Withholding Tax
Greetings all,
I'm trying to get my ducks in order for the upcoming tax year and I'm a bit confused about losses. (Don't worry I have many)
Example: bring 1000$ to casino and win a 2000$ jackpot. 600$ is held back and I'm given 1400$.
If I lose it all that day, are my losses 2400$ (my own + 1400 I won) OR just the 1000$ ?
Or am I looking at this all wrong?
Any help would be appreciated.
Cheers
I'm trying to get my ducks in order for the upcoming tax year and I'm a bit confused about losses. (Don't worry I have many)
Example: bring 1000$ to casino and win a 2000$ jackpot. 600$ is held back and I'm given 1400$.
If I lose it all that day, are my losses 2400$ (my own + 1400 I won) OR just the 1000$ ?
Or am I looking at this all wrong?
Any help would be appreciated.
Cheers
Comments
There's a thread on here with a recent case, where this was confirmed by a judge.
(Unless you are talking about winnings in the USA)
If you now have lost the $1,400 remaining plus your original $1,000, I would think your net loss for US tax purposes would be ($400) = $2,000 + (-$2,400). As a result, you would be entitled to get back your full $600 of tax withheld on the $2k jackpot. Although how do you prove that you lost the $2,400? That is likely the tough part.
Track most if it with players card, otherwise your supposed to keep records of dates and amounts etc.
I have all the info, I just can't make sense of it although I think Jah has it right.
For the CRA, your poker winnings/losses are only taxable if this is a primary or regular source of income. If you do not earn a significant portion of your income/losses from poker then you needn't even report this to the CRA. If you were a net winner, this could lead to tax payable.
if you try this with the CRA, be careful as you may need to report on poker income for the rest of your playing days....
The US though is a different story. You should have been given a 1042S with the income of $2000 and foreign withholding tax of 600.00. If you weren't then get it from the casino. If they take the tax they have to give you the form as they will be filing an electronic record of their withholding on you at the end of the year and will have given that 600 to the IRS in the week that they earned it. They need to balance all this stuff to the freakin penny.
Since you have traceable losses you can file a return with the IRS and offset your income with those losses and reclaim the tax. Even if you didn't you could file a return but you wouldn't get anything back but what would be the point. Since you had a buy in value and other poker related losses you can claim those against the income and get the tax paid back. You may or may not require an ITIN to perform this filing (international tax id number) which is essentially the foreign version of their Social Security Number. you may want to consult an accountant that is also a CPA to do this as the American forms while very well documented with user guides are in a different language if you aren't a CPA yourself. It really is quite weird and I've dealt with reporting 1042, 1099's for years ( a 1099 is very much like a T5 for americans but with different versions for dividends, interest and other)
So, if you are good at reading the american forms, do as Blondfish says and get the gain/loss report and file with the IRS and/or just eat the loss and don't report to the CRA your income or losses if you don't make a significant income from pokie and gumby.
again, not tax advice. just rambling steam of consciousness sort of stuff that may or may not make sense.
You can't prove profitability in courts, so you can't show poker is an income. I do believe this is ideal, and I suspect it to remain this way in Canada at least in the long term.
By "profitability" I mean that there is no accepted formula or proof in a court that a poker player is "profitable". Doesn't matter if its 5 years of profits or whatever. I play 180 man games mostly and the variance requires more games than one can play in a year to prove profitability (http://forumserver.twoplustwo.com/showpost.php?p=41917200&postcount=1). Nearly all games are set up like this (think about 1k entry mtts etc the variance is higher).
I can look up some citations. But the case I read was that a guy voluntarily paid taxes on poker winnings because he quite his regular business to play poker full time. He later realized that he shouldn't have to pay these taxes and asked the CRA for his money back, which they refused. He lost the provincial case, but escalated it to the supreme court. The supreme courts judgement was very firm, citing 7 reasons why this man would be given his money back, and poker is not to be a taxable income in Canada.
That was fairly recent, I'll try and post it with quotes, I'd certainly be willing to read anything relevant that is more recent as well!
I don't know our legal system super well, I think its a supreme court judge ripping a provincial judge a new one tho:
Here are the points, I numerated them, and cut some parts out from the link above. It might "seem" there is still some gray area, but this player wasn't the average player, they were likely quite organized, these points have an underlying tone that a poker player will never meet these tax playing requirements. That's how I understand the laws were written and what they mean to reflect, and as I understand it this Judge sees that, and meant to lay the debate to rest firmly:
Bad part about that decision is that poker is deemed a "game of chance" under Canadian Law.
Variance is STILL a bitch.
Another key difference I think is the money that was being raked OUT of the US, was a strong ("international") economic leak for them (at least in the FBI/DOJ's eyes and many lobbyist groups backed by irl Casino's). If the new poker stars resides in Canada, it might in some ways guarantee Canadians are allowed in the pool. Maybe the government can just take a bigger cut from Amaya, and save themselves government site run operating costs and hassle.
Since stars is the monopoly most Canadian monies rake stays more within the country with no change to regulation. It's probably not insignificant that we have many of the top players in the world too. I do allude to this is my writing on "moral poker" that intelligent governments even if corrupt are very happy to having poker not taxable for the players, and wouldn't want to change that.
And then there is the economic invisible hand that supposedly fuels and drives all these things as per Adam Smith's writings.
But if it remains a "game of chance" then there is NO WAY the government will ever allow private entities into the game, in terms of private card rooms, etc. The only chance the poker players had of getting that particular change was for poker to be deemed a "skill" game. In Canada, that chance is now toast.
Ok I got this. Our loop hole is the game is skill, but you cannot prove your profitability from results. It's there, but it needs to be turned into a legal argument. Stay tuned >:D
(don't hold your breath tho, just hang out and do stuff)
Is it just about the money? If there is no money present but just cards is it legal? This could be done very easy by automatic escrow, where the monies never enter Canada. It would be too cumbersome now, but as "software" develops (or ethererum is released early next year) it might be easier than current methods (withdraw via atm).