Whether you are an aspiring pro or just playing recreationally, poker can be a lucrative hobby and even a source of income. However, like all professions, it comes with its own set of challenges including the need to pay taxes. For those who count on poker as a main source of income, this can make a big dent in the amount that you are able to take home. Thankfully, there are ways to minimise this, such as moving overseas where you can claim residency and thus avoid paying large amounts of tax.
Do All Poker Players Pay Taxes?
In general, all winnings from gambling are taxable in the US. This includes not only cash, but also any prizes such as trips or cars that are given out at events. The IRS will look at your winnings and tax you based on the normal rate of taxation for self-employed people.
This is why you need to keep meticulous records of all your winnings and losses. This way, you will be prepared when the IRS asks for your tax forms.
For some players, they may have to pay state taxes as well. This depends on your country’s rules and regulations. Luckily, the UK does not have this problem since gambling winnings are not considered taxable. If you are an international player, it is important to find out more about your country’s tax laws before you start winning big.
If you are a professional poker player, you will have to declare your winnings and pay taxes as you would any other form of income. This is why many pros decide to have a PAYE job on the side to ensure that they will be able to meet their obligations.
It is also worth noting that the UK has a gaming duty, which is collected on all games and casinos operating in the country. This tax is not payable by the players but is paid by the operators themselves.
As a result, some UK online casinos have increased their rake rates, presumably to cover this cost. It will be interesting to see if this has a knock-on effect on the winnings of players in the long run. However, it is important to remember that if you are an amateur player, you will not be required to pay any gambling taxes. This is an excellent opportunity to maximise your profits!