Poker Tax

Have you ever thought of becoming a professional gambler? It seems that everyone and his brother are becoming professional poker players these days, but every story that sings the praise of these players leaves out the fact that these players have to pay taxes on their winnings. Unless you are Joe Hachem, the 2005 World Series of Poker Champion who managed to avoid paying takes on his $7.5 million dollar win due to Australian hobby and tax laws, you are going to have to report your poker winnings as taxable income, if you live and work in the United States. The US government considers all income as taxable, even if the source of that income is outside the US. As most poker rooms are based in Gibraltar or the Isle of Man or similar places, the question may come up, but rest assured, you need to declare that income.

There are a number of special rules that apply to pro gamblers and the IRS, and in the end the best piece of advice is to sit down with a tax pro. Tax prep software is great, but it can’t really compare your personal situation as a pro and as an amateur and give you advice on the best way to go, like a CPA or other tax pro can. Do ask for experience however; if you are going to pay for their services you want to make sure they have dealt with gambling winnings before.

If you are considering the wisdom of not declaring your earnings, keep a few things in mind. Yes, it may be pretty hard for the IRS to figure out that you won a few extra grand playing poker online last year, but if they do just keep folks like Al Capone and Richard Hatch in mind; the IRS really doesn’t like it when people don’t pay their taxes. Bank accounts will be checked for deposits, and each one will need to be account for, and if you have more than ten grand in an online payment firm, such as Neteller, odds are good you are going to get audited anyway.

So, there may be some hassle in paying taxes on your gambling winnings; but it’s a small price to pay for the fun of playing poker online, right?

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