I have a question about income tax filing. I wasn't a huge winning player in 2008, it was a really up and down year so I didn't declare taxes. Should I have done an income tax return? I didn't. If I do one this year, should I also file one for last year? Will it cause problems if I do one this year and leave 2008 blank?

How much do tax lawyers usually charge per hour? I would like to go see one I talk in person about the benefits of becoming a corporation...

Thanks!!!

If you made less than 10k then you might as well file since you won't pay tax anyways. There are also some small benefits to filing if you lose money for the year or make very little (GST rebates, etc.)

If you file for some years and not others then you can expect to get letters asking you to file and if you are aasked then you have to file something.


Lawyers and accountants charge $100-500 an hour.

in

b/c fml didn't think this was an issue in Canada given Leblanc

doh

For those paying taxes what Should I be doing for this year to prepare if I might pay taxes next year.

Hi there,

I'm a casual player (small winning player at MTTs / donk some off in SNGs / cash). I was lucky enough to score big in a major tournament. I am not a professional poker player, but the amount that I won WILL exceed any real job earnings that I make this year.

Any input towards how to proceed would be greatly appreciated (for withdrawing and also for tax purposes).

From what I've read, it can be considered a windfall, but for withdrawl / bank transfer purposes, is there any type of proof I need to supply?

I have read trough the thread and I'm wondering if there's any reason other then paranoia of being audited in declaring?

You use the roads, call the fire department, and wait in the lineups to see a foreign doctor, are 3 reasons.

This is like asking, "Is there any reason, other than possibly being caught and punished, for not stealing everything I can get my hands on?"

New op-ed on the taxation of poker winnings in Canada: http://www.theglobeandmail.com/news/...rticle1509810/

Was just about to post... from the definitive source on poker as tax income,
Benjamin Alarie, law professor, University of Toronto

They will not chase too many folks for small dollars if they have the right to claim any and all gambling losses once declared a professional.

Nice article. Is there any particular reason you brought up the US tax treatment of poker players without mentioning how it is handled in the UK? Thanks for taking the time to put together a well thought out piece that reaches a national audience.

The US is identified to point out that Americans get predictability and certainty at the price of reduced fairness. That unfairness is also the reason why compliance rates with the provision are relatively low in the US. Tax morale matters.

good article, put it in the OP and delete 4/5ths of this thread.

+1 This summarizes a big majority of this thread

+2.

That's the nature of the beast....forums can't live with em can't live without em.

Anybody know of any cases of the U.S. withholding tax refund claim being audited?

Hi guys. My accountant (friend's mom) was in the processing of preparing my return when she came across this:

"It seems that CRA is starting to take an interest in gambling.


The following is a recent interpretation CRA issued on online betting:



Operation of a Business — Online Sports Betting

The issue the CRA was asked to review involved an individual having earned more than $20,000 from January to October 2009 from online sports betting. The CRA was asked if the individual would be considered to be carrying on a business in respect of his betting activities. Given the size of the individual's earnings from those activities, the CRA considered that he probably had a source of income from those activities. The CRA noted, however, that the question of whether the activities of an individual were such that he was carrying on a betting business was a question of fact that could only be decided after a careful review of his activities and other elements connected with betting. The following criteria would be taken into account to make that determination for the individual:

• degree of organization present in pursuing the betting activity;

• existence of special knowledge or inside information enabling the reduction of the element of chance;

• intention to gamble for pleasure versus intention to gamble for profit as a means of gaining a livelihood; and

• extent of gambling activities, including number and frequency of bets.
A betting activity not including a reasonable expectation of profit would not constitute a source of income. If this was the case, neither the amounts received nor the expenses incurred in respect of the betting activity could be taken into account to calculate the individual's income, and any excess of the expenses over the receipts would be considered as personal and living expenses not deductible by virtue of paragraph 18(1)(h) of the Act. If the betting activity gives rise to an excess of receipts over expenses, this is usually an indication that the activity is not only a hobby but a business operated to earn a profit. For more information, see paragraph 10 of IT-334R2"



I'm still waiting on a response, but I'm assuming this came from the CRA website somewhere. Will post more info as soon as I get it, but was curious if anyone else had come across this yet and/or what people think of it.

Question: If one were to begin declaring poker income for the 2010 year, and that income was something substantially larger than the average Canadian income (say, $200-300k for the sake of having a number), and that person's prior 3 or 4 year's returns had basically zero income, would THAT raise a flag for looking into prior years and back-taxes? Or is it the same ol' "depends on whether the CRA worker you get has the ability to think etc.."?

it could raise a flag, but it's simple to explain: you weren't a professional last year but now you are. make sure not to hide the source of income if asked.

some CRA employees might actually think that you shouldn't even be paying any taxes now either and will send you back your money (read a few pages back itt).

It actually sounds like someone is seeking an advanced ruling on their situation. I thought advanced rulings were not public but i could be wrong. Anyway, if it is an advanced ruling situation then it was the sports better not CRA who was the genesis of this.

Technical Interpretation, Business and Partnerships Division, November 9, 2009, Document No. 2009-0337281E5 (French Document)

The last line of that nice concise article really sums it up for me: "It seems the current unarticulated approach to the taxation of poker winnings is uncertain, unpredictable and unfair."

It's an impossible situation. I love playing full time and it's worked out for me this past year, but I'm already feeling tired of the monotony of the grind and constant stress from swings. Also I have a Masters in Chemistry that is only 18 months old so I could switch to a real job easily. To keep excited and stimulated I need to get into new games. Heads up, Omaha, higher stakes, anything. Things could go south trying new things and maybe I won't make it this year. So I think claiming my earnings for 2009 would be foolish. But there is a good chance things do work out. I'm just to in love with the total freedom. If I can double my income my girlfriend will quit her job, I'll train her to play and we can live in Mexico for 3 months at a time.

If things work out and I start filing for 2010 or 2011 then all of a sudden I'm on the hook for 2 years back taxes......it's just an impossible situation. If I do file and go back to Chemistry, the CRA is really going to honour my deduction for any poker loses for years to come?

See Gurus article sums it up perfectly. Many guys like me out there. We're honest people and wan't to do the right thing, but it's very difficult to do so when you're still not sure if you really are going to make it....and if you do make it, many (like myself) are certainly not sure how long they wan't to make a full time go of it.

Well said ebffs. I think that's the basic sentiment of the majority of winning Canadian online poker players..

I mean there's also the moral aspect of it. I have plenty of friends making 10% of my income and they pay taxes on that. Yet I reap the same benefits as they do from government spending. That's not easy to swallow or feel proud about. But on the other hand, 40% is a massive chunk of money and it seems as though avoiding having to pay it might not result in any consequences in a lot of cases.

It was kind of summed up today when I was talking to my gf about it and the convorsation went like this:

"Yeah so it looks as though I might start paying taxes for 2010 and onward on my poker winnings..."

"Really? Oh well, I mean that just means you're just like every other person now.."

"So you're not bitter about the fact that I'm going to be shipping the government that money instead of buying you a nice new Lexus?"

"Ohhhhhh... :x"

I had a question also. When you say loses can be deducted in a subsequent losing year, can they only be deducted vs. future winnings in the next year? I mean otherwise say I got back to Chemistry in 2011 and make 90,000 for the year. I could throw 30,000 on Full Tilt and hit the 50/100 tables just for a shot. If I run bad and blow through 30k, just write it off and only get taxed on 60k income......seems too good to be true. It's like a 10k incentive to take a high stakes shot.

Also I can see serious money laundering issues with less honest poker players if the CRA started getting aggressive. I mean offshore gaming sites are perfect for this. On almost all poker sites you can transfer 100's of thousands to other players via inter-account transfer almost instantly. This is constantly happening anyway with online prop bets and certain players are holding on to 100k in wagers (like in H2T's recent 125k bet for his NL200 winnings). So if someone really wanted to f$* with the CRA they could claim a 30k year, which would be pretty much tax free anyway. Then the next year transfer 100k to someone you trust, that player could claim a windfall tourney win or something (choose someone who doesn't play) and you could claim a loss and carry it forward for the next year even though you actually gained 100k......I mean that's just one idea, but the CRA could have a number of problems treating poker players unfairly like this.

LOL, I know right. If only there was like a 25k/year cap on taxes I think all the full time players would snap call.