Although it’s an obligation for any poker player to pay tax, understanding requirements of the existing tax regulations can be challenging. It must be remembered that knowing these laws will put you on the right side of the law. Ideally, the majority of tax regulations vary from country to country with others treating poker winnings as part of taxable income where your winnings will attract a tax. However, there are other sets of laws that have transferred the obligation for paying taxes to the gaming companies. It’s therefore more important to understand specific tax regulations that exist in your area of operation.
For example, the United Kingdom has different tax laws than most countries. If you’re planning of playing poker in the United Kingdom, you’ll not be expected to pay taxes after humiliating your opponents at the poker table. Sources revealed that the UK exempts gamers from paying as part of their broader plans of encouraging gamblers to spend their winnings in this country. Meanwhile, gaming firms are expected to remit between 20 and 50 percent of their gross revenue to HMRC to cover for gaming duty. This will also play to any income-generating activities that these companies will take part in the United Kingdom.
The law that gives an obligation to betting companies to remit taxes in behalf gamers was established by James Gordon Brown when he was the Chancellor of the Exchequer. It was agreed that betting companies should be allowed to remit i5 percent of their gross earning as taxes in behalf of customers. The law was later amended amendment in 2005 to include off-shore companies together with online casinos. Subsequently, this will slightly different for a Briton that wants to play poker in the US. Assuming that you staked $15000 in a single bet in the US and won $25000, your $3000 will be subjected to income tax withholding.
Even though winnings are exempted from tax payment, there are procedures that you’ll be required to follow in case you want to reclaim your withheld income. Chiefly, you’ll be required to fill W8-BEN form that will be used to establish your foreign status. This is followed by reporting the gambling winning that was withheld through filling the W2-G form. And before presenting a passport to prove your identity, you’re required to apply for taxpayer’s identification number. More importantly, part of these laws that includes taxing any revenue generated from free seats in playing ground will not affect poker players.
Unlike Britain, everything that you’ll earn in the US while playing poker will be subjected to taxation which varies depending on the amount involved. The United States has tax regulations that condition players to report their winnings to the IRS and any failure will have a severe consequence on the gambler. It’s worth noting that any income that you generate from gaming is taxed and is part of other revenue. The process of filing your winning returns depends on the amount involved in one session which IRS defines as a continuous play at one table. This means that whenever a player moves to a different table, it will be considered as two sessions.
When you make less than $4000 in one session plus an advance payment, the regulation demands that it should be included while filing your income returns. Although the casinos don’t offer forms that will help you in reporting winnings, this should never be a reason to abdicate your tax obligation. Whenever a gamer makes more than $5000 in one session, the casino will be expected to withhold 25 percent of the total winnings if you provided your tax identification number. Sad news for gamers without tax identification id since they will be forced to cough close to 28 percent of the total revenue.
Identically, the United States has measures in place that ensure that even gamers that are playing from foreign countries such as Australia, Canada together with other gamers pay taxes. This is because its tax payment scheme is based on citizenship and not geographical boundary. Just like other players, you’ll be required to report your winnings to IRS. One thing is clear in the US taxation system, nobody will be spared in terms of tax obligations even the process for filing will differ between amateurs and professionals poker players.