Paying Taxes

[TheGambler]

I thought there was a post regarding how to handle your taxes with online gambling but i could not find it in the search bar. so I wanted to ask you guys how you handle your taxes each year with online gambling. any thoughts would be greatly appreciated

thanks

[Tchocky]

Are you serious? Nobody pays taxes on their winnings unless you really want to write off your losses.

[JoshW]

Couple past threads on the subject:

http://forum.sbrforum.com/showthread.php?t=6783&highlight=taxes

http://forum.sbrforum.com/showthread.php?t=1943&highlight=taxes

[marc]

The way I compute my taxes is withdrawals to my bank account - deposits from my bank account

[EBone]

Are you serious? Nobody pays taxes on their winnings unless you really want to write off your losses.

My experience is that if you are a bettor and you don't have a full time job, you had better report your winnings. If you are a bettor and you have a full time job, you can probably get away with it depending upon how much you win. I'd say if you are a college student, you can probably get away with not paying your taxes as well but, again, it would depend how much you made gambling.

And if you're making book, well, that is entirely a different story. A fairly large bookmaker will not be busted for bookmaking; but he would get the book thrown at him for tax evasion. Not reporting winnings from bookmaking is a major, major no-no. You will gain no sympathy from the legal system so you had better pay a high-priced lawyer to get you out of trouble cause you'll need it.




E

[Mudcat]

This is something I have saved which may be relevant.



Yes, I file taxes as a sports betting business since it's my only income. The law states that I have to. There are 4 conditions in the law that determine if you are a professional and I meet them. It would take some searching to dig up the exact section of the tax law - so you can do that if you want - but they have to do with how organized you are and the extent of your record keeping and if you use specialized knowledge/training to make money betting and blah, blah, blah.

I have an accountant do my taxes so I'm not going to be able to talk in too much detail about this but really what it boils down to is, if you systematically make money at it, you are supposed to pay taxes.

You asked if I write Pro Gambler on my return. I just had a quick look and I see that under Main Source of Income, she has put, Gambling. So I guess that answers that question.

I'll tell you what I do. I count money that I pull into my bank account from my offshore accounts - through Neteller - as my income. That is traceable through my bank statements. It is really as simple as that. And I can claim office supplies/equipment and a portion of my rent/car as deductions. My accountant would have to explain how that all breaks down. I just keep receipts throughout the year and hand the file to her at tax time.

What is slightly "tricky" is that I actually make a lot more money than that because I have a lot of funds offshore and those funds keep growing. But I don't count all that profit as income. I leave most of the profit offshore and only pull in what I need for my living expenses.

I still think that's legitimate. After all, those offshore funds are still at risk (now more than ever). And basically what will happen down the road (when I retire?) is I will have a big chunk of cash that I will have to pull in and account for and pay taxes on. (Or maybe I can just move it from sportsbook accounts to a safe offshore bank and legally save on taxes. I don't know. I'll cross that bridge when I come to it.)

Because so much of what we do happens offshore, you can probably get away with a lot. How much you want to "push the limits" is up to you. If I wanted to get really tricky, I could probably just say I had one big lucky win offshore - basically like winning the lottery - and that's where all my money came from. That would definitely not make me a professional and that should be tax-free. It would be hard, maybe impossible, to prove I was lying. But then maybe if I was audited and they searched my computer, they could tell I was lying. I don't know.

I frankly sleep better at night just doing what I do. I don't think I would have any trouble at all if I was audited and that's the way I like it.

Hope that helps.

[Mudcat]

And here is an IRS link I saved at some point with US-oriented info.

Let me tell you how it will be. There's one for you, nineteen for me.

[tennis28]

Here is what I don't understand. If you tell the IRS, when asked about your income, that yes you were successful online and won $100,000, however you lost that amount or more in a land-based casino or in a cash home poker game, how can they tell you that you're full of shit. While probably untrue, it doesn't have to be. In fact, i'm sure that are recreational gamblers who have gone on hot streaks online and then lost greater amounts in an actual casino. In those cases, there is a paper trail from the online winnings if the gambler withdrew from neteller to their bank acct. There is no paper trail in the casino, however.

Agree or disagree?

[MrX]

Yes, tennis, you can write off casino/home game losses vs online wins. If those numbers are large, however, you're greatly increasing your chances of an audit. In the case of an audit, you'd better have been keeping accurate records, your word is not good enough.

Also, in the case of an audit, you need to be able to justify your lifestyle. So if you're willing to win a ton online, withdraw the cash, claim a ton of fake losses, bury the cash in the yard, and live like a poor person, you could almost surely get away with it. But someday you're going to want to spend that money, and it's going to look weird if you never paid taxes on it.