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?
online gambling usa
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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.
and oh, if you want a pic to show with your comment, go get a gravatar!
