If you win a large sum of money playing online poker, do you have to pay taxes on your winnings?

Question

A friend I know plays a lot of online poker and he is afraid that if he were to win a lot of money and did not pay taxes on it that he would be subject to the american penal system.

Answer 1

Yeah, maplefan has no idea what he's talking about.  The US government doesn't care where you made your money, they want their cut.  ANY income is taxable.  You (or your friend) should really get the advice of a local accounting professional and not Yahoo Answers...

Goodluck.

Answer 2

I disagree with maple fan.  Some poker rooms issue you a W-2G on your winnings.  When I cashed at the WSOP, Harrahs sent me a form in the mail at year end so my poker winnings were taxable.  The local poker room that I play at issues you a W-2G anytime your winnings exceed $599.  Online is a different story.  If you play at pokerstars or fulltilt or a similar site and they are offshore, they are not bound by the same reporting requirements as the US.  Therefore, they do not report your winnings to the IRS.  It is then up to the integrity of the player to report their winnings.

Answer 3

Luckily most people who win big online never get paid so he really has nothing to worry about.

Answer 4

Thankfully, poker winnings both online and in casino poker rooms are non taxable at this time. The government is attempting to pass laws that will require you to claim any and all winnings from online gambling, but at this time, as a casual poker player, there is no need to claim your poker winnings.

Typically, the government sees all gambling in the same light. As a losing proposition for the majority of people. There are regulations, however, for "professional" gamblers. If you make a living playing cards, you are considered by the in government to having a profession, and your winnings are taxable. If you "apply skill and investment to achieve a profit", you should be paying taxes. As quoted from the Canadian Customs and Revenue Agency: "Winnings derived from a dedicated approach to gambling is taxable income".

If you do play poker for a living, there is good news. The majority of the investments made to play poker can now be tax write offs. Travel, meals, hotel stays, etc. that are involved in your poker playing can now be written off.