https://forumserver.twoplustwo.com/5...-poker-740589/
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Quote:
How do I properly file my tax return with respect to my poker income?
Q: What is the difference between filing as an amateur gambler and filing as a professional gambler?
A: The big differences are:
An amateur player cannot report only the net of their wins and losses on their income tax return. Instead, the sum of their winning sessions is reported as Gambling Income under Other Income on line 21 on their Form 1040 and the sum of their losing sessions can be deducted (up to the extent of winnings) as Gambling Losses on Schedule A Itemized Deductions under Other Miscellaneous Deductions (see below for more on when you should or should not itemize). In the end, tax will be paid on the net when you itemize, but the gross will impact Adjusted Gross Income, which can limit other taxpayer deductions and credits. (see Tax Implications for Recreational Gamblers
(for examples)
A professional gambler nets his or her winnings on a Schedule C Business Income.
A professional gambler is able to take deductions for business expenses related to his or her gambling. Note that a 2011 U.S. Tax Court case confirms that professional poker players can take such deductions even in excess of a net gambling win for the year. For example, a professional with a losing year will still be able to deduct his "ordinary and necessary" business expenses against other income, or carry it over as a net operating loss. (see Victory in U.S. Tax Court for Professional Gamblers as well as Paying taxes on losing year? for a more detailed discussion of the mechanics of handling a losing year for a professional player). [NOTE FROM ME: With the recent passing of the new tax bill, I think it may not be true anymore that professionals can deduct business expenses in excess of gambling wins.]
A professional gambler must file Schedule SE and pay an additional ~15.3% of his or her income in self-employment tax (For 2011, it's 10.4% towards Social Security on the first $106,800 of income, plus 2.9% towards Medicare on all income).
A professional gambler may be entitled to the Earned Income Tax Credit, available for low-income individuals. (see Earned Income Tax Credit for Professional Gamblers )
Tax Implications for Recreational Gamblers
Victory in U.S. Tax Court for Professional Gamblers
Earned Income Tax Credit for Professional Gamblers
IRS Resources:
Form 1040 -- Note that both amateurs and professionals must file the Form 1040, and not either of the shorter forms 1040A or 1040EZ.
Schedule A
Schedule C
Schedule SE
Self-Employment Tax
Q: Should I file as an amateur or a professional? Must I file one way or the other?
A: This is a very complicated question that should be handled on a case-by-case basis. Most people will not have a choice, as their circumstances will dictate that they file one way or the other.
In general, if you have been making your living solely from poker and have no other job and are not a full-time student, you definitely must file as a professional. If you have a full-time job, you usually must file as an amateur. A full-time student can usually choose to file as either an amateur or a professional.
For further discussion, see Tax Court, SE TAX, and what you really HAVE to do and Better odds for pro gamblers' business deductions. A non-exhaustive list of factors that tax courts have considered in making the amateur-vs.-professional determination is available at Taxation of Gambling: Professional Versus Amateur Gambler.
*THIS IS NOT LEGAL OR ACCOUNTING ADVICE. IF NECESSARY, CONTACT AN APPROPRIATE TAX PROFESSIONAL*
Last edited by Lego05; 02-27-2018 at 01:00 PM.
