Ann-Margaret Johnston is a certified public accountant, the author of How to Turn Your Poker Playing into a Business, and a poker player in her own right. She fell in love with the game during a trip to Las Vegas in 1997, and today she has more than 150 professional poker players as clients. Just as there is strategy in playing poker, there is a strategy to filling out your taxes, and Johnston was nice enough to sit down with us and share some vital information.
Thank you so much for taking time out of this busy season to talk with us. Other than tardiness, what is the most frequent mistake poker players make when filing their taxes?
Other than tardiness? They’re all super-late [laughs]. The biggest thing is people don’t keep up with how they’ve done all year, so now they have to scramble to gather everything. It’s really hard to get players to keep up with their expenses – especially when they’re at the World Series for six or eight weeks. Unfortunately, they then end up paying more taxes than they need to because they didn’t keep their taxi or meal receipts.
What other things can players write off?
The first thing you can write off is my fee [laughs], because I’m fully deductible. You can also write-off Internet – if you play online, which most people do – cell phone, subscriptions to places like CardRunners or PokerVT. If you play at home, then you can write-off your monitors, computers, desks and chairs you use too.
In order to receive these write-offs you have to be recognized as a “professional” poker player. How can one achieve that?
This has to be your main source, and only source of income. You cannot work at Home Depot and also be a professional poker player – the IRS won’t allow that. You can work somewhere for part of the year and then turn pro – I’ve had that happen – but you can’t have another job.
What advice would you give to an amateur player who is lucky enough to hit a big score, but doesn’t qualify to be a professional?
If you do anything else besides poker, like play the horses, bet sports or even do scratch-off tickets, you need to save everything you can for the rest of the year. All of those things are write-offs against that tournament. If you hit a big score but you have a great job so you’re not going to quit and play for a living, then you’ve just got to keep everything you do with gambling. Not your expenses, just any gambling you do.
At what limits should players start to focus on their taxes?
All limits. Remember, anything that goes into your bank account – from any source at all – is traceable. If you don’t file that money in your tax return, the IRS is going to wonder where it came from.
Which clients are harder to work with - online players or live players?
[Laughs] Online players are the worst, absolutely the worst. I’ve got a ton of Supernovas and a couple of Supernova Elites as clients, and when you’re playing that many games it’s really hard to keep up with what you’re doing. Online players are also difficult because they’ve been sitting at home, not thinking about taxes, not keeping up with it, and they’ll call me on April 11 telling me I have to do their taxes because they are trying to buy a house, etc. [laughs].
With the legality of online poker floating in limbo, should players be worried about reporting their success on the virtual felt?
No, you shouldn’t be worried at all. We’re going to put “gambling” on your tax return, not “online poker,” because – the last time I checked – gambling isn’t illegal. I tell everybody that you have to claim this stuff because as long as you have it on your tax return, you can’t get in trouble for tax evasion. Look at Al Capone, tax evasion was the only thing they could get him for because he was so good at hiding everything else.
As a player yourself, what’s the best part about working in the poker industry?
I love it; have the best of both worlds. I can play poker for fun and make some money here or there, but I love working with poker players because I can sort of get my fix through them. I was watching the WPT Festa al Lago the other night, and I saw about seven of my clients during the episode. Matt Affleck has been one of my clients for a long time and seeing him do well at the World Series was great. It’s such a thrill to see these guys do well.
How often do you play?
I play maybe one or two sit-n-gos online every night. I always go to the World Series – I’m going twice this year – and I’m staking my husband in the Seniors Event because he’s turning 50. I always play the Ladies Event – which I hate, but I always cash in it – and I always try and go down to the PCA. That’s where I had my biggest score, finishing 3rd to Vanessa [Rousso]. As soon as tax season is over, I’ll be playing a lot, and one of my clients is sending me some videos, so I’m really going to try and take it to a different level this summer.
Is there anything else you’d like to add?
I have normal clients and poker-player clients, but I put so much time and emphasis into my poker-player clients because I know they’re so young and all of this is so new. I really take the time to help them understand what’s going on and try to make them aware of taxes – even though we all hate them; they’re a part of life. I also give them a lot more leeway than my other clients. My cutoff for taxes was March 25th, but some of my players will be sending me stuff the week of April 15. Laughs If any other client did that, I’d say no, but I understand that this is new to these guys.
*Photo courtesy of WebstaurantStore.com.