Do you have to report large winnings from online poker sites on your taxes?

Question

I know that theoretically, you might have to. But do people really report it? I'm asking because a friend of mine said he won $50,000 and had the winnings electronically transferred to his bank account. Would that transfer be reported to the IRS?

Answer 1

Yep, it would be reported, but you can also say you lost that much (or more) that year, and have it deducted from the winnings.  You can claim gambling losses up to the amount of your winnings...I do it every year...

Answer 2

Yes.  He should have gotten a 1099G from the online poker site.  Penalties and interest are very high - I wouldn't take the risk of not reporting it.

Answer 3

Yes!  ESPECIALLY with an amount like $50,000.  Banks whisper behind the scenes to the IRS when large deposits like this are made.  Poker sites WILL NOT send you any tax info, and they don't report to the IRS.  But don't think your bank won't.  

All he has to do is report it as "gambling income" on the line on his tax return.  Unless he is audited, he will not get in trouble, nor will he have to provide any additional income.  The best thing is to tell the truth.