Brief Overview of US Tax Laws

Tax laws in the US apply to poker winnings too. A number of US poker players feel that they can hide their poker winnings from the government, which is just not true. Irrespective of whether poker players play offline or online, the government has ways of finding out exactly how much they spend and win.

Card rooms in land casinos, for instance, are required by law to log each gaming session, generate W2Gs and submit them to the IRS along with players’ private details whenever players’ winnings cross the $5k mark, generate currency transaction reports whenever players spend over $10k, and report suspicious player activities, if any.

Many players feel that they can hide their online poker winnings, but this is just not true. The government uses the latest technology available to keep track of players’ financial details. Online poker players got a rude shock back in 2007 when the government cracked down on major eWallet solutions and even started a fake payment processing company to find out exactly how much US players were losing and winning playing poker. When the feds seized major online poker rooms on Black Friday, they got a lot of player information from these rooms. Therefore, nothing much escapes the eye of Uncle Sam, and players will be on the safer side if they just declare their winnings.

Players can declare their poker winnings as recreational players or professional players. Most full-time employees who just play poker for fun declare their poker winnings as recreational players. They will be charged only the standard rates and will be exempted from paying social security and Medicare taxes.

On the other hand, players who file as pros will have to pay social security as well as Medicare taxes, but can deduct poker-related expenses such as travel, accommodation, office expenses, computer and Internet, and so on.