How do taxes work for winnings from online poker/gambling sites based outside the US?
If you win $50,000+ from an online poker/gambling site based outside the US, is there any way to cash out the money without having to pay taxes? If not, can someone explain how taxes would work?
I am not a tax professional, but I can provide some general information on this topic. In the United States, gambling winnings, including those from online poker and gambling sites, are generally considered taxable income. Even if the site is based outside the US, if you are a US resident or citizen, you are still obligated to report and pay taxes on your gambling winnings.
To report your gambling winnings, you would typically include them on your tax return as “Other Income.” You must report the full amount of your winnings, but you can also deduct gambling losses up to the amount of your winnings. To do this, you need to itemize your deductions on Schedule A of Form 1040.
If you win a large sum, such as $50,000, it is especially important to keep accurate records of your gambling activities, including dates, types of wagers, and amounts won and lost. This documentation will be essential if you ever face an audit or need to prove your losses.
Keep in mind that tax laws and regulations can change, and individual circumstances may vary. It is always best to consult with a tax professional to ensure you are correctly reporting and paying taxes on your gambling winnings.
You may want to contact a tax specialist or CPA, but my understanding is that since online gambling is illegal your only option for taxes is to report it under “other income earned” on a tax form. It’s like a catch 22 since it’s illegal earnings, but yet the government also wants to tax those illegal earnings. I’ve heard advice of getting an account with an offshore bank and taking out cash from an ATM so that it’s not as tracable if you were audited. You might lose a % with fees and such, but your best bet may be to keep it in cash so there aren’t as many paper trails to follow. If you do end up paying taxes on it you would pay in the high bracket like a lottery winner, upwards of 35% I believe.
My advice, if you’re really making that kind of money you’re either good or lucky. In either case look into a trip to Vegas and keep everything legal so you can enjoy your winnings to the fullest without worrying about the FBI knocking down your door.
American citizens are subject to taxation on “all worldwide income”. Therefore your gambling winnings, even if they were produced offshore are taxable. You would have to claim the income and be able to deduct certain expenses (like losses), etc..
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Since no tax was withheld you are required to file quarterly tax estimates and pay the tax. Your only problem is the the income is illegal. Which mobster finally went to prison but it was for income tax evasion by not paying taxes on his illegal mob money.
The prior answers are generally pretty good, but be careful about deducting any losses. You will be required to prove those losses and you will be required to prove that you are “in the business” with an intent to make a profit.
You can’t just do it for a hobby – it has to be your chosen profession in order to take a deduction.
I just had to correct Patricia L. You can write off hobby income losses and expenses up to the amount of the winnings (including gambling winnings.) However, in case the IRS audits you, it is strongly recommended you have proof of the loss.
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