What is my responsibility to income taxes as a ... - Finance ...

Question by Nick P : What is my responsibility to income taxes as a professional poker player ?
I have been playing poker professionally for the past few months and semi-professional for awhile before that. I?m wondering what my responsibility is going to be to income taxes? Obviously the government is going to wonder how my house payment is being paid every month when I?m not showing any taxable income. What am I going to have to do come next tax season? Would it be a good idea to somehow launder my income by opening up a front business? Any advice will be appreciated.Thanks in advance! Best answer:
Answer by

bostonianinmo If you are a professional
gambler, you derive a substantial portion-ie of your income from gambling activities on a regular basis, then you file as self-employed and report your earnings and expenses on Schedule C and pay self-employment tax via the Schedule SE.Gambling winnings are reported to the IRS via Form W-2G Sun they will be looking for them either on line 21 of Form 1040 (for the casual gambler) or Schedule C (for the professional gambler).Causal gamblers can take a miscellaneous itemized deduction on Schedule A for gambling losses up to the amount of winnings reported if they keep meticulous records. Professional gamblers report their wagers ? Typically the ?nut? going into a tournament ? as a business expense on Schedule C. The record-keeping requirements are similar for the per.There are a couple of significant differences beyond the deductions of losses. Casual gamblers Thurs not pay Social Security or Medicare taxes on their winnings as they are not treated as earned income. (Nor do they get any benefit from them at retirement time or if they become disabled.) Professional gamblers Thurs pay the Social Security and Medicare taxes. (But they DO get benefit from them when they retire or become disabled.) Professional gamblers can also deduct other business expenses related investigation as travel, hotel, 50% of Necessary meals, etc. that can not deduct the casual gambler.There?s no need to set up a sham company to ?wash? the income. If you are a professional gambler then you ARE a business by IRS definition. Any attempts to build walls around what you are doing will only bring unnecessary attention down upon you if they see it as suspicious. Why make something innocent appear suspicious? As long as your gambling activity is legal, i.e. sponsored tournaments in venues where gambling is legal, there?s no need to hide the fact that your income is from gambling.

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