Taxes

[Kworb]

Does anyone have a clear understanding of these gaming sites and if/how your winnings are taxed? I think I read on here that WW reports your winnings to the IRS, but how does it work for other countries? Does King.com do the same? What about PayPal? Most of my winnings are actually still on my PayPal account because I don't want to look suspicious moving all this cash to my bank account. But if PayPal also reports it to some government agency then that's of course quite futile.

I don't even know whether it would matter, because skill-based games are such a grey area in tax legislation, and in my country they don't seem to be taxed at all.

[Jacob]

I've e-mailed customer support in the past, and it's been told to me that King.com will send you a 1099 form by the end of the year if your winnings exceed $600. My winnings exceed well over that, and I haven't been asked for my taxpayer ID/SS yet. Odd...

Paypal does not report your ledger to the IRS -- however, the IRS *CAN* request Paypal to turn over your records if they deem it necessary (you somehow triggering an audit, inconsistent numbers with your bank deposits, etc).

IMO, play it clean and report your earnings to the IRS. You won't have to pay a huge percentage of taxes on your winnings, and if you're slick enough you can get away with certain deductions (utility, computer equipment, entry fees, etc). I was thinking about dodging taxes too, even on a freelance thing I do where the company will not be sending me a 1099...but if the IRS knocks on your door, it's just not worth it. Be honest!

[Kworb]

I also pay for stuff directly from PayPal, like CDs, my webhosting, other subscriptions, etc. Do you think I should report everything, or only the amount I transfer to my bank account?

I never even filed taxes for 2007, never heard anything from that either. But I agree with you that honesty is best.

[Jacob]

I shouldn't be giving advice on taxes to that extent...if I were in your shoes, I would just report the amounts that were transferred to the bank account. My Paypal ledger is really messy too, so if the IRS wants to get more info from a nobody like me, they'll have to spend some time determining what everything is.

Just curious, what's the most you've ever had in your Paypal account? I'm trying to keep my account below $1,000 since I've heard horror stories of accounts being frozen for having too much money onhand. Hoarding everything onto the Paypal account would be really nice, but it's risky...

[Kworb]

I think the most was about 1200 euros. I'm not too worried about my PayPal account getting frozen, customer service has always been kind to me. But I have my credit card and address and everything attached to it, which has lifted all limits, as far as I know.