Board Junkie
Joined: 01 Mar 2008
Posts: 3957
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| Posted: Wed Nov 04, 2009 4:48 pm Post subject: |
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| Sand Wedge_100 wrote: |
WOW guys there aint nothing complicated about it.
If you got more morey in your account on Dec 31 than you had Jan 1st deduct the amount you deposited from your home accnt, credit card etc. and pay taxes on the dif.
Now if you have less money then you lost money and don't owe taxes and can deduct the lose if you paid taxes last year up to a point.
Good grief its just that simple.
Now if they want to audit you then let them tell you what they want to see. |
this is very wrong fwiw. |
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nilgiri
Message Board Junkie
Joined: 11 Jan 2007
Posts: 3790
Location: Massachusetts
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| Posted: Wed Nov 04, 2009 5:47 pm Post subject: |
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| finknik wrote: |
I'm lucky enough to be a tournament player, making it much easier to keep track of my winnings.
Let's say I play 10 Razz HU SNG's, with a buy-in of $100 each. If I win 8 out of 10, what would I be paying the tax on? The net profit of $600? Apparently not. Or is it the $800 that I won? I did indeed profit $800, and decided to spend $200 of it on my hobby of gambling.
Now if I get a deduction for the $200 loss, explain how that would work, and the final number that I would have to pay taxes on for that 10 game session. |
Let's assume no rake for simplicity.
Each tournament you won was a $100 profit. Each tournament you lost was a $100 deduction. Thus, you put $800 (winnings) down on line 21 (I think? It's the "other" category) of the 1040. Then you fill out a schedule A and declare $200 in deductions. At some point in your 1040 you fill in your deductions from your schedule A and continue on.
If you want to be super-safe, you can count each buyin as a deduction, and not deduct your buyin when you win a tournament. Then it would be $1600 of winnings and $1000 of deductions. I don't believe you need to do it this way, and I did not do it this way myself last year. But I have not found anything concrete stating that the former way is completely acceptable.
Again I really encourage everyone to do their own research. Optimally you should hire an accountant who specializes in gambling income to do this work for you, but obviously this is not feasible for people who don't make very much from poker. |
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Sand Wedge_100
Message Board Junkie
Joined: 27 Sep 2007
Posts: 1545
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| Posted: Wed Nov 04, 2009 6:06 pm Post subject: |
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[quote = "JDizzzle72"] [quote = "Sand Wedge_100"] WOW guys there is not nothing complicated about it.
If you got more morey on Dec 31 in your account than you had in January 1st deduct the amount you deposited from your home ACCNT, credit card, etc. and pay taxes on the dif.
Now if you have less money then you lost money and do not owe taxes and can deduct the loose if you paid taxes last year up to a point.
Good grief its just that simple.
Now if they want to audit you then let them tell you what they want to see. [/ Quote] this is very wrong fwiw. [/ Quote]
Well if this is wrong then it aint worth very much 
I aint gonna worry about it.
Its all a hell of a lot more simple than you guys are making it out to be.
Poker tracker keeps up with it all except rakeback.
If and when they legalise it then FTP will send you a 1099 or whatever the hell form it is. |
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gonefshng
Royal Flush
Joined: 12 Mar 2007
Posts: 752
Location: give me rakeback liberty or give you death
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| Posted: Wed Nov 04, 2009 7:22 pm Post subject: |
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Listen to nilgiri, he has consistently given the best advice
This is not the 1st time this question has arose. There is other threads with plenty of bad advice and personal feelings. Don't try to figure the answers using common or uncommon sense
Another helpful link and a fairly easy read is:
http://www.pocketfives.com/tax-qa
Just to throw another simplified scenario out there, that doesn't use sense:
If you made 5k in winnings and 3k in losses. You claim the 5k as other income. If you do not normally itemize and take the standard deduction of 5.4k-10k, you may not have enough loses to be able to use them. You basically need 5.4 k in other deductions (single) + 3k in losses to be able to use the full amount when itemizing
I'm no cpa or tax expert, but it certainly isnt "just that simple",as some may imply |
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Sand Wedge_100
Message Board Junkie
Joined: 27 Sep 2007
Posts: 1545
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