I designed a spreadsheet to allow for planning one's yearly poker cash game career in anticipation of negative poker tax effects, for both amateur and professional players. It yields some crucial, counter-intuitive results.

The download link and instructions are here, and examples and chart explanations are here.

The spreadsheet calculates your effective certainty-equivalent payoff (the equivalent amount of fixed, non-poker salary that is equal in after-tax expectation to your random poker results) from a year of poker play, according to your personal circumstances. In addition to a few lesser effects on tax and risk aversion, the spreadsheet accounts for two major poker tax effects:

1. the nondeductability of a losing year
2. the loss of the standard deduction for amateur players

In a year without stable US internet poker where many of us may only be playing a few thousand hands for the year, the probability of a losing year is much higher than we're used to, as is the size of the effect of the loss of the standard deduction relative to our expected poker profits. Some of us could easily end up being -EV for 2012 even if we're winning players, depending on personal circumstances and frequency of play. This spreadsheet calculates the effective bottom-line results.

I'm sharing this because this is a legitimately important tool that everyone should check out, especially part-time players who only play in the occasional home game or make the infrequent live cardroom trip. I expect there are plenty of us in this forum who are in this category for 2012 and are also honest on their taxes.

I'm happy to take feedback or comments here, and I hope this will be helpful for some of you.

I've actually been thinking about this.

Between my new job (which means I think I will play a ton fewer hours in 2012) plus the still loss of the standard deduction I'm not sure I could still make much money (tougher games too which doesn't help). I'm hoping to buy a house this year, if I do then I'd itemize anyway with the mortgage interest deduction so then it would be fine. If not though I'm not sure I'll play enough and make enough to actually make enough money to overcome the extra I'd have to give the government due to their, IMO, antiquated and basically just stupid way of counting gambling. My state nets and that is close to the only thing I'd say my state government does correctly.

Yeah, I'm in a similar spot myself, except without the house, so I have very few other itemized deductions. It's unfortunate.

Good of you to do! Thank you for putting this out there.

Wait what why do you lose standard deduction as amateure played?

An amateur player cannot report their net poker result for the year. Instead, they report the sum of their individual winning sessions as income, and then deduct the sum of their losing sessions as itemized deductions. For a taxpayer that would otherwise take the standard deduction, this causes the player to either lose the value of the standard deduction (assuming losing sessions exceed the ~6k) or to be unable to deduct losing sessions (if losing sessions are less than the ~6k).

one-time administrative bump in advance of 2+2 software upgrade