Paying Taxes On Online Poker Winnings
As we all know, there are only two certainties in this life – death and taxes. They may even be more connected than you think! If you don’t pay your taxes, the strenuous contention of the IRS coming down on your assets and holdings could very well result in a faster journey to the after-life.
Americans have often asked the exact same question: Am I required to pay taxes on online poker winnings?
The unfortunate answer: Yes!
By law, any income you have is taxable. Whether you worked in the labor industry for it, bought a lottery ticket and won it, or played hours upon hours of poker to get it, the IRS wants its share of it.
The most common argument is that Americans aren’t supposed to be playing online poker, so how can you admit to breaking the law and paying taxes on it at the same time – it’s a double-edged sword, right? Wrong. Online poker is not actually illegal in the United States. It is illegal for a financial institution to transfer funds from you to your offshore, online poker room, and vice versa. The player has little, if anything, to worry about.
Look back into the history books of organized crime bosses. Al Capone was labeled for some hellacious criminal activities, but was it he actually went to prison for? Murder? Money laundering? Bribery? No, no… Al Capone was sent up for tax evasion! All of the money his criminal activities produced got him busted when he didn’t fork over a chunk of it to the IRS.
The fact is, the IRS doesn’t care too much how you got your money, so long as they get to scoop a portion of it for themselves.
Another common misconception is that online poker winnings are not taxable because they come from offshore (overseas) online poker operations. Again, the Internal Revenue Service is not concerned with where the money came from. They are merely determined to get their hands on it.
Think about it. If you owned a shipyard that builds fishing boats, and sold 5 of them to a guy in Australia, do you think the US government is going to say “oh, no… you keep that. It doesn’t qualify as income”? Absolutely not…
Tracking Online Poker Winnings for Taxes
The IRS has set guidelines for tracking live or online poker winnings. The player is required to keep an online poker log of all sessions played, including winnings and losses. If you’re hopping from one table to the next, tracking every session may be difficult, so it is generally accepted to track daily online poker winnings for tax purposes (not weekly/monthly/annually).
The following information is required:
-Name and address (physical or web address) of gambling establishment.
-Date and activity (type of gambling; i.e. poker) of wagers.
-Names of fellow participants.
-The amount of winnings or losses incurred.
It is recommended to record all online poker activity as quickly as possible at the end of a session or day so as to ensure accurate data.
Do Online Poker Sites Confess Winnings to the IRS?
If you look at the privacy statements of most online poker rooms, it will specifically state that player information, including financial info, winnings and losses, will never be divulged to any person, place or other entity, including tax services.
If you choose not to pay taxes on your online poker winnings, that is your decision, and the online poker site is not going to rat you out for it. But the IRS is the nosiest organization known to American man. It doesn’t always matter if there’s a paper trail leading back to your taxable online poker winnings. Like a shark to a chum bucket, the IRS can, and likely will, find you!