gaming taxes info

**JoshW** · 06-20-06, 08:13 PM

Gambling law is fairly complex. If you do it professionally is a couple ways to go. Really you are best to talk to a accountant who works with other professional gamblers. i can get you some names if you are interested.

On something this important tough to get a clean answer on the forums.

**Ganchrow** · 06-20-06, 09:08 PM

Originally posted by kalmikrazy

The info I have is you gotta pay 28% if you have a valid SSN and 31% if you do not on your gambling winnings and you can deduct all your losses as long as they do not exceed your winning.

Does the same % apply to someone who does this full time and their only source of income?

I believe the numbers are actually 25% and 28%. However, this applies only to withholdings and does not necessarily reflect a winning gambler's tax liability. To figure out your actual increase in tax liability from gambling you'd need to use your marginal tax rate.

Gambling earnings are treated as ordinary income whether you're a professional or a recreational gambler. Gambling losses are treated as a miscellaneous deduction on Schedule A and can be claimed only up to the amount of winnings. I'm fairly certain that neither gains nor losses can be carried over from year to year.

For anything more than that I'd agree with lakerfan when he recommends speaking to a tax professional.

**ihaiha** · 06-21-06, 05:46 AM

Hi all, I've filed as a professional now for a few years. First, for anyone who is reading this i'll give you a little backround about myself and then i'll give my advice and the facts as i know them about taxes and gambling. I live in the US. I am under 30 and for 3 years now I have filed as a "professional gambler", this is the title that i have used for my occupation on the tax form. I derive the bulk of my income from internet poker, however, about 20% of my income comes from sportsbetting on the internet. In order to transfer money from sportsbooks and online poker rooms to my bank account i primarily use neteller as do almost all who partake in online gambling. I have not been audited by the irs and have never spoker directly to an irs agent or anyone else affiliated with the irs. I am in no way shape or form claiming to be a tax professional. For those out there who are considering filing as a professional these are the "rules" as i know them.

1. You file a schedule C with the irs as a "small business owner" and you simply declare what you made in total earnings during the course of the calendar year, just as anyone else does. As a sportsbettor for instance(because this is what this forum mostly consists of), if at the end of the year you tally up $50,000 in winning bets for the year and also tally up $25,000 in losing bets for the year, then you simply declare that you made $25,000 for the year. Take your wins then subtract the losses and then declare the profit as your income.

2. You are required to pay what is called "self employment tax". This is about 15% of your earnings

3. If filing a "schedule C" as a professional, the irs expects you to pay quarterly estimates of your yearly tax. For instance if you estimate that your yearly income is going to be $50,000, the irs expects you to pay your estimated liability in 4 installments throughout the year. If you fail to pay in quarters and wait to pay it all at the tax deadline, the financial penalty is fairly insignificant and it is really not a big deal to the irs. Choosing to pay it quarterly or not is mostly a personal decision in my opinion.

4. You can make significant write offs against your year long earn. The list is long and varies depending on exactly how you go about making your money, but whatever you come up with, for example, lets say your profit for the year was $50,000 and you tallied your "business expenses" at $8000, then you end up subtracting that from your yearly total and end up paying taxes on $42000.

5. What % you pay to the irs simply depends on what tax bracket you land in , just like anyone else. I think anything over $29,000 or so lands you in the 28% bracket. The specific brackets are readily available from the irs.

6. If you have ever had more than $10,000 in neteller at one time during the calander year, you need to declare it. Its considered an offsure bank account. It sucks, but you are supposed to do it and the penalty for willingly not declaring it is quite severe from my understanding.

7. To the best of my knowledge as of right now, money that you have in a sportsbook or poker room does not fall under the catagory as above. For instance if you have $20,000 in pinnacle, you do not have to declare it as you would neteller.

8. Dont believe or let anyone tell you that you do not have to pay taxes on money that you have made offshore or that you do not have to declare it until you get it in your bank account. IT IS NOT TRUE! The irs expects you to declare it and that is the law.

9. Keep good records, they will come in handy if you get audited. The irs expects that you keep records, if you do so you should not have a problem.

10. I saved this one for last because its probably what alot of people want to hear. You're chances of actually being audited by the irs are quite slim. I believe its in the 1 in a 1000 range, from my understanding.

All in all, choosing to pay taxes at all as a professional gambler or choosing just how much you want to pay is a matter of personal opinion and personal risk. Some have high risk tolarance and choose to pay nothing, some have very low risk tolarance and pay every cent they owe and some fall somewhere in between. I hope all this helps at least a few people out there who are wondering

here is a link that may be of some help as well

Ten Tax Tips for Gamblers and Poker Players

http://www.pokernews.com/news/2006/3/tax-tips-poker-players.htm

Taxes for gamblers is a complex area. There is no such thing as 'one size fits all.' Here, though, are my top ten tax tips for gamblers....

**bookie** · 06-21-06, 09:45 AM

ihaiha...thanks for your informative post...info sinks in a little easier when it comes from someone who knows what they know cause they've been through it.

When this topic comes up I always recommend a short book called *Tax Help for the Frugal Gambler* (available from gamblersbook.com) which also does a good job of explaining the law.

**BigDog** · 06-21-06, 10:51 AM

GREAT post ihaiha ....you've passed along very useful info to us all

**ronald** · 06-22-06, 02:18 AM

ihaiha, nice informative. post. One question: how does the IRS know if you have had more than $10,000 in Neteller at any given time? Does Neteller contact the IRS when you reach this amount? Seems stupid you would have to declare it if you're just using NEteller as a means to transfer from Book A to Book B. The balance in NEteller may only be above 10k for a few hours before you ship it out to another sportsbook.

**ihaiha** · 06-22-06, 03:20 AM

Hi Ronald, neteller does not report anything to the irs as they are not under any US jurisdiction. The only way the irs would find out about it would be either through an audit in which they get your neteller records(voluntary or involuntary) or through obtaining your bank records(if you ever cashed out over $10,000 at once then obviously you had at least $10,000 in neteller). As far as its stupidity, i'm sure most would agree that it is, however the irs views neteller as an "offshore bank" rather than the "money transfer service" that it really is.