If you are American and you enter the main event $10000 and you min cash which was around $17000 i believe , what do you actually walk away with, after tax it cant be much more than the buy in?

You pay tax on $7,000, not $17,000.

Wow so you still only get around $13k , i dont think i would honestly bother!

Na the highest tax rate only kicks in at around $450k profit it was mentioned earlier in the thread.

Most of the EU countries have the tax treaty with the US so uncle sam gets nothing but a fair few of said EU countries take a big chunk of tax like France which would be close to 50% if Pollak and Saout lived there. Will be why they both live in the U.K the ultimate gambling haven.

The taxes stink.

That said, any endeavor that yields income is taxable. So if you're making 100k playing poker and paying 35% (marginally) on that, it's the same as making 100k as a doctor or lawyer. Bottom line is that poker winnings are taxed just like everything else.

The difference as has been pointed out already is the subject of year over year fluctuations. Thirty years ago, there was a vehicle called income averaging that permitted a taxpayer to spread out income over a five (?) year period when there was an unexpected spike in income. But that went away with a tax reform law (1986) and is now only available to farmers and fishermen.

It is possible to defer some portion of income through the use of retirement accounts, but not likely more than $106k (if married), but the tax on that amount is still over $40k so it's something.

I'd love to hear from someone with relevant experience on the subject of starting a professional poker business once a player hits it big. I'm thinking that there is some logic to the position that combining coaching, writing, marketing, etc. with entry fees might allow full deduction of losses and that a loss in future years could give the taxpayer a loss carry forward that could be used against future winnings. This strategy might alleviate the unfairness of having to pay when winning but not getting any sort of a break when losing.

US citizens are subject to taxes on income or winnings anywhere in the world.

Can you tell me where you got the info that US citizens abroad only pay taxes to the USA for 7 years? Or am I misunderstanding this comment?

A couple of years ago there was a large spike in US citizens living abroad who renounced their citizenship, as the IRS implemented wolrdwide rules to acquire what it felt was due. People who were US citizens via parentage but had never lived in USA were going to be subject to this. We're talking decades of back taxes "owed".

(For people wondering how the IRS can enforce its policies worldwide, its arms reach far. This was a huge issue for expat communities a couple of years ago when the IRS' enforcement rules changed.)

Of course. A lawyer can speak better to this than me. But the rules on establihing a domicile and all that comes into play. Here is a link about that topic:

Establishing Residency in Nevada May Not Be as Easy as You Think

Pretty sure NJ is going to be sending Blumstein a tax bill no matter what.

Ok but he doesn't even really live there, judging by his HendonMob.

Pretty sure if (A) he NEVER returns to NJ, then (B) he's NOT a NJ resident. US Constitution and all that. And buying a house in NV and living there for the remainder of the year is a pretty sure fire way of establishing residency.

And States sending people tax bills isn't how the system works; people file returns, and the State can challenge them. The tax liability does not attach until the income somehow becomes accessible, so it seems easy to claim that he abandoned NJ a few days before he won the tournament. But they may be able to use some legitimate formula to bring a portion of the income onto his final return.

"If a taxpayer, as Groetzinger is stipulated to have done in 1978, devotes his full-time activity to gambling, and it is his intended livelihood source, it would seem that basic concepts of fairness (if there be much of that in the income tax law) demand that his activity be regarded as a trade or business just as any other readily accepted activity, such as being a retail store proprietor or, to come closer categorically, as being a casino operator or as being an active trader on the exchanges...

We do not overrule or cut back on the Court's holding in Higgins when we conclude that if one's gambling activity is pursued full time, in good faith, and with regularity, to the production of income for a livelihood, and is not a mere hobby, it is a trade or business within the meaning of the statutes with which we are here concerned. Respondent Groetzinger satisfied that test in 1978. Constant and largescale effort on his part was made. Skill was required and was applied. He did what he did for a livelihood, though with a less-than-successful result. This was not a hobby or a passing fancy or an occasional bet for amusement..."

United States Supreme Court
COMMISSIONER v. GROETZINGER, (1987)

The sad thing is most of this money has already been taxed.

Example- Joe Amateur saves up all year for the Main Event from his work earnings. The $10K for his buy in was already taxed when he earned it as income. That is added to the prize pool and then taxed again for anyone that cashes.

There are very few tournament grinders that are profitable long term. Those that get out after a big score are doing it right (Pius Heinz, Peter Eastgate, etc. ).

He would lose that argument in most courts. Heck, he probably had a return plane ticket already purchased. Also, he lived in NJ for the first six months of the year. Going to be hard to get out from under NJ residency even if he was so inclined.

His residency at the time of his win is almost certainly NJ.

You're absolutely right. Money is taxed like 10x over, which is sickening. That's why a consumption tax makes the most sense. I'm not an expert, but if there was a happy medium for a national sales tax that would be enough to generate revenue then it's the best way to handle taxes. Income tax is flawed.

Really? Are you a lawyer? Do you practice in NJ? I have already spend considerable resources researching this issue for a client. The fact that he intended to return to NJ when he left NJ is relevant, but not dispositive. All that means is that he was definitely a resident when he left.

"States do not typically track in detail the activities of each taxpayer. If a taxpayer leaves a state, has no further income sourced in that state, and ceases to file tax returns in that state, then the tax authorities of that state do not typically inquire where the taxpayer moved to or whether they changed their domicile. The domicile/residency issue usually arises in two different circumstances. In the first circumstance, the taxpayer continues to have income sourced from that state, but the taxpayer begins filing as a nonresident.

The second circumstance is when a person, who has been filing as a resident of the state, ceases all filings in that state, and then at some point in the future again files as a resident of the state. This second circumstance often applies to individuals that move overseas for a period of time and then return to the same state. When the state tax authorities receive a tax return, they check to see if that individual filed a tax return in prior years. If prior year resident tax returns have been filed, but there is a gap in filings (of perhaps several years), the state tax authorities begin to wonder why no tax returns were filed during the intervening years."

updated standings v2

1. Tax Man $7,659,195
2. Scott Blumstein $4,310,571
3. WSOP $3,610,500
3. Benjamin Pollak $3,500,000
4. Dan Ott $2,600,194
5. John Hesp $2,600,000
6. Antoine Saout $2,000,000
7. Jack Sinclair $1,200,000
8. Damian Salas $997,500
9. Bryan Piccioli $791,023
10. Ben Lamb $591,517

Isn't Tax Man also getting an upgrade because WSOP donks off some of that $3,6M to Tax Man?

By the way Tax Man is getting a lot more than that because of all the other cashes.

meh. would you rather have 4MM and live anywhere on the planet or 8MM and live anywhere but the US...

I can't say I've given this much thought either way. But after reading this thread, I might set up home in the UK long before playing in the Main Event. (Realistically, though, I won't be doing either at any time soon.)

I think you are right and I misunderstood the guy from the US I worked with in Berlin when he told me he was halfway through the 7 years to not having to pay taxes in the US anymore.
I have absolutely no attachment to living in the US and would move for way less than an extra $4mil

Interesting, thanks for the info.

Good point. I updated Rzitup's numbers and assumed all 9 players paid USA federal tax rates. I do not account for state taxes. I got the WSOP take at $600 vig times 7221= $4,332,600 pretax. I then applied USA personal tax rates to all 1084 who cashed. That number is $15,777,058 to IRS. Then I applied USA personal tax rates to the Rio's take of $4.3 mil and got another $1,667,919. (corporate tax rates are different, but this is an approximation. The revised numbers then become:

Net if all paid USA federal tax rates, no state taxes included.

1. IRS Tax Man $17,444,977
2. Scott Blumstein $4,970,590
3. Dan Ott $2,886,590
4. WSOP $2,664,681
5. Benjamin Pollak $2,161,790
6. John Hesp $1,618,190
7. Antoine Saout $1,255,790
8. Bryan Piccioli $1,059,490
9. Damian Salas $908,442
10. Jack Sinclair $772,540
11. Ben Lamb $651,740

The $17.44 mil for the IRS is an average rate of 24.16% of the total buyin of 7221x10k= $72,210,000. (Top rate is 39.6% for amount over $425k)

If the IRS was smart, they could run a competing poker tournament, charge no vig, (or better yet, add bonus money to pool) and still make way more money than the Rio by far. (probably 2x more)

This probably doesn't apply to the final tablists, but a lot of US players will pay no tax on their Main Event winnings because they have offsetting gambling losses.

Ha, this happened in my local room. BB was the highest it's ever been ($475k i think) and two out of towners were both involved in the hand and took all the money

No, he said this is true for people who are intelligent and have the ability to succeed at making lots of money at poker as a career, which implies on some level that they are making these kinds of calculations.

That it's unfair doesn't necessarily mean it changes behavior the way he said it would. It depends on the person.

There're two concepts working together.

If you play low volume you'd rather make an additional wager in the same year as a big score since you can't be sure there'll be enough winnings the following year to take full advantage of the offsetting losses.

But if you're playing large volume to the point where losing years are uncommon you'd probably rather split the action up to get yourself in lower tax brackets.