After playing a live tournament this weekend where a friend of mine reached the final table and having a lengthy discussion about the implication of taxes on the payouts it made me realize how hard the government is going to bone the U.S. player base when it returns. In CA tournament payouts over 5k are taxed at 28% which is just insane.

That said if every prize on the future U.S. based ipoker site is taxed at nearly 30% and the rake is another 10% then a player is only able to win $0.60 for $1 deposited on the site, so after all this can the new sites be profitable to play on?

You're actually pointing out that paying taxes costs money?

it will be insanely profitable. the tax thing is just confusing for you. pay someone to worry about it for you imo

most likely the site will send you a w9 or w2 or w/e at the end of the year, and then you hand it to your pro and it works out,
gl

Dumb Question, But I take it when iPoker bill passes and online is regulated and taxed in the US, we (US Players) will only be able to play American based sites? Or will we be allowed back on Stars and just taxed?

I'm so out of the loop with iPoker bill and everything, I gave up caring after BF

thinly veiled brag about having a friend who made a final table



OP, say you can make $30 an hour playing online poker. After 30% tax , that would be $21/hr. **** could be worse

I happen to agree with the OP yes you can still make a profit but 28 percent is really absurd, it's worse then rake... I for one will not partake in any american based I-poker, more importantly they will be no way they can stop all the colluders, cheaters and bots so with that said, I rather put up with that BS on a site that doesn't tax!!

I suppose you're not American. Americans are supposed to pay taxes on gambling winnings whether or not the site withholds some.

Good luck, lol its going to be around 37% tax rate on all your winnings. But this is great if your a drug dealer! CLEAN money for everyone!!

I think that how they site taxes will make a huge difference.

-Will they tax every pay out at a smaller %?
-Will they only tax payouts over 5k?
-Will they tax cashouts or just tournament prizes?
-Will it be like FTP/Stars where they don't tax anything on the site and expect u to declare it after?

They will tax the site on their massive profits then you will owe 37% taxes on total winings at the end of the year.

37% is ******edly high, will that be for pro and amateur alike?

Other countries are taxing rake, not profits.

key word: OTHER

LAP, you're pretty certain on this 37% huh?

Thats what the winners were taxed from the USA november 9, and I know gambling winners in everything else are taxed very high.

But this high tax rate might drive people away from online gambling. Im thinking they might drop the Tax rate for online gamblers, but if not, it will be right at 37%

Why were the US Nov 9ers taxed 37%? It's never that high on a cash suitable for taxation, is this because of the million dollar cashes? Is there a certain $ threshold broken that the tax % goes up?

Just FYI, The November 9 weren't "taxed" at this amount, the IRS withheld this amount. This percentage is based on the amount of money won, that put them in a certain tax bracket.

Many (all) of them will have deductions (other buyins, travel, etc) to offset this withholding.

It is highly unlikely there will be a "flat-tax" of 37% for gamblers. Most likely it will be based on the amount of money you make, which will place you in a certain tax bracket. And non-pro would still place this income as other income on their returns

^ That sounds much better.

It will all be taxed under GAMBLING winnings, and most wrecreational players wont have write offs so its still going to be a high number.

Again... There is NO line on the tax return that says GAMBLING winnings. This goes on other income line 21 for a non-pro. and they can report losses (up to winnings) as a itemized deduction.

For a pro. you will file a sched C (as a business) and be subject to the additional SE tax.

Gambling profits and losses for amateurs are taxed pretty harshly in the US. In a nutshell, you are to put your winnings on the front page of the 1040 and put your losses separately as an itemized deduction. You are expected to keep careful records of every session you play. Your losses cannot exceed your winnings and cannot be carried over to the next year. What this means is that your winnings will increase your gross income which will sometimes send you into another tax bracket. It's very frustrating.

Only 8% of players are winning pros. So Yea its going to be high taxes for the other 92%

It's pretty wild how everyone knows every detail about this already. Marty McFlys itt.

Most non pros will have winnings taxed as gambling proceeds, they will be able to deduct documented losses (like your wife's slot losses on a joint return) but will pay their top marginal rates on any balance. With a progressive tax system that marginal rate will depend on your total net taxable income.

Pros have an additional problem but also some additional deductions. If they are true professionals, in addition to income taxes, they will owe self employment tax (the self employed persons equivalent of social security tax) in addition to income taxes, under normal times this is 15.3% for most persons (there was a recent partial suspension and the medicare portion extends beyond the upper limit of the social security portion). Pros will be able to deduct additional reasonable and necessary business expenses they incur as part of the occupation and may be able to form a personal services organization in order to take advantage of other deductions.

It's not hard to know the details about taxability as many persons have paid for years.

You know about the rake % too? Please enlighten us. Thx.