Paying Taxes On Your Winnings

[FuzzyDunlop]

Have you been going by these rules since you started doing on line poker, Fuzzy? If so, have you done this through a tax professional? Have you encountered any audits? Just curious. I normally do my taxes through Turbotax, but I think I might need to do them in person with H&R Block or someone else if I'm fortunate to have the problem of filing gambling income next year.

'02 I didn't have winnings, '03 I had a few thousand in winnings and didn't report. '04 I had significant winnings to where I sought an accountant, I also finished my Bachelor's Degree and planned on paying off a Federal Student Loan at first payment, couldn't do it declaring I was an unemployed student living off loans. Had to resubmit '03 to include the gambling earnings, paid penalty. I use one now every year, regardless of if the primary amount of income is gambling related or not. My taxes are done as close to New Years as they can be, they send a bill, I pay the current year owed quarterly. Zero audits.

I don't know how prevalent Neteller was in sportsbooks, but it was our lifeblood on the poker side. You could request a withdrawal before you went to bed, and by the time you woke up, you could take the cash out of any ATM in the country for a ridiculously small fee. When Neteller went down in the U.S., the government got those records. When 3rd party processors use cash transfers, the companies that run those cash transfers keep records that the government sees under the Patriot Act. If you think you're playing on an online book and no one has no clue what you're making off it, you're beyond dead wrong.

[Mr KLC]

'02 I didn't have winnings, '03 I had a few thousand in winnings and didn't report. '04 I had significant winnings to where I sought an accountant, I also finished my Bachelor's Degree and planned on paying off a Federal Student Loan at first payment, couldn't do it declaring I was an unemployed student living off loans. Had to resubmit '03 to include the gambling earnings, paid penalty. I use one now every year, regardless of if the primary amount of income is gambling related or not. My taxes are done as close to New Years as they can be, they send a bill, I pay the current year owed quarterly. Zero audits.

I don't know how prevalent Neteller was in sportsbooks, but it was our lifeblood on the poker side. You could request a withdrawal before you went to bed, and by the time you woke up, you could take the cash out of any ATM in the country for a ridiculously small fee. When Neteller went down in the U.S., the government got those records. When 3rd party processors use cash transfers, the companies that run those cash transfers keep records that the government sees under the Patriot Act. If you think you're playing on an online book and no one has no clue what you're making off it, you're beyond dead wrong.

About what percentage does the government get of your gambling winnings?

[lyon804]

About what percentage does the government get of your gambling winnings?

Depends on what tax bracket you are in. It's taxed like any other income.

[lyon804]

I LOL'ed reading over this thread. This thread is an IRS employee's dream. Next time some of you state that you do not pay taxes remember this is not private conversation here. SBR has your name and it would only take the IRS one phone call to figure out who you are if they wanted to. Keep in mind that not everybody here is a degen. Hell, you never know somebody here could actually work for the IRSor no somebody that does. Best to keep your thoughts to yourself.

[Mr KLC]

I LOL'ed reading over this thread. This thread is an IRS employee's dream. Next time some of you state that you do not pay taxes remember this is not private conversation here. SBR has your name and it would only take the IRS one phone call to figure out who you are if they wanted to. Keep in mind that not everybody here is a degen. Hell, you never know somebody here could actually work for the IRSor no somebody that does. Best to keep your thoughts to yourself.

They're probably on the streets of NJ hunting for JJ right now.

[lyon804]

One more tip for the geniuses that don't report gambling winnings.. Do not run income through your bank account that you can't account for.

[WeinketoWarrick]

One would hope John would have the integrity to not give out poster information to somebody randomly calling or asking and claiming to be the IRS. He isn't based in the US, no legal obligation to answer any such request.

But this is a gambling forum, we're all full of shit anyway lol.

[sharpcat]

One would hope John would have the integrity to not give out poster information to somebody randomly calling or asking and claiming to be the IRS. He isn't based in the US, no legal obligation to answer any such request.

But this is a gambling forum, we're all full of shit anyway lol.

Have you ever netted a profit of 30k or greater in a year or are you just responding to this topic on an "if I won" basis?

Whether or not you believe it is fair or not is of no concern to a judge when you are facing tax evasion charges for not reporting your earned income (ask Wesley Snipes). If you can not provide betting tickets or bank statements to support that you have lost all of your winnings on the horses or state lottery that is your problem and uncle sam does not care, you should have saved your receipts if you wanted to write these things off.

And I am pretty sure that even if SBR is not based out of the US (which I believe they are based out of the US) that the IRS would not have a problem extracting info from John considering that he employs citizens of the US.

[sharpcat]

Mr. KLC,

There are 2 ways to file gambling winnings. As a professional gambler in which case you would be itemizing your losses compared to your winnings or you can just claim gambling winnings on a 1099 for your net profits.

Probably best to consult an accountant if you win a substantial amount as claiming as a professional may result in paying less taxes but would definately increase your chances of an audit so you would want to make sure that everything was done correctly.

[Smoke]

This is a very uneducated argument.

The IRS can audit anyone at anytime for any reason dating back 3 years, if they were to audit ones bank account and see $50,000 plus of unanswered for income you will not only owe what you should have paid but also interest , late fees, and penalties with possible criminal prosecution.

What the OP is referring to is players who make the equivalent of a salary in winnings, if you are the type of player who considers a big winning year $10,000 I would not be very concerned with this issue.

good post

Nobody here even comes close to ten grand in winnings per year, most don't even post a profit. So the answer is no, don't file ur taxes unless your an actual pro getting all your income from gambling.

[FuzzyDunlop]

Mr. KLC,

There are 2 ways to file gambling winnings. As a professional gambler in which case you would be itemizing your losses compared to your winnings or you can just claim gambling winnings on a 1099 for your net profits.

Probably best to consult an accountant if you win a substantial amount as claiming as a professional may result in paying less taxes but would definately increase your chances of an audit so you would want to make sure that everything was done correctly.

You can't just claim to be a professional unless you're amending a few previous years returns. To file your taxes as a professional gambler, you first must meet the criteria as set down by the Supreme Court in its landmark decision in the case Commissioner v. Groetzinger (info) back in 1987. The Court's criteria can be summarized as follows:

1. Gambling activity must be done full time with regularity and continuity. Sporadic activity does not qualify.

2. Gambling activity must be done with the expectation of making income to support yourself. Note that a professional gambler may have another source of earned income, but a significant source must come from gambling.

3. You must show a profit in three out of five consecutive years. This rule is applied by the IRS to distinguish businesses from hobbies or recreational activities.

4. You must act like a business. The IRS requires businesses to accurately maintain a set of books (an inexpensive personal computer checkbook or personal finance program should be sufficient). Additional items that can help support your position that you qualify are listed below:

(a) business telephone listing

(b) business cards, letterhead and envelopes

(c) office address or post office box

(d) business license or permit

(e) fictitious business name statement

If you meet these criteria, you can consider yourself a professional gambler and report your gambling activity on a Schedule C, Profit or Loss From Business, and deduct gambling-related expenses. There is a limit to the amount of expenses that you can deduct. The IRS considers these expenses to be gambling losses, and the rule that gambling losses cannot exceed gambling winnings still applies. If this is true for you, you must show a net profit of zero. You cannot claim a net loss. This has been the subject of a number of Tax Court cases in which professional gamblers have challenged this rule. These professional gamblers argued that since other types of businesses can claim a net loss, those in the business of gambling (professional gamblers) should also be allowed to claim a net loss. Their arguments invariably were based on the "equal protection under the law" doctrine, but were to no avail. In every case to date, the Tax Court ruled in favor of the IRS.

If you file as a professional on Schedule C, you are subject to the self-employment tax (social security), and depending on your gross profit (winnings minus losses), you may actually pay more taxes than if you filed as a recreational gambler. But if you live long enough or become disabled, you will be able to receive social security benefits. You may not be making contributions to an IRA plan or a SEPIRA, but at least you will have social security benefits.

[samboy]

smart way to do it is go to europe make a friend let ask him to use his adress .... cash checks there thats how you dont pay taxes.

[ebbearsfb1]

Most of these guys don't have winnings... never with drawn from online... what if you use ** and don't put money in the bank? Fuzzy. Or fish head care to answer... was thinking of doing a with drawal from bookmaker... is it better to do 1 huge with drawal or more smaller ones?

[boondoggle]

are people this stupid ?

[ebbearsfb1]

What about a guy like jj whose a career loser? Does the govt give him money back cause he stinks so bad?

[FreeFall]

My winnings play for vacations so no reporting for me.

Care to cite the tax code that allows your income to be spent on vacations acceptable?

They are not usa companies therefore you should never report anything

JJ this is for winning players only. You don't belong here

you're already breaking the law. why bother to pay taxes

you are wrong.

[WeinketoWarrick]

Hell no I've never profited $30,000+ in a year lol. I'd be thrilled with 5k a year. I'm the epitome of a coin flip capper I think...waste a lot of time and a little money for a lot of entertainment...

[unusialsusp5]

but no one wins. so there is no income to report by 99.5 pct of players. why would you get it in a check that if deposited could be traced. just receive it another way. i've never made a withdrawal in 10 years of betting so i have no worries. i can't believe anyone can make a profit over a given year. no one is that good.

[blackbart]

wagering on sports is not illegal
not paying taxes on income is illegal

[Pokerjoe]

Anyone paying taxes on gambling is crazy. They steal enough in "traditional" taxes.

Anyone not paying taxes is crazy. I'd fuk with the Mob before I'd fuk with the IRS.

I've been filing and paying taxes on my gambling for 20 something years. I make quarterly payment even. IOW, I do it right because I don't want to do it wrong.

Basically, you can report all winning bets as income, and all losing bets as a deduction, or you can go the self-employed route. But you can not just report how much you won.

And, monthly at least, print up your sports bets, save them, in case you get audited.

BTW, "professional poker player" just got an IRS occupation classification number. Maybe someone here should do that for sports betting.

[FuzzyDunlop]

BTW, "professional poker player" just got an IRS occupation classification number. Maybe someone here should do that for sports betting.

It's a Department of Labor SOC (Standard Occupational Classification) code, until the tax code is changed, it's irrelevant. Still outside the box thinking in the right direction, would probably never apply to general gambling as they aren't games of skill.

[jjgold]

Guys if you get checks from offshore books even if like 25,000 through a years time no way you will be flagged if you do not pay taxes on it

These are not usa companies, they do not file W-2 Forms to the govts

You have to be a fukkin idiot to pay taxes on offshore gambling wins and I mean a fukkin idiot and a sucker

[Fishhead]

Guys if you get checks from offshore books even if like 25,000 through a years time no way you will be flagged if you do not pay taxes on it

These are not usa companies, they do not file W-2 Forms to the govts

You have to be a fukkin idiot to pay taxes on offshore gambling wins and I mean a fukkin idiot and a sucker

Geezus H. Crickets.......stop.

Your going to get posters fined and possibly put behind bars with these recommendations.

[wtf]

Geezus H. Crickets.......stop.

Your going to get posters fined and possibly put behind bars with these recommendations.

ok mr know it all dumpster diver, site some examples

you wont

your full of shit as usual

[easyliving]

Guys if you get checks from offshore books even if like 25,000 through a years time no way you will be flagged if you do not pay taxes on it

These are not usa companies, they do not file W-2 Forms to the govts

You have to be a fukkin idiot to pay taxes on offshore gambling wins and I mean a fukkin idiot and a sucker

so the banks will not question how your depositing 25k into your account without a proper source? So does paying taxes on gambling automatically put a person on the IRS watch list considering they are aware of it and probably expect you to pay taxes every year if you pay a few years in a row.

[Gus Fring]

Which idiots would report winnings?

Hard enough to beat -110 lines, and now pay taxes on the few times we win?

[TheCentaur]

Definitely report any 1099s you get from casinos, lottery, etc.

If you want to report a 2k check from offshore but get no deduction next year when you lose 6k be my guest