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Old 04-25-2009, 07:29 PM   #676
flettl2
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Re: Canadian Online Poker Tax Thread

Ok so since I will be playing full time, poker will be my primary (only) source of income. They will see I'm organized, skilled, run it like a business ect. So we know I have to pay taxes. 40-52% of my net winnings will go to pay taxes? And as what randomguy2 asked, can I deduct this for business expenses like computer, internet, poker software, computer chair, desk, ...?
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Old 04-25-2009, 07:52 PM   #677
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Re: Canadian Online Poker Tax Thread

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Originally Posted by flettl2 View Post
Ok so since I will be playing full time, poker will be my primary (only) source of income. They will see I'm organized, skilled, run it like a business ect. So we know I have to pay taxes. 40-52% of my net winnings will go to pay taxes? And as what randomguy2 asked, can I deduct this for business expenses like computer, internet, poker software, computer chair, desk, ...?
Not so fast--you need a track-record of financial success that is significant enough to rebut the strong presumption of poker being non-taxable. Depending on the numbers involved (in terms of winnings, length of time you've been playing, and how intensively you play) it may make sense to get professional advice.

It may, of course, make sense to get professional advice in any event.
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Old 04-25-2009, 08:01 PM   #678
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Re: Canadian Online Poker Tax Thread

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Not so fast--you need a track-record of financial success that is significant enough to rebut the strong presumption of poker being non-taxable. Depending on the numbers involved (in terms of winnings, length of time you've been playing, and how intensively you play) it may make sense to get professional advice.

It may, of course, make sense to get professional advice in any event.
ok well I'd be playing 40 hrs a week, I would be starting May 1st so I guess I don't need to pay taxes for this upcoming year since it wouldn't be certain if I was a skilled player. But If I made a consistent profit then would I file for taxes in 2010?
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Old 04-25-2009, 09:49 PM   #679
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Re: Canadian Online Poker Tax Thread

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ok well I'd be playing 40 hrs a week, I would be starting May 1st so I guess I don't need to pay taxes for this upcoming year since it wouldn't be certain if I was a skilled player. But If I made a consistent profit then would I file for taxes in 2010?
Define "consistent". Most players have very variable returns, which is why this is such a difficult (and intensely interesting) legal question.
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Old 04-26-2009, 10:59 AM   #680
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Re: Canadian Online Poker Tax Thread

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Define "consistent". Most players have very variable returns, which is why this is such a difficult (and intensely interesting) legal question.
10% ROI after 12,000 sng's is what I'm hoping after the first year. For sng's I think after 5000 games you are +/- 5% of your true ROI 95% of the time.
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Old 04-26-2009, 11:33 PM   #681
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Re: Canadian Online Poker Tax Thread

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10% ROI after 12,000 sng's is what I'm hoping after the first year. For sng's I think after 5000 games you are +/- 5% of your true ROI 95% of the time.
Any claim like this must make a daunting array of assumptions. The central limit theorem will get you some of the way, perhaps, but there are many uncontrolled (and not easily accounted for) variables. For example, what if your "true ROI" (does such a thing actually even exist?) fluctuates, as it certainly must, based on the time of day, the players you're playing against, your mood, your recent results, etc. If you accept this, then there are either multiple "true ROIs" or a range of "true ROIs" that may be right in different circumstances. Without making some assumptions about these different "true ROIs" you cannot make any of the claims you're attempting to make (I don't think), etc. And how finely do you start parsing the "circumstances" to categorize or distinguish them? At the limit, every SNG is a different circumstance and there is no way to predict your "true ROI."

These are difficult questions that lead to difficult to form legal opinions. I may be overthinking this question relative to what a judge or the CRA would do, but I can't help but think an expert could be called to make all these points in a forceful way at trial (recall Epel, where the "expert" wasn't even all that forceful or logically consistent, and yet highly influential; cf Leblanc, where an expert somehow claimed and the court accepted that they had no system and were risk maximizers... you see the point).
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Old 04-27-2009, 12:14 AM   #682
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Re: Canadian Online Poker Tax Thread

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Originally Posted by TaxGuru View Post
Any claim like this must make a daunting array of assumptions. The central limit theorem will get you some of the way, perhaps, but there are many uncontrolled (and not easily accounted for) variables. For example, what if your "true ROI" (does such a thing actually even exist?) fluctuates, as it certainly must, based on the time of day, the players you're playing against, your mood, your recent results, etc. If you accept this, then there are either multiple "true ROIs" or a range of "true ROIs" that may be right in different circumstances. Without making some assumptions about these different "true ROIs" you cannot make any of the claims you're attempting to make (I don't think), etc. And how finely do you start parsing the "circumstances" to categorize or distinguish them? At the limit, every SNG is a different circumstance and there is no way to predict your "true ROI."

These are difficult questions that lead to difficult to form legal opinions. I may be overthinking this question relative to what a judge or the CRA would do, but I can't help but think an expert could be called to make all these points in a forceful way at trial (recall Epel, where the "expert" wasn't even all that forceful or logically consistent, and yet highly influential; cf Leblanc, where an expert somehow claimed and the court accepted that they had no system and were risk maximizers... you see the point).
Ya this is where I get confused, with an expert like in the Epel case on your side, combined with the nearly infinite factors that contribute to your net winnings, I don't see how you can be taxed.
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Old 04-27-2009, 07:12 AM   #683
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Re: Canadian Online Poker Tax Thread

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Originally Posted by TaxGuru View Post
These are difficult questions that lead to difficult to form legal opinions. I may be overthinking this question relative to what a judge or the CRA would do, but I can't help but think an expert could be called to make all these points in a forceful way at trial (recall Epel, where the "expert" wasn't even all that forceful or logically consistent, and yet highly influential; cf Leblanc, where an expert somehow claimed and the court accepted that they had no system and were risk maximizers... you see the point).
In Epel they had no choice but to rely on the expert since it was the best available evidence. It was B&M play at underground games. Completely different than online play where there is a record of everything and how you play. With online players CRA will win an expert battle.

In Leblanc the important aspect wasn't that they didn't have a system but that Pro-Line can't be beat. The expert testified that the sports lottery because of the ability to retroactively reduce the payout as well as the requirement that all wagers be parleys at odds significantly inferior to any sportsbook made it such that it was impossible to overcome the advantage OLG has by any amount of skill. I don't disagree with the expert.

Further, the Leblancs greatly exaggerated their winnings. In reality they won less than a fifth of what they claimed with the majority of it happening before OLG changed the rules for Pro-Line to make it harder.
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Old 04-27-2009, 09:08 AM   #684
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Re: Canadian Online Poker Tax Thread

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Originally Posted by flettl2 View Post
Ya this is where I get confused, with an expert like in the Epel case on your side, combined with the nearly infinite factors that contribute to your net winnings, I don't see how you can be taxed.
You can definitely be taxed; the real question is at what point you flip from being casual and non-taxable to being professional and taxable. My own sense is that many players have irrational fears of tax liability.

Perhaps an analogy to body-building is apt--you're likely to be taxable if you're as serious about poker as a professional body-builder is about working out (time, dedication, effort, natural ability, etc.). If what you're doing with your poker game is akin to casually working out as a hobby, then you're fine.

In other words, in my view you get a period to "build up your physique" that remains non-taxable play, because there would be no way at all the Minister would allow you to deduct your losses if you incurred some. It's only when it's clear you're a financially successful and adept player that you reach the tipping point.
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Old 04-27-2009, 09:52 AM   #685
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Re: Canadian Online Poker Tax Thread

Alright thanks for the help taxguru!
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Old 05-24-2009, 07:04 PM   #686
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Re: Canadian Online Poker Tax Thread

I have read around 10 pages of this thread and still have not found out if there are any cases gone to court about this. Has any poker players been taken to court yet and who has won them? I am not going to read through this thread for 2 hours looking for one.
Thanks.
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Old 05-24-2009, 07:47 PM   #687
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Re: Canadian Online Poker Tax Thread

I am aware of no recent judgments.
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Old 05-24-2009, 09:06 PM   #688
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Re: Canadian Online Poker Tax Thread

The only tax case that I'm aware of is Epel and that was some time ago. Links to it should be in this thread a few times.
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Old 05-24-2009, 11:49 PM   #689
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Re: Canadian Online Poker Tax Thread

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The only tax case that I'm aware of is Epel and that was some time ago. Links to it should be in this thread a few times.
Thanks

So in all reality it would be silly for poker players to claim their earnings if nobody has been charged yet. I am figuring there is eventually going to be a landmark case to determine this.
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Old 05-25-2009, 07:04 AM   #690
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Re: Canadian Online Poker Tax Thread

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Thanks

So in all reality it would be silly for poker players to claim their earnings if nobody has been charged yet. I am figuring there is eventually going to be a landmark case to determine this.
You are assuming that just because there is only one case that other poker players have not been accosted bt CRA which is incorrect. Only a tiny fraction of cases actually go to trial.
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Old 05-25-2009, 09:19 AM   #691
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Re: Canadian Online Poker Tax Thread

Fair warning - I'm Grunching hard here.

Going to Vegas to play in two WSOP events. I understand that there's a form I can fill out - either before I leave or while in Vegas - that will speed up the tax situation should I cash.

Can somebody point me in the right direction here - even the name of the form so that I can search / research myself would be helpful.

Thanks, and apologies for the Grunch.

OT
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Old 05-25-2009, 09:24 AM   #692
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Re: Canadian Online Poker Tax Thread

http://www.irs.gov/pub/irs-pdf/f1040nr.pdf

The 2009 version of 1040NR is what you fill out to get the money that was withheld as a non-citizen / non-resident of the US. I have never heard of anyone filling it out in advance so maybe there is a different form for that.
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Old 05-25-2009, 09:41 AM   #693
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Re: Canadian Online Poker Tax Thread

Quote:
Originally Posted by Henry17 View Post
http://www.irs.gov/pub/irs-pdf/f1040nr.pdf

The 2009 version of 1040NR is what you fill out to get the money that was withheld as a non-citizen / non-resident of the US. I have never heard of anyone filling it out in advance so maybe there is a different form for that.
So the process is, if I'm reading this correctly:

1) Go to the Rio
2) Play the event
3) Win the event
4) Get a cheque for $800,000 ($1,000,000 first prize, less $200,000 in taxes)
5) Fill out this form (1040NR) and submit to the IRS
6) Wait for them to send me a cheque for the $200,000 that I paid


Is that correct?


Appreciate the quick response, Henry...


OT
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Old 05-25-2009, 09:54 AM   #694
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Re: Canadian Online Poker Tax Thread

That is my understanding. I have never had the need to go thought the process myself but from other people's experience that seems correct.

There are firms that specialize in this and work on contingency (You'll see the commercials at 4am on TV or in any Canadian gambling magazine) but it seems rather ******ed to pay someone to fill out a form.
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Old 05-25-2009, 04:09 PM   #695
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Re: Canadian Online Poker Tax Thread

Ontario_Tory, the procedure (from my experience) is:

1) Go to the Rio
2) Play the event
3) Win the event
4) Get a cheque for $700,000 ($1,000,000 first prize, less 30% ($300,000) in taxes). Suggestion: If you wire it, you won't have to fill out the Fincen/CBSA paperwork on each side of the border.
5) Fill out ITIN paperwork at the cage before you leave Vegas.
6) In January 2010, fill out 1040NR using the ITIN that you have received in August 2009 (from the IRS) and submit it, with paperwork justifying what your total net gambling win from all gambling activities in the States are that year. (If that sounds too complex, refundmanagementservices.com did my paperwork for me ... lickity split, no problem!)
7) In March 2010, you receive a refund of 30% on the difference between $1,000,000 and your net gambling win for the year from all US Gambling activities. If you proceed to lose a million dollars (or more) on slot machines ... yes, you will get all $300,000 back. If you only play one other tournament (eg the Main Event) and air ball that, you only get back 30% of $10,000 or $3000 back. It is *NOT* guaranteed that you will receive all of the withheld money back.
8) If you are a poker professional, be prepared to pay Ontario/Federal tax on that win as well. The US/Cdn tax treaty allows you to remove whatever you've paid the IRS from your Canadian tax bill ... so it's not that much of an additional hit ... 14% at top marginal tax rate, IIRC.

Hope this helps.
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Old 06-09-2009, 01:49 AM   #696
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Re: Canadian Online Poker Tax Thread

I've skimmed some of this thread, but wondered everyone's thoughts if they think I'd have to pay taxes.

I recently cashed out about 3.5k last Monday, and then 4.3k on Friday two times. I should've waited a couple days after the Friday transaction but I didn't even know about the potential of taxing on poker winnings or anything. However, withdrawals to my bank account via Instadebit were never more than say 2-3k with the exception of the two on Friday I made for 4.3k. Last week was the first time I made a significant withdrawal in the past couple months.

I'm in school full-time, and I also work part-time about 10-15 hours a week on average. Would this alone suggest that I am not conducting poker as a business? It's far from a full-time venture, and although I am making money off it so far, I don't play that often considering I have school and work. I've only recently been making money off of it the past 6 months or so.

Will the transactions I made on Friday (the two for 4.3k each) raise any flags? Should I report the winnings? Also, even if by some chance they claim I should've claimed my poker profits what is the worst that can happen?
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Old 06-09-2009, 08:26 AM   #697
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Re: Canadian Online Poker Tax Thread

I have advised and given legal opinions to many players on precisely this topic. From an income tax perspective, the timing of your withdrawals is irrelevant. What matters, essentially, are all the facts of your situation and of these, most importantly, the effort and professionalism you bring to the game and the results you achieve.

This is not a legal opinion or legal advice, but based on the limited information in your post, I would hazard that you have probably not reached the threshold for being a taxable player. Don't rely on this, though. It would be wise to do more research on your own and satisfy yourself that this is an accurate appraisal of your own circumstances based on your knowledge.

This thread is a particularly rich source of information and guidance. If you remain stumped, you might consider retaining a lawyer knowledgeable in the area.
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Old 06-13-2009, 02:54 AM   #698
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Re: Canadian Online Poker Tax Thread

Kinda off topic but I had to know, I've owned a house for 2 yrs and have someone renting my basement for 700 a month. My mortgage is 1600 a month. Do I have to report the 8400 a yr I'm renting the basement for ? And my mortgage is sick stupid with me paying literally 900 a yr in principle and 18k or so in interest. Is it different if it's a rental property as opposed to my actual residence ?
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Old 06-13-2009, 06:14 AM   #699
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Re: Canadian Online Poker Tax Thread

Wait...What...? Canadians have to pay taxes on winnings...?

If you don't have to pay taxes on B&M winnings, why do you have to pay it for internet winnings?
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Old 06-13-2009, 07:20 AM   #700
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Re: Canadian Online Poker Tax Thread

Quote:
Originally Posted by Eluvetie View Post
If you don't have to pay taxes on B&M winnings, why do you have to pay it for internet winnings?
You have to pay taxes on B&M winnings if you play professionally as well.
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