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Arguments against "I'm only going to pay tax on what i withdraw." Arguments against "I'm only going to pay tax on what i withdraw."

01-15-2010 , 01:53 PM
Quote:
Originally Posted by DrMickHead
That's my whole point. The money isn't available to you until you sell and end your session.

The money in my poker account isn't available for use until I actually withdraw it. It's like an investment that I haven't cashed in on. Why would I pay taxes on it when the money isn't mine yet? It just seems like a "session" of poker should be from deposit to withdrawal. Everything in between is just fluctuations on an investment.
True, but you don't have all of your money in play 24/7. When you stop, it's available to you, much as if you sold stock and had the cash on deposit with your broker.
Arguments against "I'm only going to pay tax on what i withdraw." Quote
01-15-2010 , 01:55 PM
Quote:
Originally Posted by Achul
Yeah, they work in a yearly framework.
But that's why if you win 1 million on Dec 31 the next year you wont have to tax for it since you lost 1 million the same year on Jan the 1st.


Things even up : )
It doesn't work that way in the US. If you make $1M profit on gaming, you owe those taxes for that tax year. If you lose $1M the next day (Jan. 1) and don't place another wager for the rest of the year, you get no tax deduction for that.

So, if you had to pay a total of 50% in state and federal taxes in the $1M profit for the first year, and had no deduction for the second year, your break-even two year gaming would result in $500K in taxes.
Arguments against "I'm only going to pay tax on what i withdraw." Quote
01-15-2010 , 02:21 PM
Quote:
Originally Posted by DrMickHead
That's my whole point. The money isn't available to you until you sell and end your session.

The money in my poker account isn't available for use until I actually withdraw it. It's like an investment that I haven't cashed in on. Why would I pay taxes on it when the money isn't mine yet? It just seems like a "session" of poker should be from deposit to withdrawal. Everything in between is just fluctuations on an investment.
This is where the IRS disagrees with you. The IRS aside, clearly leaving your winnings from finishing well in the Sunday Million in your PokerStars account is analogous to leaving the proceeds from selling 1k shares of google stock in your etrade account. Withdrawing from PokerStars is analogous to withdrawing from ETrade.

The IRS says I am taxed in the year I sell google shares, not in the year I withdraw the proceeds.

Good job trolling though -- you did get me to respond.
Arguments against "I'm only going to pay tax on what i withdraw." Quote
01-15-2010 , 02:28 PM
Quote:
Originally Posted by TheEngineer
It doesn't work that way in the US. If you make $1M profit on gaming, you owe those taxes for that tax year. If you lose $1M the next day (Jan. 1) and don't place another wager for the rest of the year, you get no tax deduction for that.

So, if you had to pay a total of 50% in state and federal taxes in the $1M profit for the first year, and had no deduction for the second year, your break-even two year gaming would result in $500K in taxes.
Yeah I know but this is an inherent problem of all tax-systems.
I'm just saying if you keep on playing you'd get the deduction.


As in: You start playing on Dec 31. You win 1 million. Say you pay taxes 100k USD.

Then you play on Jan 1'st you lose 1 million...no tax deduction for the previous win. But if you continue to play and win 1 million say in April you can deduct the losses from Jan 1'st, right? So you'd end up breaking even and paying 0 in taxes.


Else it really sucks.


Ofcourse some sort of system in where all your losses are tracked would be best. I'd suggest doing as someone else said, not withdrawing anything and only withdrawing the last of every year or something. If you've gone + you'll get taxed on your profits. If you've gone - you'll get taxed 0.

This should work since most of these poker sites today are off-shore.
I don't know how it would work if they were domestic.
Arguments against "I'm only going to pay tax on what i withdraw." Quote
01-15-2010 , 04:00 PM
Quote:
Originally Posted by funkyj
Good job trolling though -- you did get me to respond.
Not trolling. I just really think the rules don't make a whole lot of sense in the online world. Which isn't a surprise considering how long the government takes to adapt to changes.

I've only played live once and I just played for a few hours and cashed out. So, I never had any delusions about what a session constituted in a live game. So, how does it work if you play live and you just keep your money in chips? When you take the chips from the table is that the end of a session and you have to log your winning/losses or do you only log this when you go to the cage?
Arguments against "I'm only going to pay tax on what i withdraw." Quote
01-15-2010 , 05:56 PM
Quote:
Originally Posted by DrMickHead
So, how does it work if you play live and you just keep your money in chips? When you take the chips from the table is that the end of a session and you have to log your winning/losses or do you only log this when you go to the cage?
Odds are, if you leave the casino with $10k of winnings, the IRS considers your session has ended regardless of what currency they are in (chips or cash or bankwire to your bank account).
Arguments against "I'm only going to pay tax on what i withdraw." Quote
01-16-2010 , 08:46 AM
Quote:
Originally Posted by orangedeuce
Wow, that's pretty cool
In the Netherlands, self employment tax for such an amount would be 60% (no kidding). But under the latest (Oct 3 2008) Dutch Betting and Gaming act, taxes are 29% of the monthly balance. No clue how they enforce this (I am not a professional gambler).
I'm only referring to self employment tax.

i'm not referring to federal income tax, state income tax, medicare tax, or social security tax, all of which add up to 40-50%
Arguments against "I'm only going to pay tax on what i withdraw." Quote
01-16-2010 , 11:12 AM
Quote:
Originally Posted by sinner
I'm only referring to self employment tax.

i'm not referring to federal income tax, state income tax, medicare tax, or social security tax, all of which add up to 40-50%
Self-employment tax is medicare and social security.
Arguments against "I'm only going to pay tax on what i withdraw." Quote
01-16-2010 , 01:00 PM
Quote:
Originally Posted by Naked Penguins
I am no tax expert, but i do not think that ANYONE should have to pay taxes on poker money profits until they withdraw, and there is a big reason why. It is because:
Money in an online poker account is not "your" money until you withdraw it and they(the poker site) give it back to you. When you deposit money in an online poker site, it's the same as if you are buying a stock or bond-if the company(poker site) goes under, you are going to lose all your money, just like you would with a stock or bond.

Do you apply that to stock gains, as well? And other such items?
I understand your point, but that gets into the whole "offshore and bury my ill-gotten gambling gains" problem.
Arguments against "I'm only going to pay tax on what i withdraw." Quote
01-16-2010 , 01:03 PM
Quote:
Originally Posted by Poker Clif

If you're a cash player, I suppose you could go over your results and divide them into sessions if you have to prove what you've done.
Session records- location, time range, bet levels, results, etc.
If you get toll receipts, ATM withdrawals/deposits, etc that frame your session, even better.


Quote:
But even if most of your play is online, you might have to keep some other records, especially for live games.
Maybe FullTilt is the only one who gives session records, but if not then this is INCREDIBLY simple (from a raw data standpoint). They give you table number, buy-in and cash out, and timestamps. What else could you need?
Arguments against "I'm only going to pay tax on what i withdraw." Quote

      
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