It's called the deadbeat dad program. All players are put into a database where their names are shown if they owe back taxes as well as child support.

Instead of getting all worked up about this and trying to get it changed (useless), I'd be learning how to deal NLHE, buying a poker table/chipset/cards, and talking to some regs about starting a home game. 10% up to $10 rake and you'd have a big 'list' for 1/3 or 2/5 every night you ran it.

I think it's completely awesome that they screen for people who owe money to the state or child support and are gambling instead of paying their debts.

That might be illegal, just fyi.

If you win 500 $1200+ pots in a year, and have 500 W2Gs, but actually lost money at poker/gambling that year I don't think you will pay taxes on any of it. This is all speculation, but I would think any money you were forced to pay on the spot for state taxes would be returned back to you as well, or at least a decent amount of it.

Anything new on this?

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I'm not an expert and I'm not in Indiana, but my understanding for the hypothetical above is:

1. You would have 3.4% withheld from each pot for state taxes. Assuming each pot is $1200 exactly, that's $20,400 total. You can see the effect that would have on your liquid bankroll.

2. From http://www.in.gov/dor/4710.htm:

True. But you also still only count sessions. So if you have a $1,200 pot and have money withheld for taxes, but by the end of that session you won only $100, then you would be reporting only $100 of income, so you wouldn't end up paying tax on the whole $1,200. But if during another session you lost $100, you do not get to deduct the $100 of losses from the $100 of wins and you do still pay taxes on the $100.

So there is actually not enough information in that hypothetical to determine tax consequences. In Indiana you pay taxes on the total gross winning sessions. We would need to know that number to know what the taxes would be and whether such amount is more or less than what was withheld from the five hundred $1,200 pots.

Gotcha.

Regardless of what happens at the end of the year, I think the amount going to State taxes would make the game unplayable. It would probably be juicy around tax return time but dead a month or two after that.

I would like to be a fly on the wall watching a player w/ $100K (nm $600K) of W2's trying to explain to the tax man that he only won $10K for the year. I had enough of a problem w/ just 1 W2 bec I was stupid enough to have a decent tourney cash years ago which is another reason I don't play the damn things.

This is not an unusual situation for heavy hitters that bet the horses. The solution is meticulous, obsessive record keeping while taking notes and keeping receipts and doing so in a well-ordered manner.

I live in Indiana, it would be illegal.

If you could get the players from Indiana Live to come play an unraked 1/3 or 2/5 game with you regularly you wouldn't have to charge rake to still be a pretty happy camper though.

Got a cite to an Indiana statute or case law for your position? Pretty sure wampler had it right. In Indiana, one cannot deduct losses to the extent of winnings, so why would they able to do it on a session basis, when they can't do it overall? Perhaps a pro could deduct on the Fed tax on a session basis, but haven't seen anything suggesting that would override the IN tax law if one gets a W2g.

I was relying on the following as I have never had any occasion to learn anything about Indiana's state tax before:
From: http://www.bankrate.com/finance/taxe...s-indiana.aspx



And the federal adjusted gross income would include gross winning sessions.

For federal taxes if you itemize your deductions, then you can later (later meaning after having calculated the federal adjusted gross income) deduct gross losing sessions from your gross winning sessions to the extent of such gross winning sessions (you can't go under 0). Indiana doesn't have this for their state tax.




EDIT:

I just checked Indiana's Form IT-40 which can be found here: http://www.ai.org/dor/5174.htm The first line is to enter the federal adjusted gross income. The Add Backs on the second line have nothing to do with gambling. So ... yep.



SECOND EDIT:

In everything I've said I've been assuming filing NOT as a professional.

To add to what Lego05 wrote, the local taxes in Indiana can also be a couple percent. But I'm not sure if the casino is deducting for that.

So when we say gross winnings per session, does that mean the amount you cash out with, regardless of the amount you bought in with? E.g. I buy in for 9k, I cash out for 24k and am issued a w-2g in the amount of 24k -- does Indiana law require that I pay taxes on 24k, as opposed to [24k - 9k = ] 15k?

As an aside, I'm wondering what is going to happen with a w-2g issued in Ohio to Indiana residents. This happens all the time, as plenty of Indiana poker players go to the Cincinnati Horseshoe. Practically speaking, does Indiana even have a mechanism for knowing what adjusted gross income you reported to the federal government? If you took it upon yourself to net wins and losses and report accordingly for your state taxes, is it going to be blatantly obvious to them? Not asking for advice on how to cheat on taxes, just curious, because the Indiana law (and many other states) seems like such a screw job, I can only imagine it gets circumvented all the time.

No. Not gross winnings per session. Gross winning sessions. Each session is netted.

If you have $9,000 when you start and $24,000 when you finish, then you must have won $15,000. This session is $15,000 in winnings.

If you have $9,000 when you start and $5,000 when you finish, then you must have lost $4,000. This session is $4,000 in losses.

Add up all such winning sessions. This total is your gross winning sessions. Add up all losing sessions. This total is your gross losing sessions.

Gross winning sessions are included in the federal adjusted gross income. Gross losing sessions are not. On the federal return you have an option of deducting gross losing sessions later if you choose to itemize deductions.

The Indiana state tax begins with the federal adjusted gross income and never has an option to deduct gross losing sessions. Therefore, in Indiana you end up paying tax on your gross winning gambling sessions.


The withholding that is being discussed in this thread and is being done now has nothing to do with how the taxes work as explained above. This casino is withholding a percentage of every pot that is $1,200 or more and remitting it to the government on behalf of the winner of the pot as a tax payment. When such person files their taxes they would include these amounts as payments of tax already made. The casino will issue W2-Gs for it.

Usually there would be no withholding or W-2Gs issued for cash poker games. However, the issue here is that this casino is not allowed to have table games and to get around it they created electronic poker tables and they got these electronic poker tables classified as slot machines rather than table games. These withholding rules are the rules for slot machines.




EDIT:

Again, I am assuming that the taxpayer is NOT filing as a professional.

One minor correction. Any time you cash out $10k+, you are probably going to be issued a W-2G. This is even playing poker, and at any casino, not just the specific one in Indiana we are discussing which is treating pokerpro machines like slot machines for legal reasons.

So I wonder if you can tell me this, since you are very on top of this: a resident of Indiana is issued a w-2g in Ohio. Does Ohio now expect them to pay taxes their Ohio earnings, irrespective of state of residency? And then of course does Indiana also expect you to pay taxes on it, because it is part of your adjusted gross income, irrespective of what state you earned it in?

I do not think this is true. But the casino may need to file certain forms to fulfill reporting requirements; similar to what a bank has to do if you withdraw $10K+ from your bank account.

If one were in this position he would either have to look into Ohio and Indiana tax laws and procedures or hire a professional to handle this situation. I'd guess that a lot of accountants are familiar with people being taxed in multiple jurisdictions, although this may be more common in the Northeast where I'm guessing it is somewhat more common for people to live and work in different states (such as living in New Jersey and working in New York for example).

So, as I said, one has to look at how the particular states involved deal with it, but my guess would be the following:

Ohio will tax such person on the money won/earned in Ohio. And such person's Indiana taxes will be computed as normal, but Indiana will give a tax credit to such person to be used against his Indiana tax based upon the amount of money paid to Ohio for Ohio taxes. I'm just guessing though as I believe this to be the pretty normal broad overall principle, but I don't know anything about how Ohio and Indiana specifically handle this.

I'd imagine that a large amount of people who travel out of state and do some gambling never file or pay taxes in the state they traveled to (and I'd guess that amounts are usually extremely small and basically negligible). If some of your winnings get reported to the state by the casino though, then they'll probably be expecting something from you.

Just as an aside, Nevada does not have an income tax.

All good info. However, the IRS will be receiving a bunch of W-2Gs for larger amounts than the net winning sessions reported by the taxpayer on their tax return (for both pros and non-pros). Even if the taxpayer includes an explanation, the IRS is going to wonder why and will likely investigate. Actually, the IRS will probably at first automatically generate a tax bill to the player, based on the W-2G totals, and leave it up to the taxpayer to prove otherwise.

The reports that casinos issue for cashouts of 10K+ are Currency Transaction Reports (CTR), not W-2Gs. The CTR is submitted to FinCen for money-laundering detection purposes, not the IRS, and has nothing to do with income tax reporting or withholding.

States usually have as part of their state income tax returns a place to deduct income taxes paid to other states on earnings in the other state(s). Not sure if this is the case for Indiana. You can look at an Indiana tax return form to find out.

This is true. One could end up with an annoying hassle if he ends up having W2-Gs showing a lot of "winnings", but shows a lot less winnings on his tax return and it triggers the IRS to look into the matter. Nonetheless, that is how it works and I, personally, wouldn't pay a lot more in taxes than I need to in order to avoid the possibility of this hassle. One should make sure he keeps good records though.

Yeah, I got mixed up near the beginning of the thread and then stuck with my mix-up until just now: I was confusing the W2 they ask you to sign for your SSN when they have to complete a CTR, with a W2G, which I gather is entirely different.

At the end of the day, I have sympathy for the pros and amateurs alike who would rather trade chips/cash under the table and avoid all this.

Americans couldn't settle from bleeding the world, they start shaving every penny off their own citizens too.

Propaganda must be very effective there, since most Americans have so much pride for the country regardless of what the nation does to its own people and the rest of the world.

other than the fact you have to pay income tax on any gambling winnings, this is not a National/Federal Issue.

You see, here on the US we have these things called "States". Each state is free to set their on laws as it relates to brick and mortar casinos. Indiana laws are such that this elec poker table must be classified as a slot machine.

So your bad feelings about the US aside, the only thing your post shows is you know very little about what you are posting about.

Right on PTLou. Maybe I'm dense, but think this thread got confusing as to the Indiana tax ramifications. Please correct me if my accountant is wrong, but
1) if I play only one session of poker in the year and win a pot at the Grand for $2k and then proceed to lose it all back and more in the same session, I still owe the IN tax on the 2k win.
2) If I play every day in IN or anywhere, and lose my ass every day for far more than 2k total, but win a 2k pot at IN Grand and get a W2G for 2k, I still pay the IN tax on the 2k win.
3) If I play tournaments or cash and have 30K in winnings, (with no W2Gs received), but also lose 30K or more for the year, the result from a federal tax perspective is that my federal AGI increases by30K but the deductions offset that, so I pay no federal tax on poker winnings. Nevertheless, I still pay the IN tax on the 30K winnings.

We are an incredibly spoiled people. Every day I go about my business doing all kinds of things I enjoy, while having all kinds of comforts and luxuries available to me. I'm sure there are probably some other countries who do it better, but based on my contentedness with my life, I feel most of my complaints would be petty. Surely our collective condition is in the upper echelon. No? I'm just falling prey to the propaganda?