Total winnings, total losses, and a net (winnings minus losses) are the only numbers that matter.

Not any amount that you cash out.

Sir, your fate will soon be in the hands of your new cell mate BUBBA, he will take good care of you. Hands like an angel.

Always pay your taxes.

Whether you cashed it out or not, you owe taxes on any money you win

It's like if your paycheck gets to your bank account via direct deposit, you still owe taxes on that income, even if you never spend it.

You owe tax on total "winning sessions". If you are pro, you can offset "losing sessions" against those winnings. If you are not a pro, you can deduct losing sessions (up to the amount you won) if you are eligible to itemize.

i'm sure there is an FBI agent right now licking his chops and looking in the phone book for his IRS buddy and his computer buddy ready to track this guy down to hold onto this thread for 5 years when the federal trial on OP starts.



just kidding OP, twas sarcasm.

So he hasn't paid taxes on income for years. Big deal. That just means he's qualified to join the ranks of the Obama White House. Just ask Tim Geitner, Hilda Solis, Kathleen Silibius, and Charles Rangel (yeah, I know the last one in s a member of Congress, but the point still stands...)

Maybe we're thinking about this all wrong. Call in some markers, get close to the president, cry the necessary crocodile tears on TV while talking about inadvertantly overlooking that you owed craptons of cash, and get in good with The Man. Then, convince him to use his political power to get the law changed. This is a golden opportunity to get into the halls of power inside of the beltway.

It's so screwed up the way gambling taxes work. If a player's winning sessions add up to $2000 and losing sessions add up to $3000 and he doesn't itemize deductions, he has to pay tax on $2000 of income with no deduction, despite being an overall losing player. So if the sites were to report all player wins/losses, it would be a massive amount of players who underpaid their taxes.

if you're a rec player, the gov't Essencially takes rake on every winning session you have. Although you personally have to send in the rake, which you haven't.

Find a good accountant and get this fixed.

Likely, you'll just have to pay the back taxes and penalties and interest.

However, if you did anything that smells like deliberate avoidance or structuring (10 withdrawals of $9,000 or something idiotic like that) you need to fear criminal prosecution.

But don't take my advice on this; find a professional pronto.

Any plea settlement by the poker sites may involve turning over the tax information and transaction details of all the US online players. THAT will be the real "black friday". . . .

Most definitely should have paid your taxes and in all likelihood you will be charged.

You're one of the reasons the U.S. economy is in the state it is.

~wood

Wait, just because the FBI indicted the poker sites doesn't mean they can just go in and fish for evidence against poker players...right?

paid

Hi, long time lurker and fellow *******earted poker player here. I can shed a little light on what will happen if you get audited by the IRS. At 16 I started my own web marketing business and quickly built it into a $100,000/yr+ business within 3 years. By the time I was 21 I had spent all the money(somewhere around $600,000) and business had evaporated. All that time I was only paying taxes on income from companies that sent me a w2 form which ended up being about 20% of my total profit.
When I turned 21 I got a letter in the mail stating I was being audited by the IRS. It was definetely the 'oh ****' moment of my life...I knew I had fked up and was going to have to pay. My business partner had also been audited by the IRS and he admitted to me he only didn't report about $50,000...I was somewhere in the neighborhood of 200k.
Anytime the IRS called or setup a meeting I always showed up and told them what they wanted to know...my business partner on the other hand ignored for them about 6 months and was trying to ditch the situation. He ended up getting charged with Criminal fraud, I ended up getting Civil fraud. Even though my case was much more egregious.

Basically if anyone gets caught cooperate and tell them the truth and you will get civil fraud, which is a 40% penalty on top of what you owed them plus some outrageous interest like 19% interest dating back to the first year you didn't pay. Don't run from them and don't bother hiring a lawyer in most cases.

you know, this seems like a very likely plan for them. why else would they strike right before tax day? so all the poker players who didn't plan on paying their taxes don't have a chance to react and they can audit the **** out of them later. lol wp government

admitting to tax evasion. riveting play old chap!

I'm not a lawyer, I don't play one on TV, and I didn't stay at a Holiday Inn Express last night, but my understanding is if they have a warrant that expressly allows them to look at financial records, then they probably had player financial records spelled out. Either that or in looking through other financial records for evidence if/when they stumble across other evidence of wrong doing, such as income tax evasion by players, then they can use that in other investigations.

20k spread out over some years is nothing. Don't listen to the poster who suggested you *not* get a lawyer. Terrible advice. Talk to a tax attorney and he/she will be able to straighten this out. Ask around for references, since fees are not always linked to quality.....

I'll be shocked if you have to do anything other than pay back taxes with interest. Also, ignorance is your friend. So long as you didn't deliberately try to steal from the IRS, you'll be fine. It also helps that you are voluntarily reporting this.

Is the gov't getting records on players poker balances? What about old records from sites that were shut down years ago?

I said don't get a lawyer if you've already been audited...there is literally nothing a lawyer can do for you in a civil fraud case. It's a different story if you're going to come forward and admit to it..which id say less than 10% of people on here that owe will.

+1 There are thousands of players, probably tens of thousands of players who are in MUCH worse shape than you. For now if I were you i would either talk to a tax accountant or just wait it out.

You understand that there isn't a cashout tax, right? We have income taxes. You report every winning session as income. You get to make itemized deductions for your losing sessions. You can only deduct losses up to your winnings and you can't carry losses forward year to year. Do some searching around here, and you may even find a good post as a general guide to playing taxes as a gambler. The thing you're afraid you haven't done is nowhere near close to what you legally should have done. (disclaimer: not a tax lawyer).

If you gambled online where there are clear records of all your play since the beginning and cheated on your taxes, you weren't really thinking.

Hypothetically, could losing players that were amateurs, owe taxes on their winning sessions, even though they are losers in the long run?

Edit (let's pretend their loses were always greater than there wins by the end of each year)

as this thread came up and i later read a bit about the taxes the same question came to mind

Of course they could for some people. There was a story a couple years back about a casino whale who had a multimillion dollar winning weekend in a year of huge losses. He didn't report any gambling or comps on his taxes. AMT caused him to owe a ton and he ened up going to jail, iirc. You also have issues as someone who can't otherwise itemize, because your poker wins/losses effectively wipe out your standard deduction.

Relevant question. Is that true that you can't claim for all your losses?

A lot of losing players would be in line for a tax rebate if this was possible.

Could you not class your losses as 'speculating' to accumulate, similar to a business buying machinery in order to make money.

From the UK, things are different here.

Online, there are records of your entire year. So a losing player with a winning year would owe. Live, your hypothetical is exactly what happens to people that hit a jackpot after playing slots for years; they didn't record how many times they plugged in $300 and lost it all, but now they have a W2g for $5k and must pay taxes on that "win". It'd be really cool if gambling were acknowledged as a losing venture and the government ignored big wins. Or at the very least have a much higher cap on when you need to pay taxes on gambling winnings.