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The Poker Legislation Forum, Brought to You by the PPA Discussions of various poker-related laws and steps players can take to push for better laws.

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Old 12-29-2008, 02:56 PM   #1
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Minimum Income to Pay Income Tax?

ok so personally I'm going to be over whatever threshold it is, but I am asked time and time again from other players who play lower, friends who just have summer jobs, etc. wikipedia seems to say even if you mow lawns for a week in the summer and make $200 and that's all your income you still pay taxes on it at the lowest levels (like 10% or something?). My parents say that there's a minimum somewhere but they don't know what it is. Many seem to think if you earn under the poverty line you pay no tax. I can't find one anywhere and this section in particular is riddled by people who have no idea what they're talking about.

So can someone reputable (I know there's at least one tax accountant who posts here) either answer this or can someone get a link to a reputable source on whether or not there is a minimum amount of money needed to be earned before you have to pay income tax? Do you have to be over 18? I've heard so many different answers from people who have no idea what they're talking about and was hoping I could get an answer here even though it's not strictly a poker legislation question. Thanks.
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Old 12-29-2008, 03:04 PM   #2
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Re: Minimum Income to Pay Income Tax?

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Originally Posted by zachvac View Post
ok so personally I'm going to be over whatever threshold it is, but I am asked time and time again from other players who play lower, friends who just have summer jobs, etc. wikipedia seems to say even if you mow lawns for a week in the summer and make $200 and that's all your income you still pay taxes on it at the lowest levels (like 10% or something?). My parents say that there's a minimum somewhere but they don't know what it is. Many seem to think if you earn under the poverty line you pay no tax. I can't find one anywhere and this section in particular is riddled by people who have no idea what they're talking about.

So can someone reputable (I know there's at least one tax accountant who posts here) either answer this or can someone get a link to a reputable source on whether or not there is a minimum amount of money needed to be earned before you have to pay income tax? Do you have to be over 18? I've heard so many different answers from people who have no idea what they're talking about and was hoping I could get an answer here even though it's not strictly a poker legislation question. Thanks.
It does not take an "expert", if your income from all sources EXCEEDS your minimum deductions, the amout above the deductions is taxable.

Simply look at a tax form; the deductions - standard, yourself or if claimed by another are there.

obg
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Old 12-29-2008, 04:10 PM   #3
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Re: Minimum Income to Pay Income Tax?

If you are single, you do not have to file a tax return if your gross income is less than $8,950 (this is essentially the amount of the standard deduction plus the personal exemption). But note that "gross income" only includes the sum of your gambling winning, before you deduct gambling losses (unless you are filing as a professional gambler). If you are going to deduct gambling losses, you cannot take the standard deduction.
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Old 12-29-2008, 06:01 PM   #4
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Re: Minimum Income to Pay Income Tax?

lol this is what I mean by getting mixed responses. I get two people who seem to know for sure and 2 completely different answers. Source for the $8950 figure?

Also note obg this is only income, I'm mostly talking about students who either have summer jobs and/or play poker, not people who have a full-time job and play poker on the side.
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Old 12-29-2008, 06:22 PM   #5
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Re: Minimum Income to Pay Income Tax?

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Originally Posted by zachvac View Post
lol this is what I mean by getting mixed responses. I get two people who seem to know for sure and 2 completely different answers. Source for the $8950 figure?

Also note obg this is only income, I'm mostly talking about students who either have summer jobs and/or play poker, not people who have a full-time job and play poker on the side.
Nick gave you a correct answer but you muddied the waters by acting as if netting your poker winnings is identical to earned income. If you want an accurate answer with no caveats list your income and where it came from. If part of it was from poker you need to list totals for all the winning sessions and losing sessions separately. You can then be sure to receive an unambiguous answer. Alternatively you could type in www.irs.gov and find the answer yourself.
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Old 12-29-2008, 06:31 PM   #6
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Re: Minimum Income to Pay Income Tax?

IRS FAQ

To determine if you need to file a Federal Income Tax return for 2007 answer the following questions:

Occasionally, individuals have one-time or infrequent financial transactions that may require them to file a Federal Income Tax return. Do any of the following examples apply to you?
  • Did you have Federal taxes withheld from your pension and wages for this tax year and wish to get a refund back?
  • Are you entitled to the Earned Income Tax Credit or did you receive Advance Earned Income Credit for this tax year?
  • Were you self-employed with earnings of more than $400.00?
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Old 12-29-2008, 06:49 PM   #7
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Re: Minimum Income to Pay Income Tax?

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Nick gave you a correct answer but you muddied the waters by acting as if netting your poker winnings is identical to earned income. If you want an accurate answer with no caveats list your income and where it came from. If part of it was from poker you need to list totals for all the winning sessions and losing sessions separately. You can then be sure to receive an unambiguous answer. Alternatively you could type in www.irs.gov and find the answer yourself.
Well this wasn't for me. Ignore poker. Say I made ~2k last year working part-time as a baseball umpire (which is true, but I'm going to have poker winnings on top that require me to pay income taxes anyway, but ignore that for now). They just send me a check every 2 weeks for the amount of games I worked times the pay with nothing withheld. Do I pay taxes on it?
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Old 12-29-2008, 06:53 PM   #8
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Re: Minimum Income to Pay Income Tax?

Unfortunately, there is no one right answer. The $8950 that someone put out is generally the correct answer. However, there are numerous other conditions that could cause you to have to file a tax return. The link above is good for many of them.

One of these exceptions is if you are a dependent and earn $900 or more in unearned income (gambling income for the non-professional is considered unearned income) or $5,450 in earned income. With the kiddie tax now expanded to include full-time students up to age 24 claimed as dependents I expect this exception to hit many who otherwise would not have to file.

Note that this just one of the many exceptions that could cause someone who earned less than $8,950 to need to file an income tax return.

-- Russ Fox
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Old 12-29-2008, 07:26 PM   #9
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Re: Minimum Income to Pay Income Tax?

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Well this wasn't for me. Ignore poker. Say I made ~2k last year working part-time as a baseball umpire (which is true, but I'm going to have poker winnings on top that require me to pay income taxes anyway, but ignore that for now). They just send me a check every 2 weeks for the amount of games I worked times the pay with nothing withheld. Do I pay taxes on it?
No, assuming you have no other income and you are not claimed as a dependent by someone else, you would not have to file.
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Old 12-29-2008, 07:31 PM   #10
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Re: Minimum Income to Pay Income Tax?

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Originally Posted by Russ Fox View Post
Unfortunately, there is no one right answer. The $8950 that someone put out is generally the correct answer. However, there are numerous other conditions that could cause you to have to file a tax return. The link above is good for many of them.

One of these exceptions is if you are a dependent and earn $900 or more in unearned income (gambling income for the non-professional is considered unearned income) or $5,450 in earned income. With the kiddie tax now expanded to include full-time students up to age 24 claimed as dependents I expect this exception to hit many who otherwise would not have to file.

Note that this just one of the many exceptions that could cause someone who earned less than $8,950 to need to file an income tax return.

-- Russ Fox
Hi I am from near San Diego and was a full time student from Jan08-June08. I had a part time job before and was claimed as a dependent. I didn't work this year but I played poker over the summer and have a gross of $28,000 and losses of $22,000 ($7,000 net). So does this mean I am supposed to file an income tax return?

I talked to an accountant and she said she didn't know about gambling stuff but would do research and get back to me. It's been 2 weeks and she hasn't yet so I am going to call her again soon.
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Old 12-29-2008, 07:36 PM   #11
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Re: Minimum Income to Pay Income Tax?

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Originally Posted by zachvac View Post
lol this is what I mean by getting mixed responses. I get two people who seem to know for sure and 2 completely different answers. Source for the $8950 figure?

Also note obg this is only income, I'm mostly talking about students who either have summer jobs and/or play poker, not people who have a full-time job and play poker on the side.
Which is what I answered, income.

Try reading IRS publication 501:


http://www.irs.gov/pub/irs-pdf/p501.pdf

You need to restate the question in full with the precise details, not adding more in your later responses for a credible aswer, I.E. are you a student claimed by others or do you get the full deduction, very important.

If poker income is to be considered wins / losses not NET.

obg
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Old 12-29-2008, 09:40 PM   #12
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Re: Minimum Income to Pay Income Tax?

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Hi I am from near San Diego and was a full time student from Jan08-June08. I had a part time job before and was claimed as a dependent. I didn't work this year but I played poker over the summer and have a gross of $28,000 and losses of $22,000 ($7,000 net). So does this mean I am supposed to file an income tax return?

I talked to an accountant and she said she didn't know about gambling stuff but would do research and get back to me. It's been 2 weeks and she hasn't yet so I am going to call her again soon.
I'm pretty sure you need to file a return. Even if you filed as a professional, you might owe taxes because you can't take your own personal exemption.
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Old 12-30-2008, 12:48 AM   #13
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Re: Minimum Income to Pay Income Tax?

ok ty all for the answers. Like I said in the OP I wasn't trying to do my own situation just wanted general rule. Apparently tax law is complicated though so there is no general rule. But from what I read so far students working (ie a "real job") for under $8950 don't need to file but anyone who wins over $900 in poker income does need to file. So this means that someone who makes $8k in his summer job pays $0 in taxes but guy who makes 8k at summer job and wins 1k and loses 1k to be a break-even poker player now owes $800 because bottom rung for income tax (think it went up to 10k) is 10% and he made over $900 in unearned income?
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Old 12-30-2008, 07:14 PM   #14
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Re: Minimum Income to Pay Income Tax?

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ok ty all for the answers. Like I said in the OP I wasn't trying to do my own situation just wanted general rule. Apparently tax law is complicated though so there is no general rule. But from what I read so far students working (ie a "real job") for under $8950 don't need to file but anyone who wins over $900 in poker income does need to file. So this means that someone who makes $8k in his summer job pays $0 in taxes but guy who makes 8k at summer job and wins 1k and loses 1k to be a break-even poker player now owes $800 because bottom rung for income tax (think it went up to 10k) is 10% and he made over $900 in unearned income?
that sounds right, isn't our tax system great
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Old 12-31-2008, 02:12 AM   #15
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Re: Minimum Income to Pay Income Tax?

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So this means that someone who makes $8k in his summer job pays $0 in taxes but guy who makes 8k at summer job and wins 1k and loses 1k to be a break-even poker player now owes $800 because bottom rung for income tax (think it went up to 10k) is 10% and he made over $900 in unearned income?
Just because you need to file doesn't mean you will actually end up owing taxes.
If you make 8K at a job, win $1K and lose $1K, you net income will be $9K. You will be eligible for a $1K itemized deduction, but you should just take the standard deduction instead. After the standard deduction and the personal exemption, your total income actually subject to taxation will be $50, so you will owe $5 in taxes.

Of course, if you are a student with a summer job, and your parents are still claiming you as a dependent, you cannot take the personal exemption and you will owe more. But this is true re: the summer job income whether or not you have any gambling winnings or losses.
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