Hey all, what is the basis someone needs to prove that they are a pro poker player for tax purposes (ala can write off losses and take business deductions such as meals and mileage)?

I play poker tournaments and travel kinda a lot around the northeast and just wonder if I had any shot at not listing poker as a hobby. I’m going to guess no I would not be able to list as a pro player as I have a full time job and only travel for poker day 12-15weeks a year.

I keep good records, down for the year due to tournament run bad, but have many miles I could acct for/ gambling losses from sports/ horse racing if I was having a winning year.

I’m going to guess I should just list one score as income and not go through trouble of potentially being audited. I Guess what should I do down the road to try and prove a point of being a pro tourny player if I do have a big score?
I keep solid records (all tourny tickets), plan to play 70-80 mtts a year which prolly could acct for 30% of my full time job salary in buyins, keep track of miles etc, travel a lot, study (pay sub fee for training sites), etc.

Hey feel I could make a case for being a pro however not sure the irs would agree with it. Thanks for any thoughts on this topic.

I hit a score under 10k at the end of this year.... still down in mtts for the year. Just find it obnoxious I’m probably going to lose 2-3k of that score due to taxes + if I wanna write off gambling losses up to wins,..... I’ll lose my std deduction.

I assume you make more money at your regular job.

Tough to overlook that Basic criteria.

Not even close. I’m down money from gambling for the year. Even if I had a winning year (say hit a 30-60k score), I would make more money from my normal job.

Because of the horrible way CT taxed gambling wins, I switched to filing as a part-time poker pro after moving there in 1998. I always made more money from my regular job until 2004. Never had an issue, never got audited. You should be able to file as a pro even if that is not your largest source of income.

However, you are unlikely to be permitted to file as a pro, especially the first time, if you are losing money at it. That will likely be seen as a tax dodge, and disallowed.

Having said that, it may not hurt to try. Now, if you would have owed money filing as an amateur, and then owe less money (or even get a refund) when you file as a pro, there is a risk. When they disallow your pro status, they could say you underpaid, and were therefore late in paying what you owed. They could then add on a penalty plus interest. However, if you are due a refund filing as an amateur, but would get a larger refund filing as a pro, then there couldn't be any penalty or interest, they would just refund you the smaller amount.

Overall, probably don't bother to file as a pro unless there is a net profit after considering all losses and expenses.

None of this is legal, tax, or accounting advice, as I am not a lawyer, CPA, or accountant. Following this advice is at your own risk. Everything I have said above could be completely wrong.

Cheers, Greg Raymer (FossilMan)

Thanks for this response! I will probably file as an amateur and just pay taxes on one big score (a tad less than 10k) for the year. I can’t write off tourny losses as I believe it would be less than the std deduction anyways.


I will def keep better records. For the year, I have a lot of losing sports bet tickets and horse racing stubs however I didn’t keep a tally of winnings as you lose ticket when you cash in.

It sucks bc say I cashed for 40k and had buy ins of 20k. I have a ton of travel miles, hotel expenses etc for poker tournaments. I probably would try to file as a pro if I had a gain and needed to write off some of the gains. This being if my tax preparer said it would be advisable to try and file as a pro.

Meh it kinda sucks that one score can really kill my taxes. I’m going to owe 2-3k on one score when I’m a losing mtter for the year (maybe played 60 mtts for whole year). My expenses for travel for year with hotel and miles prolly could easily acct for 5-7k (not sure exact fig but ballpark it at that). I guess would the irs look down on it if I had a 20k profit and used these standard expenses as a way to lower my tax hit (miles for travel, hotel fees, dining fees, losing sports bet / horse racing bets, subscription fees for poker training, etc)?

I believe you are incorrect in your understanding of how you can write off losses. Even if you are not a professional, you can still write off your gambling losses from your gambling wins (you just can't write off mileage, travel expenses, training costs, etc...).

Get a CPA, who is familiar with Poker/Gambling. For example Russ Fox is definitely one of those and he will handle everything for you.

Disclaimer: Similarly to Fossilman, none of this is legal, tax, or accounting advice, as I am not a lawyer, CPA, or accountant. Following this advice is at your own risk.

No, it looks like he has a good understanding. Russ Fox has posted about this in this forum, as well as many others. As a non-pro, wins get reported as Misc. Income on your 1040. Losses, up to the amount of wins, can be taken as an itemized deduction only, not netted against wins. OP states that his losses are less than the standard deduction, so he wouldn't itemize and therefore can't deduct his losses.

Another thing I gotta ask. I know for most smaller buy in players, scores will
Be in say the 300-4k range. I would assume most players don’t report these miniature cashes as the govt has no real way of tracking them (meh I assume they don’t look at Hendon mob to find all scores by a player that aren’t reported for tax purposes). It’s safe to assume there is almost no risk in just having your bigger scores reported and no need to report small scores that never will
Be reported by the casino correct?

Almost....is probably true. However, you are required to report all earnings (even the $50 wins,,,) so....you would be filing an incorrect tax return.

I’m pretty sure the casino only informs the irs if the score is 5k or above the buy in. I could be wrong but I would like to think the casino doesn’t give additional information if not required by law. People tend to chop for a cash to be under 5k in smaller tournies for a reason.

Btw it seems really unfair that they want us to report all cashes. I can’t just give them a list of my actual winnings (tourny cash total - tourny buy in total = net profit which should be taxed).

However if I have 3k in small cashes, I have to pay 30% tax on this fake income bc I actually am losing for the year. Just seems like a really bad tax system. Seems like they almost want people to cheat the game but just my thoughts.

It's not that they want people to cheat. It's that they don't want people to gamble. That's the underlying reasoning for the unfair tax code. It's social control through taxation.

It is true that casino reporting to the IRS only occurs for tournament payouts which are over 5K net (winning about minus buy-in amount). When you don't also report smaller wins, you care committing tax fraud. But it is correct to say that probably most players don't report those tournament winnings on their tax returns. It is also likely that the IRS doesn't care much, hence their rule (not in the law, just a rule) that reporting is done only on the over 5K net payouts. I imagine someone in the government did the math to determine that the manpower and resources necessary for tracking the smaller stuff outweighs the monetary benefit to the govt. It certainly wouldn't make even the tiniest of dents in our national debt.

should...yes this seems fair to me as well.


OK...so this 30% tax seems to me to be contrived imo.

IF you are in the 30% bracket, I assume your regular job pays you well. This has two consequences that don't add up to me.

1. In the 30% tax bracket I would assume you can itemize. If so, then you CAN essentially report the net. You report all winnings (each winning session totaled) as earned income. You then are allowed to deduct losses up to the amount you won.

2. If you earn enough to be in the 30% ....you "should" have enough assets (accumulated wealth) that..... you should have interest in keeping. I would much rather pay all the tax that I am legally responsible to pay than to "gamble" by under-reporting income and have the whole shebang come tumbling down because you got a random audit (rare, but they still do happen). Why gamble for such a trivial amount??!?

fyi
24% tax brkt rate for incomes 82K-157K
then jumps to
34% tax brkt rate for 158K-200K
(there is no 30% brkt...but I understand generalities and the combining of fed, state and local)

This is my understanding as well.

I’m not sure what the exact tax rate is.... however you would have to pay federal + state taxes (and I’m not sure about ss/fica). How would the us govt find out about small cashes though. That would be a lot of research for something that doesn’t really even count as a drip in the bucket. If someone doesn’t report 3k in small cashes it seems like it doesn’t matter and I assume almost 100% of players that cash for small tournies don’t report.

Also if I do itemize, I lose 12.5k std deduction. I’ve cashed for less than that this year so it’s pointless.

One more question- hypothetical say I cash for 50k in mtts, 20k in buyins, and then have sports betting losses of 2k and 5k in horseracing. We can bucket these losses to offset our gains if we itemized correct? I most likely in the future will keep better records of horse racing and sports betting gains/losses to offset.


This year, I prolly have 500-1k in horse racing loss tickets and a few hundred in sports betting losses. I haven’t kept records of my wins so I wouldn’t even really be able to give them an accurate accounting for actually profit if I did itemize.


Also, I bet horses on tvg seperately. I see on the site they issue tax forms for certain big scores. I hit a pick 6 2 times that paid $1100 (2200 total). I was kinda surprised I didn’t get a form issued for that but lucky also. The bets were 80-120 total so I’m guessing that might be why but no idea. I’m going to be screwed if I have to report my tvg like income. I wanna say I have 15k of winning bets for the year and 18k in losses. I have no idea how they classify this but if I have to add 15k to my income..... I guess I’m going to itemize bc I’ll have a ton of wins/losses total for the year. (Say 11k in live mtts, and 15k in horse racing bets). No idea how tvg goes about sending forms at year end.

Yes, correct. All betting losses from any type of gambling, including poker, can be offset against poker winnings when you itemize. Just add it all together to put in one figure for your gambling losses.