How many of you actually pay taxes on your gambling profits ?

[Mudcat]

hey mudcat , i thought in canada gambling winnings weren't taxable, do you declare it as self employed or other income

I'm afraid you thought wrong. There is a section in the tax code that outlines a set of conditions under which you must pay taxes. (Well, you have a choice of paying or testing out the fraud route).

As Matt Rain said earlier,

The tax exemption rule mostly applies to one-shot lottery winnings.


But if you are organized and methodical and profitable, the law says it's taxable.

If someone had other income they could probably get a bit trickier with their offshore funds. In my case, since it's my only income, I have to explain how money keeps turning up in my bank account to pay my bills. And like most every other Canadian, that income is taxable.

[Tchocky]

I'm a registered tax preparer and I would recommend against reporting any profits. Online gaming is still illegal and reporting any profits from an online sportsbook would be tantamount to admitting you have illegal income. Unless you receive any forms from a brick and mortar casino, racetrack, lotteries, etc., there is no need to report this income.

[Sinister Cat]

I'm a registered tax preparer and I would recommend against reporting any profits. Online gaming is still illegal and reporting any profits from an online sportsbook would be tantamount to admitting you have illegal income. Unless you receive any forms from a brick and mortar casino, racetrack, lotteries, etc., there is no need to report this income.

This is interesting. I'm thinking this is bad advice, but I of course would like to hear the counter argument. What is the likelihood that you will get in trouble for reporting online gambling income? First, it is a matter of state law, and most states do *not* have statutes that explicitly forbid online gambling (though their general provisions regarding the illegality of gambling could arguably cover it). Further, to my own (very limited) knowledge, there has only been one person prosecuted-- that is the case in South Dakota, but apparently bookmaking was actually alleged in that case.

So I am wondering what the downside to reporting the income actually is (besides paying taxes)? The upside to reporting it, of course, is that you won't get in trouble with the IRS/DOJ for tax evasion, which seems to be a more real threat.

[Tchocky]

This is interesting. I'm thinking this is bad advice, but I of course would like to hear the counter argument. What is the likelihood that you will get in trouble for reporting online gambling income? First, it is a matter of state law, and most states do *not* have statutes that explicitly forbid online gambling (though their general provisions regarding the illegality of gambling could arguably cover it). Further, to my own (very limited) knowledge, there has only been one person prosecuted-- that is the case in South Dakota, but apparently bookmaking was actually alleged in that case.

So I am wondering what the downside to reporting the income actually is (besides paying taxes)? The upside to reporting it, of course, is that you won't get in trouble with the IRS/DOJ for tax evasion, which seems to be a more real threat.

This is more my opinion than the official IRS stance. Whether or not, one chooses to report income is your choice. There are those that will tell you that you do not have to file a tax return. I'm not one of those people. In light of many of Obama's disastrous nominees, I urge everyone to file and pay your taxes.

[SBR_John]

I'm a registered tax preparer and I would recommend against reporting any profits. Online gaming is still illegal and reporting any profits from an online sportsbook would be tantamount to admitting you have illegal income. Unless you receive any forms from a brick and mortar casino, racetrack, lotteries, etc., there is no need to report this income.

If you moved the winnings onshore then there is a record which during an audit will be caught. I might agree if a player was to say they never have any plans to bring the money back to the US.

[thespeculator]

i have read even if you are dealing drugs, the government can also charge for not paying income tax, so i think that is a separate matter that the online gambling is legal or not , the legality of the income isn't the issue if it is income and it is not explicitly exempt ( like in the UK) you have to declare it , Mudcat really helped clarify for me , thanks cat