I have a full-time job, but will make in the low-6-figures from my poker hobby. Was I supposed to have been paying taxes quarterly on that income? (Obv the fed government taxes its cut right out of my paycheck from me 'real' job, but this poker income is essentially un-taxed until I file/pay my taxes in April, 2010.)
- Should I have been paying taxes quarterly?
- Is there a penalty if I just pay my taxes in April as usual?
- Does the interest that I hear they charge start accruing from Jan 1, 2010 or from the quarterly date when I should have paid quarterly taxes (i.e. March 31, June 30, Sept 30, etc)

You probably owed quarterlies and you probably will pay penalties from date owed (4/15, 6/15, 9/15). (and don't forget the state quarterlies)

That said, is it to your benefit to keep that estimated tax money and penalties working until you decide to pay?

Yes, but you won't pay penalties.

Google - IRS Safe Harbor

Well, assuming this is your first year with the six-figure income from poker and you didn't owe anything last year on your taxes, you shouldn't have a penalty this year due to safe harbor.

Next year will be a different story though if you don't make estimated payments.

I just pay the penalties, which are negligible, instead of making my estimate payments.

+1

The government lends cheap.

I've wondered about this, for all of the new online players.

If you would be declaring as a recreational player, rather than a pro (which might be possible, if not preferable, for the OP)..... would you be required to pay quarterlies?

Yes. From the IRS web site:
http://www.irs.gov/businesses/small/...110413,00.html

I fail for being lazy... guess that's why Santa only brought me one poker gift.
/beat

+2

+3

Been doing it for years. I can make my money work better than the Man can -- I end up farther ahead paying taxes all at once annually with the penalties.

And then if there's a year where you owe no tax and the following year you do, iirc you get safe harbor again. This has happened to me probably 3 times in the last 10.

Not sure what would happen if you made six figures every year and just intentionally didn't pay.

+4

Been self employed for 13 years. I was diligent the first couple of years about paying it but after I saw how much the penalty was I was like meh.

What are these "taxes" you speak of?

K, so I'm reading up on the IRS Safe Harbor guidelines now, and here's the one that intrigues me. Seems like I won't owe ANY penalties or interest if:

Through withholding and estimated payments, you paid more than 100% of your 2008 tax liability ($110% if your AGI is greater than $150,000):

This appears to be great news for someone in my situation, since i WILL have paid 100% of my 2008 tax liability (b/c my job is exactly the same as last year, and I didn't have any poker income last year, but i will this year). The important question that I can't find the answer to, but which I think might be really important and something that I'd have to take care of in the next 36 hours is this:

Just when do I have to have "paid" the minimum amount to qualify for the safe harbor BY?? December 31st of THAT fiscal year? In other words, tomorrow I'm going to check my tax return from last year and then make sure that at least that amount has been withheld from my paycheck this year...BUT if the answer is that I'm short by, say, a few thousand bucks, do I have to write a check and get it into the IRS by Dec 31st of this year, in order to qualify for the safe harbor?

The final quarterly payment of Estimated Taxes has to be postmarked by January 15th. You should make up any deficit in your safe harbor minimum by then as an estimated tax payment.