Full Tilt Poker. How to pay Online gambling tax?

Question

In CA, if a 18 year old who has never filed a tax report ever won 100K dollars in months from online poker website (full tilt poker), how does he pay the taxes? I've read many questions on yahoo answers about online gambling tax but I'm still confused about how to, where and when I file the tax ? Online poker is my only income. The thing is full tilt doesn't allow a player to withdraw that much money right away, only lil by lil. So what am I supposed to do?

p.s. How much would I pay if I have 300K in my account? Do I pay the tax when I withdraw it? I'm so confused. This is a serious question. thank you.

Answer 1

It is your own responsibility to report the tax as gambling income on your tax return.  Offshore gambling and poker sites have ZERO responsibility to report the money you withdraw from poker sites to the IRS.  But you can and should report the gambling income as your bank can and most likely will report large deposits to the IRS and your state agency.  

However, you don't have to mention where the money came from.  You can take a copy of your bank statement and have a professional (preferrably a CPA that used to work with the IRS) and go from there.  

Answer 2

I've recently run into a similar problem. My method of taking care of it was to hire a CPA to do my taxes for me. I recommend that.

How you fill out your taxes is also dependent on whether you use poker as your main income. It sounds like you do, so you will need to pay social security on your poker incomes as well if you are a US citizen.

You are technically suppose to report all money won in each session of poker. If you play any serious number of hands (like 40,000 a month+), like i would assume you do from the amount you have specified, this is next to impossible. Since your Full tilt account is off-shore and doesn't gain interest, it isn't considered in a bank account, so the IRS really has no way to find it until you withdraw it.

I typically simply report the amount cashed out and add that to my gross annual income on my taxes. So for example last year i made $50k at my day job, and 70k at online poker, i would simply report $120k and pay the difference. It really doesn't matter one way or the other. You will have to report that money at some point if you ever make it 'real'. So whether you report the money as you earn it or as you withdraw it, is simply your preference.

Remember that, you will need to pay quarterly taxes after the first year of reporting, which means you have to pay estimated taxes based on your previous year each quarter of the following year.

The best piece of advice i can give you is to get a CPA. They aren't outrageously expensive especially for the hassle they can save people like us who have very complicated and sticky tax situations.

Answer 3

Any income is required to be reported, whether it is or not is the responsibility of the tax payer. To report it simply file your taxes and list the ammount as earnings. Under occupation list yourself as a gambler. This is actually a legitimate occupation. As a gambler you can also show losses to offset your tax liability. Some go to the local horse/dog race track weekly and pick up losing tickets. Some go to local casinos and cash checks, the cancelled checks are accepted by the IRS to to a buisness loss. If you have accumulated 100k Im assuming you play in 1k+ buy in tournaments. or any tournament for that matter, go to the cashier tab and select account history, print and give it to your accountant and that will show losses as well. When do you file the tax, that is an interesting question, most buisness owners file quarterly so I would assume you do the same. I would only take the advice of a CPA on that matter as well. Regarding how much you would pay. Some say 27% will give you a good ballpark figure. Also remember that you can deduct your computer, internet service, subcriptions to card player bluff or all in magazines (they are considered trade magazines) subcriptions to p5 or any other online training site as well as a small protion of your home that you use when playing.

I think I have covered everything, but you are talking about a huge sum of money, please talk to an accountant or better yet a CPA for advice as soon as possible.

good luck at the tables.

P.S. Id love to hear how this turned out for you. Drop a line to bigg_spitt@yahoo if you care to.

Answer 4

If you want a serious tax answer, you should ask a serious tax person, not a Yahoo board...

That being said, you are "supposed" to declare your income on your income tax when you file (the normal deadline is April 15).  Full Tilt isn't going to have anything to do with the filing.  You are supposed to declare your winnings, it doesn't matter when you withdraw the money.

How much tax would you pay?  It depends on how much you won.  Fill out the tax form and it'll tell you how much tax to pay.

Answer 5

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