Quote:
Originally Posted by oxymoron
I prefer to get in the habit of doing it like a professional in case I decide to ever make that move. It's easier to develop good habits now than to try and develop those habits later.
Except the IRS does NOT see it that way. At all. If you're filing as a pro, you get to offset wins and losses and pay tax only on the profit. And you can write off expenses, like poker books, mileage, tips, and whatever else. But you have to pay self-employment taxes (both sides of SS and medicare).
If you are not filing as a pro, you don't get to do any of these things. You must declare ALL of your winning sessions as income. You may then deduct your losing sessions on schedule A (up to the amount of the wins, but no more). And you may not write off expenses. But you don't have to pay self-employment tax.
So sometimes it's better to file as a pro, sometimes it's better to not. But you don't get to pick and choose based on what's good for you. If you get most of your income from poker, file as a pro. If you have a job that pays a lot more than your poker income, you're an amateur.
And state rules very all over the board. I believe some states claim it's illegal to be a professional gambler. Don't list "poker player" as your profession in Ohio, for instance. And in some states gambling loses are never deductible for any reason. If you follow the latter of the law in those states, and you had $1M of wins in a year and $1.1M in loses for the year, you'd owe the state income tax on $1M.