I designed a spreadsheet to allow for planning one's yearly poker cash game career in anticipation of negative poker tax effects, for both amateur and professional players. It yields some crucial, counter-intuitive results.
The download link and instructions are
here, and examples and chart explanations are
here.
The spreadsheet calculates your effective certainty-equivalent payoff (the equivalent amount of fixed, non-poker salary that is equal in after-tax expectation to your random poker results) from a year of poker play, according to your personal circumstances. In addition to a few lesser effects on tax and risk aversion, the spreadsheet accounts for two major poker tax effects:
- the nondeductability of a losing year
- the loss of the standard deduction for amateur players
In a year without stable US internet poker where many of us may only be playing a few thousand hands for the year, the probability of a losing year is much higher than we're used to, as is the size of the effect of the loss of the standard deduction relative to our expected poker profits. Some of us could easily end up being -EV for 2012 even if we're winning players, depending on personal circumstances and frequency of play. This spreadsheet calculates the effective bottom-line results.
I'm sharing this because this is a legitimately important tool that everyone should check out, especially part-time players who only play in the occasional home game or make the infrequent live cardroom trip. I expect there are plenty of us in this forum who are in this category for 2012 and are also honest on their taxes.
I'm happy to take feedback or comments here, and I hope this will be helpful for some of you.