Professional Gamblers

Professional Gamblers

We understand gaming and the importance of each client's unique circumstance. Professional or amateur, from staking to sponsorship, online play or live, we have the experience to handle any tax situation you have. We have a consistent track record of uncompromising skill that instills trust for every client. We currently represent over 120 professional poker players who have amassed, online and live, career cashes of more than 130 million dollars and have won more than 45 WSOP and WPT bracelets.

Domestic (US) Players:

What qualifies me as a professional gambler and is there a benefit filing my taxes as such?

Are you playing “full time” with the intent of earning a living? By definition, this is your job. You don’t always have to be turning a profit for this to be your profession. To be a professional, you need to treat yourself as such. Professionals must consider themselves a business and participate in accepted business practices for the IRS to also treat them as such. Being a professional gambler allows you to take additional business expenses: travel, supplies, dues, etc. Unfortunately, a recreational gamer can only deduct limited losses against winnings.

If I gamble online or overseas do I still have to pay taxes on it?

Under the Tax Code, as a US citizen, all income is taxable, regardless of where or even HOW it is earned. With the ever-changing laws regarding online gaming, professionals need to make sure their taxes are done correctly to keep them from being criminally liable to the IRS. Each professional gambler could have many sources of income, i.e., live play, online play, tournaments, public appearances, sponsorship, royalties, etc. In this field, it is harder for the government to prove winnings and losses, especially with all of the international ties. Accepting that fact, audits can be very intrusive and aggressive, as well as expensive.

Why do I need someone specialized in accounting /tax preparation?

There are many different ways a self-employed person's income is reflected on a tax return, based on their specialty and business type. In regard to Gambling, wins and losses are also presented differently on different individual's tax returns. If a person lives in a state that does not have legalized gambling, a local tax firm may have little or no experience with gaming wins with exception of the occasional winner on vacation. The IRS has specific rules that are related to gambling, especially when done as a profession. These laws change often. Online Gaming issues have complicated matters even more since "Black Friday". Taxpayers need to make sure they are not filing incorrectly, causing red flags with the IRS. Taxpayers need to make sure their tax preparer is qualified to handle the complexity of a return with professional gambler status. Ask if they have ever ACTUALLY prepared a return for a “Professional Gambler” on both federal and state returns. Tax preparers can be uncomfortable using this status because of its rarity and complexity. Ultimately, they may be ultra conservative in handling the player’s expenses and losses instead of maximizing the true benefits of filing as a professional.

Non-Resident Gamblers

Do I have to pay taxes to the US on my gambling winnings?

This is a tricky answer! The US has current tax treaties with numerous countries which may reduce the amount of tax withheld on your gambling winnings. US gambling winnings earned by residents of the following countries is not taxable in the USA: Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russia, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom. Individuals who are residents of other countries are typically subject to a 30% tax withholding by the casino. If the casino withheld, and you are from a treaty country, the only way to get it released is via a tax return as well. Make sure to bring documentation with you if you live in one of these treaty countries. The treaty and possible withholding are based on your residence not necessarily just your country of citizenship.

I'm a non-U.S. Citizen who cashed in a US Event. 30% Federal Withholding was taken out of my winnings and a 1042-S was issued. How can I get my money back?

Individuals from certain countries may have taxes taken out by the US based casino AUTOMATICALLY. The casino is obligated to withhold up to 30%. In many cases, SOME of these winnings can be recouped.

If the individual is a “Professional Gambler”, a 1040NR (non-resident tax return) can be submitted. This return will offset expenses and other gambling losses from the same calendar year played in the U.S. Unfortunately, a person may not receive a full refund of all the withholdings. With an experienced tax preparer, they may be able to recoup a portion that was withheld. Individuals must apply for an ITIN# (Individual Taxpayer Identification Number) as part of their first tax return submitted.

What is an ITIN and how do I get one?

An ITIN (Individual Taxpayer Identification Number) is a nine-digit number that is issued by the IRS to individuals for federal tax purposes only to those who are not eligible for a social security number. An application for an ITIN is most often submitted with a valid tax return to support the need for the individual to obtain an ITIN. There are some limited exceptions to this requirement. During 2012 the rules and regulations for the Form W-7 were revised causing additional delays in the application process. VERY SPECIFIC PAPERWORK is required to prove your identity.

In the past the casinos were helpful in this process but that is not necessarily the case any longer due to all the new IRS changes. If you anticipate needing an ITIN, we recommend taking the necessary steps BEFORE your travels to the United States so you can BRING the required documentation with you. In addition to a lengthy approval process, if your ITIN goes unused for a few years, you will have to renew it, by again, providing more and more documentation.

An unexpired passport is the only document that satisfies all requirements, but if that doesn’t work for you, the IRS website lists alternative documents you can use.

What is a Certified Acceptance Agent and what can they do on my behalf?

A CAA can help you with tax return preparation, document verification, W-7 preparation and submission of the application to the IRS. The CAA can follow the process through the IRS system and contact them directly should the need arise. You won’t need to send in original documents, unless the IRS specifically requests them as part of their review process. The CAA receives notifications from the IRS about your application, as well as a copy of the ITIN when it is issued.

The CAA is a facilitator who helps an applicant and the IRS process applications for ITIN’s. The CAA follows the ITIN process from beginning to end and has to comply with IRS regulations. The CAA has specific requirements when submitting applications for ITIN’s and for record keeping. There are also responsibilities, per the agreement the CAA has with the IRS, to help the taxpayer from the time the application is prepared, through the IRS processing of the application, and until the ITIN is relinquished by the taxpayer, cancelled by the IRS, or the taxpayer becomes eligible for a Social Security number.

Theresa Fox is a Certified Acceptance Agent (CAA).