I Quit Cashgaming!

[cchappa]

Here's why.

In 2006, I made a modest (but unimpressive) profit of a mere $392, which I calculated as checks cut minus deposits.

In January 2007, my wife is filing taxes online. We had yet to receive my W-9 from WW, but I told her I didn't even make $400 on the site, so if the IRS even bothers with it, they'll contact us, and I might have to pay them, oh, $60 or so. No biggie. If the govt wants that money badly enough, they can ask me for it.

Well, we submitted our taxes. The first week of Feb 2007 I get my W-9. I didn't even open it. By then, our taxes had been processed, and our refund was on it way.

Fast forward to today. I get a letter from the IRS. I figured they want their $60 or so, plus some silly late fee.

Ahem: they wanted $555 plus late fee of $57, for a total of $612.

Uh.....


Upon further inspection, WW reported my taxable income for 2006 at close to $3000, not the paltry $392 I actually made. Total winnings minus the entry fees FOR ONLY THOSE GAMES I WON is where the $3000 figure came from. Entry fees for games I lost were not deducted from my reportable income.

Now, before any one says it, yes, I know, I was responsible for closely reading what was taxed. It's my fault I assumed I was only going to be taxed $392 and not $3000.

That aside, it's absolutely ridiculous that I made a profit of $392 in 2006, and owed $555 in taxes because of it. So for coming out ahead at WW, I lost $555 - $392 = $163 for 2006.

Well, I'm preparing myself for 2007 (whose tax return did not include any WW winnings, again, deliberate). "Fortunately," I fared better in 2007 ($1705 net profit), but according to how WW (has to?) report winnings, I am expecting to pay back taxes on $3400 unreported income (instead of $1705).


For this reason, I am quitting WW. I have peaked there. My money in 2007 was all Zuma, until I learned that a group of players that had been barred for being too good under false accustions of cheating (that's when I made my killing: when they weren't playing) were allowed to resume playing. My profits prettyuch came to a crawlafter that.


Man, paying more taxes than what you make is just stupid.

[Jacob]

To the best of my knowledge, entry fees can be considered a deductable under your reportable income for Worldwinner. It's an expense needed for you to conduct business on Worldwinner, right? I know a few people (both here and in the online poker realm) who use entry fees as deductables. Hell...if you're brave enough, claim your computer, claim the portion of your house that has your computer for the yearly lease, claim your electricity, etc.

I do agree about the whole tax thing though, and it's why I really, really hate losing on Worldwinner...the longer the tug-of-war is with winning and losing on there, the more taxes you have to pay. :/

[Grengoddess]

thats a shame though. you shouldve been able to deduct your entry fees from that.

my winnnings - my entree fees equalled a 83,000 net profit. Originally i was going to have to pay 17k on it. but thanks to H&R block i only had to pay 3000 dollars instead. so yea they messed up somewhere. you didnt have to pay all that.

[msufan]

Yeah man -- you have to claim the winnings, but then you can deduct the losses. It hurts on your state return because they use the number before the deduction is taken, but it should cancel out on your federal return. Please look into that!

[Renaldo Moon]

You can deduct your other losses (entry fees from games which you didn't win), but you have to claim this manually. Worldwinner, by law, isn't allowed to deduct those for you. I think the IRS hopes people will screw up on situations like this and have to pay more.

It's unfortunate that you didn't notice the situation in the past, but if you wanted to continue playing, you know how to resolve the matter now.

[cchappa]

Than you for all your feedback. My original post was more of a tilt post than anything (to borrow poker lingo).

I will contact a tax consultant to get this sorted out.

Thanks!

[TheEnigma]

Well I am in the UK and WW love to take 30% for tax reasons. There looks like some pain in the arse way of getting around it in order to reclaim the correct amount. In the uk there is no tax on gambling or skill competitions!

[LostInSpace]

How can you tell how much money you've lost, unless you actually keep a tally yourself? I don't think I'm in any danger of having to pay anything, but I don't know how many games I've played, I wasn't keeping track.

Let's say I've won $500 playing, payed $100 in entry fees on the games I've won, but lost $300 of that playing... They're going to say I've won $400, even though I'm only UP $100? That's kind of stupid if they do that! If they can find the games you won, they can find the games you've lost and subtract that to see what you've really won.

I've barely won anything and haven't cashed out anything either. I've been up to a high of about $150 and I'm sitting at $75 right now. I'm guessing on the winning games I've played I'm probably up in the $300 range after I subtract the entry fee.

Do they only consider money that you've cashed out as winnings for the year?

[afort56]

Worldwinner tracks all this data. When your "winnings" cross $600, WW will require US citizens to submit a W-9 electronically with Social Security number. They will then send you a 1098-Misc at the end of January for every year. For foreign players and others who don't want to fill out the W-9, WW will allow you to opt for 28% withholding from all winnings. For example, you play a 5-player, $1 game, winner gets $3.50 normally. If you opt for withholding, you would win only $2.80. ($3.50prize-$1.00entryfee=$2.50winnings-28%withholding=$1.80+$1.00entryfee= $2.80 prize with withholding.

It's either the W9 or the withholding, otherwise WW won't let you continue to play cash games.

[LostInSpace]

So if I've "won" $300 in the games that I actually won (minus the entry fee), but then lost another $200 on the games I didn't win...

Do they consider me "winning" $300, even though I am actually only $100 ahead, because they don't subtract the losing games?

Plus... Do they only count "winnings" on money that you've cashed out, or will they say you won money even though you've never cashed out anything?

If that's the case, you could've actually have "won" hundreds or thousands and never even really won anything. Then they'll make you report your "winnings", even though there are no winnings. Then it's up to you to have to report the losses.