Posted Fri Jul 09, 2004 1:24 pm GMT by jwrussell
Hi all. Here's a fun topic! 
Ok, before I state the question I am going to pose to all of those hopefully more knowledgeable on this topic than I, let me state some ground rules:
1. I don't CARE if you think income tax is wrong, or that you hide all of your earnings, or that you think it's stupid for paying taxes on poker winnings.
2. I don't want your advice on how to hide my earnings.
3. Please don't direct me to an accountant (unless you are one). I will probably do this anway, but I'm asking you!
4. Refer to Rule #1! PLEASE
Seriously folks, please stick to answering the question if you can.
So, here goes: How do you declare your winnings when doing your taxes? What kind of records are necessary to have if, god forbid, you need to provide them? Receipts from casinos I'm guessing are fairly easy, but what about online play?
Here's what I've gathered so far, correct me if you know I'm wrong.
1. Poker Winnigs are what are refered to as regular earnings and are not taxed any different rate than any other income (unlike Lottery winnings for instance).
2. You can deduct losses, but not more losses than winnings.
That's about all I've been able to figure out. I'm hoping to be able to earn enough from poker this year or next to actually need to worry about this, so please, any help is appreciated. Oh yeah, and I'm talking mainly about online poker here, though there is some B&M play mixed in.
I'm hoping there are some poker playing accountants out there with some advice! 
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Posted Fri Jul 09, 2004 1:32 pm GMT by Nut Flush
Here it is straight from the IRS
http://www.irs.gov/newsroom/article/0,,id=108277,00.html
Pasted the page as well:
Gambling Income and Expenses
Tax Tip 2004-33, Feb. 18, 2004
Hit a big one in 2003? You must report all gambling winnings as income on your tax return.
Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other noncash prizes.
Generally, if you receive $600 ($1,200 from bingo and slot machines and $1,500 from keno) or more in gambling winnings, the payer is required to issue you a Form W-2G. If you have won more than $5,000, the payer may be required to withhold 25% of the proceeds for Federal income tax. However, if you did not provide your Social Security number to the payer, the amount withheld will be 28%.
The full amount of your gambling winnings for the year must be reported on line 21, Form 1040. If you itemize deductions, you can deduct your gambling losses for the year on line 27, Schedule A (Form 1040). You cannot deduct gambling losses that are more than your winnings.
It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.
For more information on record keeping, see IRS Publication 529, Miscellaneous Deductions, or Publication 525, Taxable and Nontaxable Income. You may also want to check out Form W-2G and its instructions and Tax Topic 419, Gambling Income and Expenses. All are available on this Web site. You may also order free publications and forms by calling toll free 1-800-TAX-FORM (1-800-829-3676).
Posted Fri Jul 09, 2004 1:38 pm GMT by jwrussell
HOLY CRAP!
Nutflush, you are here by awarded "THE MOST ON TOPIC REPLY TO THIS TYPE OF POST EVER!" award!
I checked out the 2+2 forum (sorry guys, I'm cheating on this forum with other forums ) and their posts were completely out of control.
I'll have to check out that section on record keeping. This is great info, I appreciate it.
Any thoughts (anyone) on the issue of online poker rooms in all of this? I know the laws are murky so I guess any discussion would just be opinions but I'd hate to do my civic duty in paying my taxes only to get screwed because I was playing online poker, ya know? Where's Moneymaker when you need him? 
Posted Fri Jul 09, 2004 2:07 pm GMT by sleaz1
man am i glad i'm Canadian...
Posted Fri Jul 09, 2004 2:44 pm GMT by Nut Flush
This looks like a possible good book to pick up.
http://www.gamblingtaxguide.com/
As I'm new to the online gambling world, I'm interested in this topic as well. Does anybody know if the major online casinos issue out forms W2-G? And if they do issue them, is it only if you win a certain amount, like $600 for example. Also, are there any online casinos that will give you a history of money won/lost for the year if you request it?
Posted Fri Jul 09, 2004 2:50 pm GMT by MasterShake
| sleaz1 wrote: | | man am i glad i'm Canadian... |
Why, don't you have to pay like a 13% sales tax?
Posted Fri Jul 09, 2004 2:57 pm GMT by Ventrick
| Quote: | | Does anybody know if the major online casinos issue out forms W2-G? |
Don't know this for sure, but I would assume no, as all Online Casino's are off shore so they do not have to adhere to US Tax laws and therefore would not be issuing US Tax forms. But I could be wrong.
Posted Fri Jul 09, 2004 3:02 pm GMT by Dave B
Casinos dont unless they ask for your SSN. They usually only do this if it is a single large jackpot or tourney win.
Posted Fri Jul 09, 2004 3:11 pm GMT by jwrussell
Nut,
I doubt they issue the W-2G as none of them are based in the states. As to histories, I'm sure they would provide a Deposit/Withdrawl history if asked in most cases, not sure about wins/losses. I'm guessing they don't track that.
Posted Fri Jul 09, 2004 3:33 pm GMT by Nut Flush
Interesting, so I guess it's pretty much the honor system as far as taxes go. I tried to find more info regarding online casino winnings but couldn't find too much.
Posted Fri Jul 09, 2004 3:46 pm GMT by jwrussell
Yeah Nut, I have a feeling that is because at this time Online Poker Playing (read Gambling) is not technically legal. I think most of the laws can be read so that it is illegal. With the absolute explosion of online Poker I'm curious as to how long it will take for something to happen to crystalize the situation. WPT, Celebrity Poker, WSOP, Poker on FOX, Poker everywhere! How many advertisements were there on last years WSOP for PokerShootout.com? Makes me wonder what is going to come of it. Here's hoping we see it flat out legalized soon!
Heck, all the goverment would have to do is reach agreements with the online sites to issue W-2Gs to everyone at the end of the year and they would have it made in the shade. (Can't wait for the people to flame me for making that suggestion!)
Posted Sun Jul 11, 2004 5:52 pm GMT by Blarg
Actually, Dave, all casinos are not alike. Because of mob connections, the IRS took over a large interest in a major Southern California interest and kept it for years; I think they were finally forced to sell it off because it's basically against the law for them to really own business interests in perpetuity.
That casino would ask for your drivers license when you won a jackpot, and I believe your social security number too.
Posted Sun Jul 11, 2004 5:55 pm GMT by Blarg
Here's a little online exchange I kept from a month ago:
Poster 1:
"PantherPoker.com and every other poker site does NOT report you or your winnings to the IRS.
That is completely left up to you. Even with a large cash out, if you deposit it into your bank account, the bank will not report anything to the IRS UNLESS it is $10,000 + and in CASH. If you deposit a $15,000 check, they will not report it.
The IRS, if they perform an audit on you, can and will request all bank deposits which will then show the large deposit, which will then get you in trouble if you had not reported it.
If you receive a cash out, in the form of a check, and you cash the check and do not deposit the money into an account, then there would be no way to track it, thus no trouble if your audited.
If you receive a cash out, to your Neteller account, simply request them to cash out to you in a check form vs. through your checking account and the same rules would apply.
If you ever cash out directly into your checking account, yes, you would need to report it just in case you were ever audited.
If you left your winnings in the poker account, the IRS would have no way of tracking it, thus if audited, they would have no records of those winnings left on the poker site.
OF COURSE...as a disclaimer:
Any and all income regardless of how you come upon it, MUST be reported to the IRS by law.
I'm sorry, but the IRS gets enough of my income as it is. I do not report my poker winnings, and have cashed out $12,000+ one month from PartyPoker.com. Am I doing something illegal? Yes. Will I get caught? If the IRS reads this post and finds me, yes. Will I go to jail for it? No, the IRS has bigger fish to fry then a measly little ole poker player such as I, however, I would be fined up the wazzoo.
I just thought I would be completely and totally candid here, as I have to say I do believe that there are WAY more poker players like me, vs. the ones who report every single cent of their winnings"
nsidestrate:
"Title III of the Patriot Act made sweeping changes to these rules and the Federal Reserve has updated Regulation H (12 CFR 208.63).
Although I agree that Uncle Sam largely has bigger fish to fry, an astonishing amount of information (including your identity and any transactions sent to "foreign banks or financial institutions" are very closely scrutinuzed post-911. I have no idea how much of it finds it way to the IRS (I suspect very little), but the possibility is there.
If you do get audited, the IRS is quite good at following paper trails. Your neteller transfers will be closely scrutinized and I'm quite sure they will have their records as well. If you leave the money at your favorite site, I think it would be almost impossible for them to see it. Once at neteller or your bank, it would be very easy.
The new magic numbers are $500 for money transfers and $5,000 for banks. Casinos and card rooms are specifically named as financial institutions subject to the act. The internet card rooms are not covered because they are not American entities."
Posted Sun Jul 11, 2004 5:58 pm GMT by Blarg
And here's another link: http://www.gambling-law-us.com/
Posted Sun Jul 11, 2004 6:34 pm GMT by Geno
| sleaz1 wrote: | | man am i glad i'm Canadian... |
All gambling was made tax-free in the UK about a year ago :D
Posted Sun Jul 11, 2004 7:07 pm GMT by Always_Bored
| meatwad wrote: | | sleaz1 wrote: | | man am i glad i'm Canadian... |
Why, don't you have to pay like a 13% sales tax? |
15% in ontario. And it goes up and down depending on what province your from.
Posted Mon Jul 12, 2004 12:23 am GMT by JohnnyCache
Dang. This is complicated. I think I'll just keep losing ;)
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