How to claim online poker winnings on your taxes

Written by jeremy cato
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How to claim online poker winnings on your taxes
Online poker winnings are taxable income and must be declared on your tax return. (POKER image by brelsbil from Fotolia.com)

For some people, online poker is not just a hobby -- it's a career. You may not be earning enough to consider yourself a full-time online poker player but if you've won any money playing the game, you'll have to declare those winnings as income on your taxes. Keeping track of your winnings is not always an easy task and you may pay out more in taxes than you won online. However, since the taxes must be paid, you might as well learn how to do it right.

Skill level:
Moderately Easy

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Instructions

    Filing Taxes on Online Poker Winnings

  1. 1

    Calculate your total amount of online poker winnings. Refer to available records such as session logs and win/loss tables.

  2. 2

    Add this amount to any other income you are reporting on line 21 of your IRS Form 1040.

  3. 3

    Deduct your gambling losses up to the amount of your winnings. Add this amount to other deductions that you can claim and enter the total on line 27 of Form 1040. Do this only if you itemise your deductions on Schedule A.

  4. 4

    Total up your winnings and taxes withheld if you received one or more W-2G forms from online poker websites. Simply include the amount from box 1 with your other income on line 21 of Form 1040 and include the amount from box 2 (federal income tax withheld) on line 62 of Form 1040. If you did not receive any W-2G forms, skip this step.

Tips and warnings

  • You might consider filing your taxes as a professional gambler, but you must be able to prove to the IRS that gambling is your main source of income and you earn enough from gambling to support yourself. If you can do this, then you can report your gambling winnings as ordinary business income on Schedule C and pay a 15% self-employment tax.
  • Keep detailed records of your gambling sessions as proof of your activity. Also, keep records of bank withdrawals to fund your online poker bankroll, cancelled checks and any other documentation.
  • You can only deduct the amount of losses up to the amount of your winnings. The IRS is very strict about this. If you've won £1,300 and lost £1,625, you can only deduct the £1,300. The other £325 cannot be deducted.

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