Does the rake not count because the person taking the rake is not in the USA?

All of it makes sense except that most audits are not full blown audits. Usually they are questioning your deductions and things like that.

I doubt that they would subpoena your bank records unless it was a full blown audit looking for hiddem income which would usually be caused by someone snitching you off. Or if you had other unreported income that WAS reported to them and that made them suspicious enough to look into you further.

I do pay my taxes, but I can guarantee you that there is no correct way to do it. Nobody has records of every session theyve ever played.

If I win $200 in the morning and lose $100 in the evening, I technically have to report those seperately...I cant just report winning $100. But what if my computer crashes and I lose my pokertracker records? You think I can remember what I won and lost from each session for the whole year?

Give me a break. I can guarantee you that if ask 5 IRS agents some of these questions about reporting the income you'll get 5 answers. A friend of mine had his taxes done by a CPA who said that as long as youre not a pro, you can just total up all your wins and losses and report the total. I know for a fact thats wrong. But thats how he filed. Its just impossible to do it correctly.

So if i just report my winnings from poker and happen to get full blown audited, you dont think they'd penalize me for not reporting them the correct way? It seems as though if i report just winnings and then get audited they could easily ask for the records of my winning and losing sessions since its clearly written down as thats how you're supposed to do it... and if I don't have it they could fine me for this. When I was referring to the numerous under 10k cash outs i was referring to the bank reporting them... i read on another forum relating to this topic from someone who worked at a bank that said numerous deposits just under 10k get reported and some banks even do 5k.

It would be much simpler if the correct way was to report your winnings... For some reason i just have this feeling that if a person were to try to not pay their taxes adn they were making alot of money... in the 6 figure range and kept it all in their bank account that the banks would definitely flag the account and report them even if they never made a transaction over 10k.

Also, what are reasons that people would get audited.... if they never know about the money because nobody reoprts it to them... what type of things do you get audited for if nobody reports you to the irs? If someone for example made 200k in poker over the course of 4 years and had it all in their bank account and decided to buy a house with the money... is there a good chance they'd get audited? Basically you cant spend your hard earned money without getting red flagged by the IRS? I wonder if it's even possible for a pro (someone making their living by cards) to not pay taxes... driving around in nice cars, constant transactions with their bank account but no job... paying house notes and all that... but if nobody reports you, even the banks... how would they even find out? Is the situation just ... "IF THEY AUDIT YOU" then you're really screwed?

This year I'm just gonna post each month as a session. Might not be entirely correct...but ti's stioll an accurate figure of my income.

ChasingItDown,

I think you are being a little too paranoid about this. You are sort of looking for monsters under the bed here.

I've been a CPA for several years (I am NOT giving tax advice here, just my personal opinion) and can assure you that the chances of the IRS auditing you are not that substantial. I've NEVER been personally audited and my income has fluctuated greatly over the last 10 years or so. I've even had a few years in the middle where I reported $0 income for the year. Trust me, there are much bigger fish for them to fry then people like you and me.

As for reporting poker earnings, Iceman is correct in that you are truly supposed to report gross winnings as part of your AGI (adjusted gross income) and losses as an itemized deduction (and losses cannot exceed gains for gambling income). You are supposed to do this on a session by session basis. I won't go into all the boring details on this but that's the general concept.

This is not universally done by most poker players because for many it's simply not possible. Not everyone is tracking all of there play session by session, definitions of a session aren't clearly defined, and the IRS didn't really have online poker and such in mind when these rules were put in place.

The “right” answer is you need to pay your taxes. What you do is up to you though. Report your winnings and losses as accurately as you can. If the only way you can do it is by looking at your poker account at the end of the month to see where you are at then that's the best you can do. Remember, the IRS only knows what your employer tells them (via W-4s) and what you tell them.

Keep an eye on the news and see if any of these "big-time" internet players ever run into IRS trouble and see what happens with it. If ZeeJustin is pulling down thousands of dollars a month and you are pulling a few hundred, why would they target you and not him?

Leon,

Im glad you piped in here. Now youre on the hot seat

I do my taxes on turbo tax and e-file, so I havent actually seen a real tax form in a while. Turbo Tax asks me if I have gambling income. I say yes and it gives me a W2-G to fill out. Normally I would have an actual W2-G if I won the lotto or won a big prize at bingo or something and I could just transpose all the info, but since I dont have a real W2-G...how do I fill it out?

Do I fill out a different one for each poker site? Its just like a W2 in the sense that you have to fill out who you got the money from ,their address and all that crap.

Im lost on this one.