Quote:
Originally Posted by hussainsajwani
If your tournament win (ie the amount of form W2G) for e.g. is let say $50,000 and that's your only source of income then you can file as a professional poker player (or gambler), and show that amount on Schedule C as income and then show your expenses + losses on Schedule C as well. Schedule C is used when you are self-employed.
Good luck with THAT. Everything I've heard on the subject suggest you have to dedicate a substantial amount of time gambling to claim you're a professional, or the IRS won't buy it. I would think at least 1200 hours a year. Also, you have to pay employment taxes (Social Security and Medicare), and since you're "self employed", you have to pay both sides (15.3%). But you also get to subtract expenses, including education (such as your Upswing Poker or Run it Once membership), from your winnings as a professional. But if you're not spending a lot of time at it, those expenses will be minimal.
That said, if you won $50K in a tournament and
that was your only income, you'd do better NOT to file as a professional, as you get the standard deduction off of the $50K and don't have to pay employment taxes (either side). If you have losses less than the standard deduction, you do better there, and if they exceed the standard deduction, you do the same there. You might get more than your losses if you can capture some other deductions such as mortgage interest and real estate taxes, which you wouldn't get with zero income.
The problem with not filing as a professional is when you have other income and deductions lower than the standard. The first $X amount of losses fills in the gap between your other deductions and the standard deduction. The amount over $X increases your deduction. In fact, you could lose money gambling, but sill pay more in taxes than you would have if you had never gambled.
As for OPs question, yes you add up all your losses and enter it on Schedule A with your other deductions. Keep all your tournament entry receipts as proof of those. If you did other gambling, the wins and losses there should also be added to your income/deductions.
Also, if OP has a nice tournament win earlier THIS year, then OP shouldn't wait until next year to send the IRS (and whatever State) "their" money. You have to file estimated taxes every quarter. If OP won in January, February or March, OP has to file/pay the estimated taxes by April 15th.