Treating my poker like a business II: Taxes

Every year poker seems to be the reason that I do not get my taxes done by the April deadline. Doing your taxes as a non-professional player is a total pain.

If you do things correctly, you should keep a thorough record of you session wins and losses. However HEM does not output SNG results by session the way it does for cash games so as a result I had to import every tournament into a spreadsheet, then take subtotals of every day to get my session wins and losses.

The grim reality is that even if you only won a few thousand dollars you may have a net win of tens of thousands of dollars and to properly report you have to take the total gains then later on subtract the total losses rather than just use the net figure. If you have $10K in net winnings you may put yourself into a stratospheric tax bracket by having to report $100K in gross winnings as income before you can reduce your income back with the net losses. This can also put you into a serious bind as far as the alternative minimum tax.

Thankfully I didn't play enough this year for it to be a problem and by next year I believe my activities will earn me the right to be able to file as a professional poker player.

However it reminds me that keeping careful notes on playing and coaching income is extremely important. As I was digging back through my old HEM database on a now defunct computer I realized that I need to place a lot more emphasis on doing some of this work periodically so that I don't have to do it all at the end. It takes time but if I work to keep up during the year, I am hoping that by next year I can file at the regular tax deadline and avoid paying interest on the taxes I owe.

It also reminds me that I need to be voluntarily withholding some poker income so that I don't have to cut a big check at the end of the year.

Of course Dusty's book again covers this topic and I found myself thinking about it as I spend almost 10 hours getting this info together. Anyways, another year done. Hopefully my accountant can sort out the rest.

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