I have made about 30k this year in online poker (since may) with 14k of this being in the month of september (moved up to 400nl). My poker income looks like it is going to substantiently pass my regular job income which I work at 40 hours a week (for now). I play poker about 20 hours a week on average. I have yet to pay quaterly taxes on this income.

This year I have already paid more than 110% of taxes what I did last year since I was deployed to the Middle East and earned tax free money.

Am I going to get nailed with a penalty for not paying quarterly taxes because it appears that I am going to owe between 12k and 15k to the IRS at the end of the year? I plan on to start paying quarterly taxes next year though.

No.
There is no law that you HAVE to pay quarterly tax deposits if you are self employed.
It will just be a larger lump sum to pay at the end of the year.
Anyone who tells you anything different is full of it.
CSD

However I believe they can and will charge you interest (as opposed to a penalty) in some cases if you don't make estimated quarterly payments. I believe there is a threshold of withholds/estimated payments that if you pay at least that much you're okay in that regard. I think OP is at or over that threshold for this year.

Nah you'll be fine.

Estimated quarterly taxes aren't required normally, your accountant would prefer it so that when you come to him every year, he doesn't have to say, OK cut me a check for 20k and he look like the bad guy.

Plus, that money you "made" from poker could become money you "spent" on poker very quickly, so personally, I wouldn't mix it w/ my other bank accounts and hold it as a "type" of passive income that isn't "realized" yet. (That's more along the lines of info you would want if you went "pro")

Looks like I should get a CPA to start doing my taxes this year from the looks of it. I hope I don't have to pay interest for the amount I owe.

Thanks all

This is the most "required" for this year's withholding/estimated to avoid interest (if you mean 110% of your tax bill for last year).

I thought the 110% safe harbor provision only applied to underpayment penalties but that you'd still owe interest if you paid after the quarterly deadline.

I barely paid anything in taxes last year so I have paid way more than 110% of my last tax bill.

If OP timely pays estimated/withholding payments of 100% of 2007 tax, no penalty since the maximum possible 'required' estimated was paid; you are correct - if 'late' or under 100%, possible penalty for underpaying estimated tax. (read 110% for a few people)

Any 2008 tax over the max withholding/estimated that OP already paid is due when the return is timely filed.

I didn't do quarterly's last year and I was charged no penalties or interest. It does kinda suck paying it all at once, but at least I didn't get any penalties. Luckily for me (well kinda) is I bought a house a couple months ago and I get a $7,500 tax credit that I have to pay back over 15 years. So taxes will not be too bad for me this year.

Then you could consider keeping a savings account with what you expect to owe, instead of sending it now.

did you pay any federal tax last year?

if not, you shouldn't have to pay quarterlies this year AFAIK

Didn't want to create a new thread on a similar topic so I'll just bump this one with a question.

My income (80% for poker/20% from stock capital gains) was ~$30k for '08 and I didn't pay quarterly taxes and am filing as a pro.

This year I made about $20k for the 1st Q of 2009 and expect to make similar amounts in the other 3 quarters (probably slightly more).

I would really prefer not to pay quarterlies and just pay in one lump sum next April although I'm probably supposed to be paying quarterlies. I just think I can make more with all the money working for me right now. So my question is, what kind of penalties can I expect by not filing quarterlies this year and instead just paying one lump sum next April?

Interesting approach. IRS Form 2210. Looks to me like it's 3.57% of the underpayment for 2008. Probably will be less for 2009 since interest rates have come down.

Given your relatively small income for 08 and expected significant bump, perhaps a good alternate plan would be to pay the minimum required to avoid a penalty. From http://www.irs.gov/taxtopics/tc306.html So once you figure out your taxes for 08, take the total you paid in taxes, divide by 4, and send that amount to the Feds quarterly. You'll pay relatively little but will be free of penalties. Just a thought.

Thanks a lot bav, that was gonna be my next question if the interest penalties were pretty stiff. Could I just base this years quarterly payments on last year's smaller amount? and it sounds like I can do that and avoid most, if not all, penalties.

So let me get this straight, if I didn't pay taxes last year legitimately, didn't cheat but didn't make enough, and make 100k this year through poker I can just pay one lump sum next April and it'll all be good?

so...for a poker player filing as pro...what forms must one file besides the schedule C?

afaik yes

I paid $0 federal tax for 2007 income, made a lot in 2008 but didn't pay any quarterlies

Doncha love it when tax issues actually work out in your favor? Enjoy the rare victory against The Man.

'Course Russ or Jimbo or someone will come along and post "not so fast!" and spoil the party with some exception, but far as I know, you're a-ok the first year you earn income if you withhold 0 and just pay it all by April 15.

are a lot of poker players filing with Schedule AI (annualized income)?

with such a high variance income it seems most logical to do this method

meh, I guess I didn't realize you are perfectly fine if you pay 100% (or 110% if your AGI is huge) of last year's tax owed

so, 2007 tax=$0
2008 tax=>0, didn't pay estimated b/c I had no tax liability in 2007
2009 estimated payments = 100% of 2008 tax liability

am I getting this right guys, ty in advance

Close. If you have an off year and your 2009 tax estimate is less than 2008 tax, send payments to cover 90% of 2009 tax (if over $1k). If you have a very good 2009, you may need to send 110% of 2008 tax.

The 100%/110% thing was being considered for change for 2009 (110% applies if your AGI exceeded $150K). I have no clue if it ever passed and my googling is failing me. All I can find is something saying it may change.

But keep in mind, if you fail to have enough withheld, you just pay a small percentage penalty on the difference. It's not a big hairy deal to miss by $2000.

Let's say hypothetically I made 140 K in 08 but this year I haven't made a dime from poker. I don't have the the liquid cash to pay estimated taxes on money I haven't made yet so am I able to vary my payments depending on how much I make each quarter?

Yes. If you do that you have to annualize all of your income, too, so it's more work when it comes time to file. Fetch IRS form 2210 and look for Schedule AI within. In those couple cases in the past where I could have avoided some of the penalty by doing this, it was just worth it to me to pay the $10 extra penalty (or whatever it was) instead of struggling through figuring my income all over again for every quarter. It's almost like doing your taxes four times instead of once.