(1)If you win a live tournament for $100,000, you get a tax bill for $100,000. What if for the year you only end up profiting $50,000. Do you still have to pay taxes on that $100,000? or do you only have to pay taxes on your $50,000 profit?
- I'm guessing it's only on your profits as the other option would make it extremely difficult to live as a pro. Is it something like you have to prove your only $50k in the profit and hten pay taxes on that?
(2) Also, if you only grind cash for a living, there's no way to track how much you make. You could say you only profit $10,000 on the year but you really profited $100,000. Is this something the IRS just expects people to be honest about?
Disclaimer.......I will attempt to answer this question although I have never filed as a pro. If you cash for anything over 5k in the U.S. you will automatically have a w2 sent to the irs from the casino. It is up to you to pay the taxes on it. If poker is considered your primary source of income you can file as a pro and deduct travel expenses, food, etc. And yes you can deduct losses up to the amount of your winnings. So if your winnings were 100k and losses were 50k you would only have to pay on the 50k profit. The key is keeping all tournament receipts, etc. I play as a serious recreational player who takes some chances at 1k live tourneys now and then and I keep all tourney receipts in case I do actually win 100k or something. I hope this helps and I hope I'm accurate. To the best of my knowledge this is the case. Although I have no idea how it works in other countries and I have heard countries such as England are tax free for gambling. As for cash games, you are supposed to take detailed records and keep a journal or ledger or something to track your play although this can be very easy to cheat obv because there is no paper trail so to speak. (Kind of ironic online there is a "paper trail" but live there is not lol) If I'm incorrect someone please correct me. Gl gl hitting your 100k cash!
Depends on your write offs. Keep good records. I'm not extremely tax savvy. But filing as a
Prossional gambler changes a few things. And for what it's worth I report about 1/4 of what I make playing live cash and have never had an issue in the past 4 years. But I also don't deposit most of my money into a bank account.
If you are playing recreationally, you can still Itemize your deductions which would be your gambling losses. You would claim your gambling winnings (which is the total amount you have won without subtracting losses out of it) as your gross income. Then on page 2 or whatever it is, it says subtract the greater of your itemized deductions or your standard deduction from your gross income. I'm pretty sure most gamblers would Itemize because losses are an itemized deduction and they include all your losing sessions and I'm sure for most they add up to more than the standard deduction.
In the end you pay taxes on your PROFIT as a recreational player. As a pro you can deduct gas and meals and other expenses.
You guys are correct - just please, please keep good records!!!