Another taxxx question
If you are playing full-time, are you supposed to pay taxes in installments, or is it ok to pay one lump sum payment when tax time comes? I was hoping to put aside all taxes into a fixed income investment of some kind until the end of the year.
Comments
Just tell them you are self employed, and ask them the payment rules. Easy as 3.1416 lol
I'm pretty sure he'll tell you not to give anything to the gov't if they don't ask you for it. Invest the money securely and report your income at the end of the year as 'other' income. I think what you'll find is the 1st year you declare a huge amount of non-employment income, they'll ask you to start making installments, since there wouldn't be any deductions from that income.
It's kinda dumb though, since they'll assume your next year's income will be the same as this year's. How can you predict that? How many big tourney's are you planning to win? If you have a bad year, they still expect you to make installments, although I don't think there is any penalty if you fail to make an installment and your income is small enough to justify skipping the installment.
I think you are better off not saying poker is a full-time job. Anything you make in the casinos is tax free, then. You're better off working 5 hours per week at McDonald's and 35 at the casino 'part-time', if you catch my drift!
I hope this makes a small amount of sense. I'm jealous if you need to take this route...
If you work 5 hours at mcdonalds, and 35 at the casino, I'm pretty sure you can't call poker your 'part-time' job, it would be considered full-time, unless you 'forgot' to claim it. I may be wrong though...
The only reason I can see for declaring poker winnings is so you can write off your expenses. The only upside with doing that is if you're spending more than you're making. And if that is the case, how long can you support that career choice? I fail to see the upside.
Casino winnings are not taxable. If you are winning money in illegal clubs, guess what? It's illegal. Lol. I don't think I'd want the gov't knowing about that. Neither would the illegal clubs.
Talk to an accountant. A good one shouldn't charge for the first meeting. Worst case, it's a hundred bucks.
Sorry, I've taken this conversation a bit off the track. I don't see the upside in declaring poker winnings. I know the 'honesty' and 'sleeping at night' arguments but casino winnings are legitimately not taxable. Winnings from clubs may be taxable but you are opening up a can of worms if the revenuers want to investigate that.
If you file a tax return and less than 75% of your income is was not subject to withholding tax, then the government will require you to make installments next year.
And today, its called the Canada Revenue Agency.
But how about the other questions? What constitutes full time employment and income?
Is a log of wins and losses and expenses sufficient as proof of income?
What might some of the fne print be?
It doesn't matter whether your poker playing is a full-time job.
The only issue from a tax perspective is whether it can be considered a business.
This is a matter of fact, which means that the CRA looks at your situation and determines whether or not you are in the "poker business".
The CRA will consider you to be engaged in a business if:
1. You rely on the income to pay bills on a regular basis. That means your other income is not sufficient to pay your monthly bills. You also make regualr withdrawls.
2. You have a special knowledge that will minimize the element of risk / luck. Being a player that studies the game, has read numerous book, keeps notes on players, etc. will make you look like you're in the poker business.
3. Your intentions about playing. This is hard to judge but they would look at how much time you spend playing, whether you have a firm win goal and whether you trake other steps like setting up tax plans or other business arrangements.
Gambling income is only taxable if your are considered to be engaged in a business of gambling. There is no idea in Canadian tax of whether you are a "pro" or work at it full-time.
Part-time businesses are taxable just like full-time ones are.
The only key tax issue is if your poker playing has switched from being a hobby to a business.
To really determine your individual tax status, you would need to sit down with an accountant who is knowledgable in this area (VERY few are).
If you were to come to me as a client, I would need to know:
1- Your other income sources
2 - How you play - where, how often, the stakesetc.
3 - Your overall net worth situation.
4 - How much you play &how much you make from it
5 - more information if you were found to be in the business of poker so that I could recommend advanced strategies to minimize tax if it was due.
There is only a small chance of you actually being considered in the businees of gambling but it is not the end of the world if you are. There are many good tax strategies you can use to reduce / eliminate the taxes payable.
There has been only one real case where the CRA tried to get a poker player to pay taxes on his earnings but there are a few more in the works.
If you are making more than 10k or so, I'd recommend talking to an accountant about it.
I have been thinking of maybe holding a tax info session at one of the casinos to discuss these concepts in depth.
Feel free to email me if you're interested in hearing more.
I can't really give advice specific to individual situations without getting a full picture of the specific circumstances.
I'll also go on record as saying that probably 5% of poker players have to worry about paying tax on their winnings.
Almost no one reports it.
Currently your chance of getting caught if you don't report it is maybe 1%. However, the CRA knows about this issue and will be cracking down in the future, Your chance of getting caught might then be 10%.
Small risk but very large penalties (think triple the tax evaded ballpark).
I'm in favour of doing the proper thing and reporting it if you have to, but using tax strategies to minimize the taxes owed on it.
That way you are legit and pay the bare minimum.