I think he would lose too if it came to it. All of what you said really has more to do with the liklihood of him being caught if he just doesn't file in NJ and acts as if he is not a NJ resident, then it does with that position actually being correct.

Presumably:
--He had already been in (and actually resided in) NJ for over half the year in a "permanent home".
--He still owns or rents a place in NJ.
-----(Just the above two might be dispositive right here. I'm not 100% sure off the top of my head, but even if you have a permanent home in another state, -----if you have a permanent home in NJ and spend more than half the year in NJ then you may be considered a resident of NJ. I'm not sure how this would -----be effected if he was able to dispose of his permanent NJ home prior to the end of the year.)
--He has a NJ driver's license and a car registered in NJ.
--He has family in NJ; not NV.
--He has paid estimated tax to NJ for the year and/or had wages withheld and paid to NJ for the year.
--He registered and/or voted in NJ.
--He has a NJ Will.


All of the above are not helpful for him in an argument that he switched his domicile from NJ to NV (I am making assumptions and don't know for a fact that all of the above are true, but they're mostly reasonable guesses). And when combined with the fact that at the same time he made the decision to switch his domicile from NJ to NV he just happened to win a large amount of money and would owe NJ around $900,000 if he were a resident of NJ would not look good for him and a court would not be sympathetic.

Would it be fair to say that most pros still fall under the 25-28% taxable income bracket because of how much of their own action they actually have?

Even in a year where a player was to have a $450k run, does the avenue of swapping/selling off action provide "income averaging" therefore bringing them down to the 25-28% taxable income bracket?

Your income is what your actual income is.

For example, if you win $475,000 playing poker while operating under an agreement that a backer is getting 30% of your profit, then your income from such poker play is $332,500 and the backer's income from such poker play is $142,500. The $475,000 isn't your income.

There are rules about how to report things.

Yes.

For the remainder of your questions, Lego's post covers my views fairly well so I won't repeat his post.

Anyone else from America read this thread and lose all motivation to start firing in select tournaments?

Taxes are what they are. I rather have the problem of paying alot of taxes because i make good money rather than paying little to none because i dont make much money.

The good news is that they can earn 8.5 months worth of interest on winnings before paying taxes. The bad news: that interest will be taxed too.

I think taxes are mostly a detriment to tournament pros, where you might end up getting extra screwed on a year you run really bad. If you're just taking a shot here and there, taxes don't really matter that much (outside of the problem of paying a bunch if you get 1st).

No deductions taken out by the WSOP?

No quarterly estimated tax due Sept 30?

Not true. They'll need to make estimated tax payments at least for Q3 or face a penalty at the end of the year for underpayment. It gets really tricky in this spot with "uneven" income. In certain cases the penalty can be waived but it varies both at the federal and state level. I'm not a tax lawyer, but got hit by this in the past.

Interesting thread but i recall there is one after every wsop main event.


What percentage of live tournament pros even profit then would you guys estimate? For example, typically they pay 15 percent of the field nowadays right? Of course those players who cash in those tournaments, there are many other tournaments they dont cash and lose money. For example, someone could cash a say 2 tournamnets of 1500 dollar buyins for 3500 each for 7000 profit. But they lose 10k in other tournament entries etc. So obviously they dont owe any tax since they are down for the year. But there are ppl that might profit say 10-20k on tournaments. Then the next year... they lose 5-10k etc. But they dont carry that forward right?


I mean if you factor in the amount of tournament players who are profitable... how many are profitable over say a 5 year span etc? Because let say 5-10 percent of tournament players are profitable ... now you then factor in what percentage of them have losing years where they cannot carry over... i mean wouldnt that mean its probably like 5 percent is the absolute max of players who play live mtt are profitable?


Also what percentage of players even play 100 percent with their own money? For 5k buyins, obviously most ppl are not playing everything on their own. For a top tournament pro... they obviously would have 100 percent of themselves in a 1500 dollar buyin most likely. But if they play a big schedule which most do in wsop, well they probably sold action. So if thats the case and you factor in all of this, wouldn't you say over a 5 or 10 year span of someone who plays live mtt, its probably 3-5 percent that are profitable?


I look at people on hendom mob with like 1 million + in tournament earnings. Of course that doesnt take into effect their buyins. Someone with 1 million in tournament earnings could have 1.5 million in tournament buyins where they are down money. And even those with 3 million in tournament winnings... well let say their buyins are 2.5 million. But then you factor in how many years they had losing years. Then wouldn't someone like this where 3 million in tournament winnings but 2.5 million in buyins could mean this player is actually down money due to not being able to carry over the tax?


I always wonder about a guy like allen kessler who seems to be one of the few live pros who i believe is profitable. He seems to be playing for a very long time and does have a lot in tournament cashes. However, not sure what his total buyins are but if you factor in losing years which i read tournament players have... then really what percentage of live mtt players are profitable? What about a guy like eric baldwin? He seems to have impressive hendon mob and definitely has to be up money. However, i read lot of mtt pros are backed and in makeup etc. I mean... what percentage of the mtt players who play those high rollers are profitable in mtt? I mean its probably more like 25 percent when you factor them playing wsop and wpt and ept etc?

From the New Jersey Division of Taxation website:

If you became a resident of New Jersey or moved out of the State during the year and your income from all sources for the entire year is more than $20,000 ($10,000 if filing status is single or married/CU partner, filing separate return), you must file a New Jersey resident Income Tax return (Form NJ-1040) and report any income you received while a resident of New Jersey. If you had any income from New Jersey sources while you were a nonresident, you may also need to file a New Jersey nonresident return (Form NJ-1040NR). View additional information on filing a part-year return.

New Jersey's position is that if you were a resident of the State one day, coming or going, and received income of more than $10,000 if single, you must file a return. I've seen the half-year idea thrown around in posts above. Almost no state uses the old 180 days rule today. Most states have gone to something like 120 days to be liable for taxes for the full year, but New Jersey has an extreme position. While some people might reside there one day and not report and get away with not reporting, if you have income and celebrity the chances of doing that are none.

Another thing im curious of. But for those poker pros who dont have to pay taxes because of the country they are located, so basically you could buy a house, get a mortgage, buy a car etc without paying a single cent to the government?


I read that UK citizens and many other countries like that dont have to pay taxes for gambling since if they do that... well people who lose in gambling who claim rebates. And that is the reason why they dont tax gambling winnings. Does anyone know if this is true or not? I read this somewhere but i forgot what country it is about. I think this was in the uk or something. Like i recall watching youtube where luke schartz mentions about buying a new house in the uk with his poker winnings etc... so that means he didnt have to pay any taxes at all for poker winnings? Because if that is true and you could use that money to buy property, car, invest etc... wouldnt that seem a bit unfair to regular people? Because if a regular person earns 50k a year, they probably pay like 10-13k in taxes. But if a poker player in the Uk makes 50k, and he gets to keep all of it and use it for investing, that seems like a huge plus for the poker player. Does anyone know if this is true or not? Because if that is true, well that would seem like a huge plus for the poker player. But of course that would definitely not seem fair to most people.

Added bold to quote.

Blumstein would certainly be at least a part time resident of NJ for the year. The question at bar was whether he could possibly claim that he was only a part time resident for the year and ceased to be a resident of NJ at some point in July, meaning whether he could claim he became a non-resident of NJ right before he won $10,000,000 or so in NV.


http://www.state.nj.us/treasury/taxation/njit26.shtml





Anyway it is hypothetical and I'd be shocked if he somehow successfully argued that he was not a resident of NJ for the second half or so of 2017, but I haven't done any research on it other than quickly pulling the above quotes and obviously I'm not going to for a hypothetical. So, this is going to be it for me. I'd certainly be interested if a case popped up in tax court where this was argued though.

This honeslty makes me feel disgusted.

what would be the figure for the entire series?

Once again, for everyone commenting in the thread. The ONLY hypothetical that I AM discussing is that he NEVER AGAIN, NEVER EVER returns to NJ. I.e. a disclaimer, for now and forever.

A will doesn't have a State; it has a person. A State could have jurisdiction in interpreting, effectuating, etc. The mere occurrence of that document in that State is not sufficient for jurisdiction; again with the US Constitution.

if i were him i definitely wouldn't return to nj in 2017 and i'd just stay in nevada until the end of the year. if he's bouncing all over the world it gives nj a much better argument he was a full time jersey resident.

http://lmgtfy.com/?q=paying+tax+in+the+uk+poker

For someone so curious suprised it hasn't killed you like the cat you suck at using google.

okay so he makes a few business trips a year

I don't know about the guy specifically, but that wouldn't be true for the vast majority of tournament grinders. Lots of them came to Vegas in late May or early June and didn't stay in a hotel but in a house or condo. A person like that could easily make a case for having relocated to Las Vegas after living the first ~5 months of the year somewhere else.

The late start of the ME this year makes it more likely that a player arrived in Vegas in July, but in the past with MEs starting right before/after 7/4, even lots of players who only came for the ME were in their (former) home state for less than 6 month before going to LV.

Out of curiosity, what's the relevance of him visiting NJ for Christmas in 2035 if we're speaking about the 2017 tax year?

It raises an argument that a NJ Court may contemplate, i.e. home is where the heart is. There is a principle of tax law that if something is done ONLY to escape a tax statute, then that activity may be interpreted in the light most favorable to the tax agency. His argument is much stronger if he presents himself as some sort of political conscientious objector with firm convictions. I.e. a permanent disavowal.

Excuse my ignorance of US law, but is there no statue of limitation in tax law? Could the IRS really use that 2035 visit to come back in 2036 to argue that he was a NJ resident 19 years ago in order to collect 2017 taxes, presumably with interest?

This only bankrolls the pentagon for about 7 minutes

Not sure about NJ, but:

"no deadline applies where the IRS can establish that a taxpayer has: 1) filed a false or fraudulent return; 2) willfully attempted to evade tax; or 3) failed to file a return. Unlike the circumstances above where tax returns are filed (even with errors), these are cases in which a taxpayer is willfully or intentionally not filing taxes or is filing fraudulent return(s). Not only will there be no time limit on IRS action against such taxpayers, but heightened interest fees and penalties will apply."

So apparently the collection of a tax does not have the same heightened level of scrutiny by our courts as criminal proceedings.

The IRS statute of limitations on tax returns is three years from the due date or date of filing (whichever is later); six years if you 'grossly understate income;' and forever if you don't file or in cases of fraud. (This can be extended by audits, appeals, Tax Court, bankruptcy, and other methods.)

The IRS statute of limitations on collections is ten years from the date of filing or the due date of the return, whichever is later (though this can also be extended by various means).

State statute of limitations vary, but are generally three or four years from the due date or date of filing, whichever is later and double for gross understatement of income. If you don't file, the statute of limitations runs forever.

State collection statute of limitations widely vary, with as short as ten years while some states don't have a collection statute of limitations!

-- Russ Fox