The season to be jolly has come and gone. Now U.S. citizens enter into a new season, one that might not be so jolly for some — tax season. April 15th is on its way so get out your pencils, notebooks — you did keep all your records didn't you? — calculator and computer and get ready for the long haul. Better yet, hire an accountant and better than that, hire an accountant who specializes in counseling poker players.
Ann-Margaret Johnston, author of How to Turn Your Poker Playing into a Business is one such accountant. A poker player herself, Johnston is able to understand the mindset, lingo and lifestyle of those she counsels in her craft. A trip to Las Vegas nearly ten years ago switched on the proverbial light bulb for Johnston, who had at that time been a licensed CPA for 13 years. She saw the need for someone to counsel poker players and gamblers specifically on how to work with their winnings and how to write off their expenses. "I knew I could connect with the players," says Johnston, "I play poker so I know where they are coming from and what their concerns are."
More than ever, accurate tax reporting is important to live and online poker players alike. The Internal Revenue Service has made it easy for live tournament players to make sure all of their winnings have been reported by providing forms to casinos and card rooms that are to be submitted at tax time, detailing prize information. Knowing what are considered appropriate deductions, however, can help offset those winnings. Don't forget those comps for rooms and meals… all are considered income.
Laws such as the UIGEA and seizure of gambling monies and information from companies such as Neteller can arouse suspicion at the IRS, based on information gathered through these sources. "No one knows what records the federal government has had access to during these arrests and seizures," says Johnston. "We have no idea what they know about those accounts. Should a player end up being audited by the IRS, the first thing they (the IRS) do is check bank accounts. Deposits into accounts had better add up to the amount listed on the front of the return or you have a lot of explaining to do."
One misconception among online players is that if you leave your winnings online and only take out under $10,000, the IRS does not need to be notified. Money in an online, offshore account is not necessarily safe from taxation. According to Johnston, you were living and earned that money in the United States which makes it subject to taxes, regardless of how you try to justify it.
Tax advice? According to Johnston, "Keep good records. Keep a log book and record every win, loss and expenditure." Specifically, keep track of dates and types of buy-ins, the name of the casino or online card room, amounts that you won and/or lost. Keep W-2Gs and any other tax related forms from the card room, cancelled checks, credit card records, ATM slips for withdrawals and any casino receipts that you accumulate along the way. If audited, you will have all you need to keep your hide out of trouble. And your accountant, such as Johnston, will love you for making her job easier!
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