I am not sure if this post is in the right forum, but it seemed the most fitting. My question is mainly concerning the correct way to cash out in the US.

If I wanted to cash out over 10k what is the best way to do this? And how exactly do you go about reporting it for taxes if online poker is "illegal" in the US.

Lets say I wanted to cash out an even bigger chunk...something like 50k. Do the same rules apply?

I understand that online poker is illegal in the US bc they cannot tax it, but if you are honest and report your checks that you get as income do the same laws apply?

Help me out here....thx

Whether income is legal or illegal, moral or amoral, etc., if you're an American and Congress hasn't specifically exempted that income from taxation, it's taxable and must be reported on your income tax return. Gambling income is taxable.

Gambling income is reported as Other Income (line 21, Form 1040) for the amateur or on Schedule C for the professional.

Not reporting the income is tax evasion, and that's a felony. Also, remember it's not your cash-outs that matter; rather, it's how much you earn on the sites that determines your income.

-- Russ Fox

Yeh but how can they know how much I have left on my account after cashing out some?

So you are saying that even though online poker is considered illegal in the US, if I took a 10k check to the bank and deposited it, then claimed that 10k as gambling on my taxes I would be legal? They arnt going to ask questions about why I am recieving a check from a bank rather then cash from a casino or payout from a legit gambling establishment?

Dont ask Russ Fox for advice on how to evade taxes or how to evade detection of tax evasion.

And if others choose to give such advice, you have only yourself to blame if you follow it and get caught.

Under US tax laws it is YOUR responsibility to accurately report your income, however it was obtained. Failing to do this is a crime.

Hoping the government doesnt catch you committing this crime is silly. They may not, but you will pay big time if they do. And they have their ways.....

And as for playing online poker, where did you get the idea that that is a crime? Not from this forum.

Skallagrim

I am not sure you understand the point of my post...

I am not trying to figure out a way to beat the system. I am asking for your advice on how to do things legally. The exact steps taken to do so.

Here is an example you can answer....


You have 40k in your poker account, you want to cash out 15k. You request a check from FTP/Stars and it comes in the mail within a month.

Now you take it to the bank and deposit it and tell the people at the bank that it is from a large online service provider. A week or however long goes by and the money is in your account after being verified. All is well....until the end of the year when its time to report the 15k to the government.

once again my question is....how do you report this to the government if online poker is considered "illegal". If its reported as "gambling" 2ndary income they will not ask questions as to why it came in check form from a bank etc?

Or is it ok to report it as "online gambling" because you are being honest and reporting the income so it can get taxed.

this is the area I am unclear on....

Playing online poker is NOT a Federal crime. And is likely not a crime in all but 2 states, and maybe not even there.

No provision of the tax code requires you to report your gambling income as anything other than "gambling income." If you insist on telling them it comes from PokerStars you are a fool. If the IRS audits you, you have to provide back up records, true; but even there rules exist to help you - which an expert can and will explain because you would be a true fool to go to an audit without an expert accountant/tax lawyer.

And all the above could have easily been found out by searching this forum, as it has been explained, oh I am guessing, about 30 times before.

Skallagrim

Also, the process is to pay taxes on what you made for the year, which has nothing to do with your $15K withdrawal. If you search the forum, you'll find plenty of information.

Velvut:

The IRS is more concerned with how much you made than it is with where or how you made it. Also, you don't have to incriminate yourself on your taxes. So, if you think that you could be prosecuted for writing, "Online gambling", then you wouldn't have to write that.

That said, who said online poker was illegal? I do not believe anyone has EVER been prosecuted for playing online poker. Anyhow, when you file your taxes, you do not need to tell the IRS you are engaged in online gambling. Instead, you just write, "Gambling Income" in the "Other Income" box. For all the IRS knows, you went to Vegas and won the $15,000 playing Roulette. Of course if you get auditted, you'll need some records showing your sessions. However, even here, a person does not have to incriminate themselves. We have the 5th amendment which protects us from doing that.

Later, you may want to file as a professional gambler. You'll need help from a tax accountant to do that. The important point here is that you need to declare your income somehow--and until you file as a professional, the way to do that is by just writing in "Gambling Income".

brag on 15k cashout