Paying Tax in Ireland

bingobars

This issue has to have come up here before but I cant find it in a search.

So basically whats the story with paying Tax on poker winnings in Ireland?

I have made a few lodgements into the bank by check, is this something to worry about.

My understanding is we have the same rules as the UK and its tax free.

Lurker1977

Your winnings are tax free.

Ollieboy

bingobars wrote: »

This issue has to have come up here before but I cant find it in a search.

So basically whats the story with paying Tax on poker winnings in Ireland?

I have made a few lodgements into the bank by check, is this something to worry about.

My understanding is we have the same rules as the UK and its tax free.

You have to pay 120% tax on all poker winnings including a extra 10% rake, please forward the cheque to me and I'll sort it for you.

bingobars

Ollieboy wrote: »

You have to pay 120% tax on all poker winnings including a extra 10% rake, please forward the cheque to me and I'll sort it for you.

Haha Sound

Its messed up IMO in places where they have to pay tax on their winnings. Its not as if losses are deductible....

Ace2007

bingobars wrote: »

Haha Sound

Its messed up IMO in places where they have to pay tax on their winnings. Its not as if losses are deductible....

unfortunately:(

IrishKestrel

bingobars wrote: »

So basically whats the story with paying Tax on poker winnings in Ireland?

OK - so here's the boring technical answer......

Income from Poker is treated under Capital Gains Tax (25%) legislation, as opposed to Income Tax (41%) legislation.

However, S 613 of the Taxes Consolidation Act 1997 (..told you this would be boring...) covers this off.

"Winnings from betting (including pool betting), lotteries, sweepstakes, or games with prizes shall not be chargeable gains.."

and for those who like to 'stake' people into tourneys

"...and rights to winnings obtained by participating in any pool betting, lottery, sweepstake or game with prizes shall not be chargeable assets."

TRANSLATION: It is tax free income. If it was a good enough excuse for our former Taoiseach to avoid tax problems, your sorted.

Your money in your bank account is as safe as a house / bank / Fianna Fail TD / ?????.

LuckyLloyd

This post has been deleted.

zuutroy

I was reading Benefield's blog a while back and he got badly stung by the whole system, going on a big heater in December and having to pay tax on his net profit for the year of which that was a sizeable chunk, then going on a downswing of equal magnitude in Jan/Feb which he couldn't write off, meaning that even though he was BE over the 3 months, he was down X% due to taxes.

LuckyLloyd

This post has been deleted.

pok3rplaya

IrishKestrel wrote: »

OK - so here's the boring technical answer......

Income from Poker is treated under Capital Gains Tax (25%) legislation, as opposed to Income Tax (41%) legislation.

However, S 613 of the Taxes Consolidation Act 1997 (..told you this would be boring...) covers this off.

"Winnings from betting (including pool betting), lotteries, sweepstakes, or games with prizes shall not be chargeable gains.."

and for those who like to 'stake' people into tourneys

"...and rights to winnings obtained by participating in any pool betting, lottery, sweepstake or game with prizes shall not be chargeable assets."

TRANSLATION: It is tax free income. If it was a good enough excuse for our former Taoiseach to avoid tax problems, your sorted.

Your money in your bank account is as safe as a house / bank / Fianna Fail TD / ?????.

Thanks for this. Best explanation I've seen on this site.

zuutroy

LuckyLloyd wrote: »

It affects his short-term cashflow, but it would all balance out at the end of the following Tax year.

Yeah I think I'm wrong.

Here's the blog post to which I'm referring...just remember the details wrong.

I am effectively on a 2.5 million dollar downswing. I have lost over 600k in investments in the last 14 months, I am on a 750k downswing in poker (500ish today), and I just figured out my tax total that comes to around 1.1 or 1.15m. This means, I am down 2.5 million dollars. Now, that is a lot of money in anyone’s book. I highly doubt I am as rich as some of you all think (especially now).

Anyways, I was feeling pretty ok about the tax thing when I thought I had to pay out about 700-750kish. That was something I could handle. I mean, I can handle the 1.1-1.15, but I am really really unhappy about it. I know I can be like wow I am so lucky to get to pay that much money in tax! That means I made a whole lot!

Well, yes, and no. See, the retarded stupid idiotic tax system in the united states stipulates that say, I make 500k in 2008 from Jan 1 to Dec 31 and leave it all in my FTP account. Then, on Jan 1 2009, I blow it all up, I lose EVERYTHING, all of my money. Well, the US government still wants its 230k or whatever in taxes. So, you are busto, ran it all up on a freeroll, have no job, no skills, and will be paying off that 230k in taxes for the rest of your life. Isn’t that awesome? I think it’s awesome.

I wish my downswing happened at the end of last year instead of the beginning of this year. I have nothing to write my losses off against now, which is absolutely ridiculous. So basically, I need to go on mega heater for the rest of the year and cross fingers I break even. Isn’t that stupid? The last thing I want to do right now is play poker, but over the next year I am going to have to play a bunch just so I don’t get screwed on taxes. Sweet.

Lurker1977

LuckyLloyd wrote: »

It affects his short-term cashflow, but it would all balance out at the end of the following Tax year.

As long as he wins more than he loses as I don't think you can carry your losses forward to the following tax year in the US.

IrishKestrel

Lurker1977 wrote: »

As long as he wins more than he loses as I don't think you can carry your losses forward to the following tax year in the US.

You can't carry the losses forward in the US.

There's a lot to be said for the Irish system on this.

In the US - you have to declare your GROSS winnings (not your net winnings after losses). You then have to deduct your losses from this GROSS income ...... but only if you can PROVE you made those losses. You have to keep a detailed journal / accounting record of all your losses, or else the IRS will not allow you to deduct it.

Sounded harsh to me first time I heard about - but I (sad, I know) read some of the transcripts of the court cases the IRS have taken against both Amateur and Professional Poker players - casinos are obliged to inform the IRS of any winnings you earn (including Irish nationals).

Absolute Nightmare. You don't want to be an American Taxpayer, and play poker - believe me.

Fortunately, Irish taxpayers are covered under a Double Tax Agreement with the US, so we are exempt from the IRS withholding tax on any winning we might get.

Jesus Wept

GARNISH MY SALARY?!

Treehouse72

bingobars wrote: »

Its not as if losses are deductible....

Ace2007 wrote: »

unfortunately:(

LuckyLloyd wrote: »

Losses are deductible in the US.

It is my understanding that it is the non-deductible nature of one's poker losses (that is to say, every bet you make in pursuit of winning money that actually loses you money) that makes taxing poker winnings impossible. I believe this was established in UK law (and therefore ours) at some point in the 70's. The idea being that one's write-offs would be too large to make taxing the winnings viable. I think the test case that established this principle is considered pretty watertight.

Mellor

Lurker1977 wrote: »

As long as he wins more than he loses as I don't think you can carry your losses forward to the following tax year in the US.

I think you missed the point. The 3 months is too small a sample, the fact that he was break even and lsot due to tax shows nothing. If he is a winning player over both years then his loss to tax is fairly fixed as a whole.

IrishKestrel wrote: »

In the US - you have to declare your GROSS winnings (not your net winnings after losses). You then have to deduct your losses from this GROSS income ...... but only if you can PROVE you made those losses. You have to keep a detailed journal / accounting record of all your losses, or else the IRS will not allow you to deduct it.

There is no real difference between net and gross systems as far as online players are concerned. Your "gross winnings" are what you withdraw. Your losses are what you deposited, all concrete provable via credit card statements. And in fact, the system is very easy to cheat. (think about it for 10 secs, and you'll have 3 ways to by pass some)

Live is obvious more of a problem to track. But this is double-edged as the IRS would have difficultly tracking cash flow from cash games. Buy-in and cash out being anonymous a lot of the time. Again room to "adjust" declared values here also.

The only real area that it may be a problem, is live tourney pros (does such a thing even exist). But its not hard to get a receipt everytime, and some winnings are going to be off the books.

To be honest its not that difficult to keep a record if you have to.

marty smyth

http://pokerworks.com/poker-news/2009/06/25/international-federation-of-poker-elects-author-anthony-holden-president.html

if these guys get their wish to have it classified as a sport, would that then mean it's taxable?

Ollieboy

I just don't understand why any full time player would live in the states unless there a full time live player. It makes no sense at all to live in a country were you pay tax on poker winnings. You could live in Mexico drive to Vegas every weekend and pay no tax on winnings... just maddness to me.

ianmc38

Didnt want to start a new thread, but can someone here who plays full time and pays PRSI please drop me a pm to tell me the how and why etc as its something I want to start doing.

Thx.

valor

Ollieboy wrote: »

I just don't understand why any full time player would live in the states unless there a full time live player. It makes no sense at all to live in a country were you pay tax on poker winnings. You could live in Mexico drive to Vegas every weekend and pay no tax on winnings... just maddness to me.

US citizens have to pay tax no matter where they live

Moro Man

Ollieboy wrote: »

I just don't understand why any full time player would live in the states unless there a full time live player. It makes no sense at all to live in a country were you pay tax on poker winnings. You could live in Mexico drive to Vegas every weekend and pay no tax on winnings... just maddness to me.

I think you'll find it's only our fair land that you can claim (and get away with it) to be a tax exile and still work here

Zab

ianmc38 wrote: »

Didnt want to start a new thread, but can someone here who plays full time and pays PRSI please drop me a pm to tell me the how and why etc as its something I want to start doing.

Thx.

Are you looking for a contributory pension or treatment benefit?

Ollieboy

valor wrote: »

US citizens have to pay tax no matter where they live

Correct, but if you live outside the states you can become a tax resident in another state. Thats why Ireland attracted a lot of top CEO's during the boom years as are tax rate and pension breaks were attractive.

Ollieboy

Moro Man wrote: »

I think you'll find it's only our fair land that you can claim (and get away with it) to be a tax exile and still work here

Not correct, UK/Spain/Italy and a host of other countries are the same. There is always a regular thread start on 2+2 about moving somewhere else to avoid paying tax in the states etc. Ireland, Spain and UK always get mention. Thats why a lot of pros live in Monaco.

Jesus Wept

Sport :rolleyes:

ianmc38

Zab wrote: »

Are you looking for a contributory pension or treatment benefit?

Interested in both actually. I assume both fall under the same PRSI payments?

Zab

Well, that's the thing, they don't.

You can get the pension under class S (self-employed), but you need class A (normal paye type worker) to get the treatment.

When I looked into this before I didn't see a way to contribute under class S while just playing poker (you do have to meet criteria to qualify to pay under class S). You'd have to do coaching or whatever and declare the income.

If you want to pay at class A you'd have to get somebody to actually employ you. This class seems to have the most benefits.

If it has been less than 12 months since the last tax year that you paid PRSI in then you may qualify for voluntary contributions, which would get you the pension.

All of this is obviously my inexpert opinion on the subject.

ianmc38

Cool, thanks for the info. I think Roundtower might pay PRSI though I havnt seen him on boards in ages.

Zab

Ok, do fill me in if you find that I'm wrong.

Treehouse72

Yeah, I would also like to make PRSI/stamp contributions too and am a bit bummed out there isn't an obvious way to do it. I must look into this more. If anyone gets word on it a PM or post in this thread would be much appreciated.

IrishKestrel

Mellor wrote: »

There is no real difference between net and gross systems as far as online players are concerned. Your "gross winnings" are what you withdraw. Your losses are what you deposited, all concrete provable via credit card statements. And in fact, the system is very easy to cheat. (think about it for 10 secs, and you'll have 3 ways to by pass some)

Live is obvious more of a problem to track. But this is double-edged as the IRS would have difficultly tracking cash flow from cash games. Buy-in and cash out being anonymous a lot of the time. Again room to "adjust" declared values here also.

The only real area that it may be a problem, is live tourney pros (does such a thing even exist). But its not hard to get a receipt everytime, and some winnings are going to be off the books.

To be honest its not that difficult to keep a record if you have to.

If only it were that simple ........

GROSS winnings are declared on Line 21 of the Form 1040 (US Tax Return). For an online player, Gross winnings are NOT what you take out of your online account and lodge in your bank account. The IRS actually define Gross winnings. If, for example, you multitable 6 sessions of $1/$2 Hold'em on Day 1 and win on 4 and lose on 2 - then, yes, you can net these off and that is the figure on Line 21. However, if you have 6 sessions of $1/$2 NLHE, and 4 sessions of $1/$2 PLO - you are not allowed to net them off.

Your losses from playing poker are declared on Line 27 of your Form 1040. 2 basic rules. a) Line 27 cannot be higher than Line 21 and b) you have to have detailed records to support Line 27.

Next stop - the Live Player. A casino issues a Form W-2G if you win money. Classic example of a problem here is the case the IRS took against an amateur player (David Hochman). This guy wins money at a tournament but claims he was a losing poker player overall. He puts the winnings on Line 21 to match the W-2G that he knows the IRS have a copy of, and a matching loss amount on Line 27. Net effect = Zero. The IRS claimed his deductions (Line 27) were unsubstantiated and disallowed them. He took them to court and lost. OUCH!

I won't comment about your 'tax planning' adjustment ideas......... best to leave that to your lawyers!!!!!!