For those of you who actually pay taxes on your poker winnings...
 

How do you define each "session" in order to come up with the total wins and total losses numbers that the IRS requires?

I really, really, really hate how stupid the tax codes from 40 years ago are in regards to gambling income.

Since tax time is coming, here is a good thread I started last year (that was pretty much ignored by everyone but pshabi, you tax evading sons of bitches):


Do you guys bother doing that? If you're doing it another way, what are you doing?

If you don't report any of your poker income, GL rolling those dice.

Do you think I need to claim anything i cashed out, very small amounts? (<$500)

If you've made any money at all playing poker, you are legally obligated to claim it on your taxes. The amount of the cashouts do not matter.

Serious Q
 

What if you were a losing player? Are you still obligated to report your wins and losses and thus be taxed on your winnings and have your losses be able to be written off?

If so thats ridiculous btw

one session = calendar day for me. Based on my understanding of the tax code and how it applies to internet players, which I have tried my best to figure out, this is a reasonable definition.

OK. Here's the naked truth.

Let's say you're a young single guy who does not own a home, thus has no mortgage interest to deduct so you normally take the standard deduction. ($5,350.00 this year, I think)

Say last year you netted -$500 based upon $8,000 in winning sessions and $8,500 in losing sessions.

OK, so $8,000 goes on page 1 of form 1040 as *other income*. Now, to deduct you losses you MUST itemize deductions, so on schedule A, you enter $8,000 for *gambling losses* (can't deduct losses in excess of wins). Now if you do not have a ton of medical expenses, you're not going to find much more in other deductions - state and local taxes paid is one, medical is probably out since those are in excess of (I think 2.5% of your AGI and you just inflated your AGI by $8,000), so lets say you have a total of $10,000 in deductions.

Your additional deductions now that you've lost the Standard Deduction are $4,650, but your additional income is $8,000.

Thus you are going to pay taxes on $3,350 of additional (by non-existant) income.

As I've said before, I understand the IRS' logic. This is based on a B&M world, where the IRS understood that the average casual gambler will not claim the $500 he/she wins at a casino on vacation either through ignorance or a "who cares" they can't catch me" attitude, and the truth is, the IRS does not have the resources to chase that money. So they based the algorithm on the concept that they soak the people who a) make enough from gambling that they know there's a good chance of getting audited, or b) know the law and are (I'll be kind here) are honest to a fault.

One last point. This is by far not the only example of what is fucked up about the US tax code.

Here's how I do it, the old fashioned way.

I write down each session on paper. A session is either a) a tournament, or b) a cash game. For cash games, I define a session as a given game (LHE, for example) at a given stakes level in a given day.

There used to be a great free poker diary online, but that disappeared about 3 years ago. The one the Hendon Mob has on their site is better than nothing, but its cumbersome to use and the sort function is nothing like the old mypokerdiary.com

As for what the IRS thinks, my CPA friend says that as long as a system for reporting is internally consistant and there is the impression that it represents an honest attempt to comply, the IRS is fine with it. There is no GAAP regulation for gambling.

Do they think my way is fine? No idea. I've never been audited in my life.

I'm sure there has been a thread EVERY year that I've been on the board. I'm almost sure this question, as well as every other conceivable question was answered in them.

Wish we could get someone TP to go back and pull them all up.

And btw, Zy, the answer is yes and it is ridiculous.

I spent about 60k last year without a job, pretty sure I'm gonna get audited when the only income I report is interest earned on my savings accounts (~$600).

I think you're safe....just as long as there's no paper trail with the hookers and blow.

This is my understanding of it too. My accountant look into this for me in detail a few years ago, and basically came back with a shrug of the shoulders for what I'm SUPPOSED to do, since the tax code is so outdated. When I showed her some PT stats and how I planned to group them by daily session and the numbers that resulted from that, she strongly believed that would be fine. She said if I was ever audited and pulled out all that data, she thinks the IRS would basically be fine with it and move on quickly.

It just irks me so much... I'd much rather report a "session" as like the net at the end of a given month or something, but I know that's not right, so I do my day by day thing. If anything, I'm actually too conservative with it, since I split out cash games and tourneys and HU SNGs, etc, potentially resulting in multiple sessions per day and thus higher gross numbers (the same net number, of course)... But without going insane trying to combine everything into exact daily totals, this is the best method I've come up with.

As for old threads, follow the link I posted in the OP and you'll find some of the old stuff, including a link to the thread from the year before when I explained everything in detail (and I think answered Zy's question) and so on.

But yeah, in a nutshell: Unless you lost EVERY session you played, you are required by law to report your total wins and your total losses (even if the net number is 0 or negative) to the IRS. Will they ever catch you if you don't? Realistically, probably not... but you need to ask yourself if this is a risk you are willing to take. I for one would not like jail time, so I try to avoid it at all costs.

Last comment: If the shit ever hits the fan, don't think pleading ignorance will get you off the hook, because it won't.

From the horse's ass mouth:

Last comment: If the shit ever hits the fan, don't think pleading ignorance will get you off the hook, because it won't.

One comment on this so we don't scare too many people. Unless you either fail to report a large sum of income (I won't even claim to know the threshhold), or you try to dodge it once they catch you, the IRS will usually just send you a bill and give you payment terms if you can't pay all at once. However, this presupposes that you haven't repatriated the funds in such a way that makes it look like an obvious attempt to hide the income from the start. That's called "structuring" and is treated much more harshly than straight out non-payment.

From the code:

To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.

Next time I'm at a B&M I'll be sure to ask for a receipt when I walk out down $50. :rolleyes:

Right... realistically, if you are a losing player and don't report anything, the IRS will never be the wiser... or care, because it's likely little or no money out of their pocket. But if they suspect that you have intentionally not reported (or misreported) income in order to avoid paying them their fair share, that's when things will get ugly.

My accountant told me it really depends on who shows up to do the audit. She said many of them are nice, reasonable people, who are happy to work to find a quick and fair resolution. But she said there are also some real pricks, who find joy in going after every last dime, inflating your income and discarding as many deductions as possible, basically making the auditee's life a living hell. So... try not to get that guy if you ever do get audited.

"Other records" include your own personal records. Every poker player should keep SOME sort of records for all of their play, so this really shouldn't be too much of a problem for most people to produce.

Pokertracker may not be the best tool for actually determining the number of sessions. Plus, if you play live, it's not of much use at all.

One of the online session tracking sites may be a better option. Try or .

No taxes here in Aus :)

But yeah my accountant thinks I will be audited

Wow... must be tough to take it so seriously when the IRS clearly doesn't care?

Trust me, they care very much. Its just that the IRS doesn't *create* the rules. They just enforce those that already exist. Congress makes the rules, and they have had no interest in clarifying the existing vague rules for a few reasons.

1.) they're a bunch of idiots
2.) they only care about posturing about "saving" us from those evil online gambling sites to make themselves look good.
3.) The U.S. tax code is only comprehensible to those few lawyers and accountants who make it their life's work to understand it.

Clearly, the only logical thing to do is to repeal Amendment XVI :eek: ;) :thumbsup: :talktothehand :donkey :cool:

No taxes over here in britain on any gambling wins so we do not have this problem
Now can somebody explain to me how the usa can tax you on something they made illegal

1. It's not illegal.

2. You are required by law to report all of your income, regardless of how you earned it. Lots of big-time gangsters have gone down for tax evasion, because that was the easiest way to bust them - Al Capone comes to mind, but I could be remembering wrong.

sorry i worded that wrong is it not illegal for usa citizens to transfer cash onto a poker site.I thaught that was why party poker had to shut to usa citizens

It's "illegal" (loose definition) for the BANK to process the transfer. Party shut down U.S. play because they are a public company and were worried about how it would look if they were doing anything that could even be misconstrued by the general public as illegal... which obviously happens all the time. I mean, you are a poker player and don't fully understand the law (nothing wrong with that, btw - just saying)... so it only stands to reason that the average non-player would also assume "Online gambling is illegal in the US." At least that's how the people I know and meet seem to think.

Still a horrible decision by Party, IMO, but whatever. Their stock price tanked when they made the move, so goody for them.

Well i suppose we are lucky over here our government has sense and has acually regulated the online poker industry.I know why party shut down to usa citizens its lawyers and the city of london advised them that being a listed company they could be laying themselfes open to huge fines until the law in usa was acually clarified.The intresting part of all this is now how the usa is facing huge fines from wto for its stance about online poker.
Another point of intrest our government has a white list of online poker companys that are allowed to advertise on uk television 3 companys not on that list are pokerstars ub and ap three of the biggest sites.They all have 1 thing in common they are all regulated by the kahuna indians [prob spelt wrong] our government does not think there regulations are strong enough and offer very little protection to the people playing on the sites