You have a good life.
As a Poker Stars pro, he can often be found at the EPT (European Poker Tour), and PCA (PokerStars Carribean Adventure). He also was featured in the 2016 World Series of Poker Main Event. ©2009-2013 Poker Chang.
You have a supportive family, a nice set of friends, and a decent job.
Whenever you find free time, you play poker with your friends and relatives and for some strange reason, you get to kill the game and win almost every time.
Although it’s impossible to win each hand you’re dealt with (even Phil Ivey has to fold a hand from time to time), you have a sense of what’s going on at the poker table.
When we play, we must realize, before anything else, that we are out to make moneyYou think you have the steel to win poker matches, especially in your home games, but have you ever thought about earning a second income from poker?
If this is the first time you’ve heard of playing poker as a source of secondary income then you’re in for a treat. A fair warning though, I don’t suggest that you gamble your lifesaving’s away.
All you need to do is be smart about it and plan in advance.
Start off with the extra cash that you have and make sure you don’t blow your hard-earned money away.
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Don’t give poker a bad name
Bull going all-in!You’ve cards flying up in the air together with limped bodies and cowboy boots.
Poker is often associated with cowboys and westerns thanks to much Hollywood movies we’ve seen.
If not westerns, poker (and other card games) is often played in sleazy and dingy card rooms.
Rats won’t stand a chance in these filthy places much less you, the poker player.
Whether we like it or not, that’s the poker environment we’ve grown accustomed to: polluted, covered with cigar smoke, and dangerous.
Let’s thank the poker gods (and ESPN) because the descriptions above aren’t close to real card rooms and casinos.
You don’t see dudes from the ‘hood with guns toting at you. Instead, you’re more likely to find businessmen, math professors, MBA degree holders, and more plain average Joes.
Of course there are sharks (professional poker players who make a living out of the game), but with the right preparation and steady bankroll, the idea of earning a second income from poker is very possible.
The Reality of Poker: Gambling versus Sport
A scene from the movie Rounders.“Guys around here will tell ya, you play for a living, it’s like any other job. You don’t gamble, you grind it out. Your goal is to win one big bet an hour, that’s it. Get your money in when you have the best of it. Protect it when you don’t. Don’t give anything away. That’s how I paid my way through half of law school. A true grinder. You see, I learned how to win a little at a time” – Mike McDermott.
Are those lines familiar to you?
If they’re not, they’re from the opening scene of the movie Rounders.
We can get a lot of card philosophy from the movie if you’re considering earning a second income from poker.
The debate whether poker is gambling or sport remains unresolved and to the uninitiated, poker players are often frowned upon.
But one thing should be clear: Poker only becomes gambling if you play with reckless abandon like a boxer who throws punches with his eyes closed. What goes on at the poker table – how you you’re your cool, how you react, and how you decide – is a microcosm of real life.
Poker is no different from a sought-after business deal. It’s no different from war (or the threat of it) and brinkmanship is crucial. And just like the many aspects of our professional and private lives, poker is about making decisions.
Poker is not for the faint of heart. It’s for adventurers, thrill-seekers, and especially those with entrepreneurial spirits. It’s about taking risks and calculated chances.
You must have the heart and soul to appreciate victories and the humility to accept defeat without going crazy.
Earning a Secondary Source of Income FROM POKER: How to Prepare
The Art of Poker“Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy’s resistance without fighting.” – Sun Tzu, Art of War.
It’s a scary thought, but I have to admit that poker’s a tough sport.
What’s easy these days anyway?
With that in mind, in wouldn’t hurt if you prepare before you rush into the sport.
Here’s another tip: treat poker as an investment.
If you look at poker as an investment, you won’t squander your cash in casinos and online card rooms like you have a cash flow that never runs out. Every investment has risk and to keep that always in mind will help you protect it.
Play within your means. Don’t be blinded by a pipe dream. Sure, it’s sweet to see yourself at the final table of the World Series of Poker with Phil Ivey on your left and Tom Dwan on your right.
Don’t mistake the money you win for fame, glory, and wealth. Think of your winnings as windfalls that could help pay the bills or the vacation you’ve been longing for.
What’s important is to play the blinds that won’t hurt your wallet.
Remember: your objective is to make poker a source of secondary income, not make you poorer. You have to grind it out.
Set Targets
Set your target.Set yourself a goal each time you play.
Put a reasonable monetary target.
There’s no shame if your goal is to win $100 per four or five hours of playing poker every day.
Poker 3 of a kind vs straight. One-outers on the river to crush your massive favorite.But how often do these 'long-shots' really come in?
The point is to build your bankroll big enough to augment your current income to support your family’s or friends’ financial needs.
Here’s another Rounders treat for you: “You can’t lose what you don’t put in the middle.”
Be wise when you play poker and make it a source of secondary income.
Poker Journal Vs Poker Income 2017
All the other players sitting with you at the table are out there to take your money, too.
Variance and bad beats will show their terrible heads from time to time, but you can control your losses if you leave yourself outs.
Who knows? Maybe the next time you re-read this article in front of you – this article that spawned your desire to consider earning a second income from poker – your monetary target is no longer $100 per night, but $5,000 or $10,000 or more!
I don’t know where you live or from which part of the world you come, but there are plenty of places you can go to find a good poker game.
- Search for local card rooms within your vicinity.
- Check out the tables and their swings.
- Observing how the regulars play will give you an idea how strong the players are.
You can use what you observed and assess whether your game is good enough to play head-on with the veterans of the card rooms. You can have a feel of what’s going on around you by playing face-to-face with other poker players.
However, live poker games in card rooms and casinos have disadvantages.
Here they are:
Online Poker Games
Not as good as live but still…If you can’t handle the distance and you want to avoid additional cost, don’t worry.
Online poker games abound it’s like choosing from live card rooms, too. Below are three examples of online poker sites that you can try if you prefer to save more money:
Learn More Poker
Learn more poker.Finally, learn from the masters of the game.
Sure you can beat your buddies at home even when blindfolded. You can rip them off and take their barbecue money.
However, when you go pro – at least from earning a secondary income standpoint – it wouldn’t hurt to read about the game.
Chess grandmasters would spend thousands of hours playing. They also spend loads of time reading and studying chess books to up their game.
Go grab a poker e-book. Read Doyle Brunson’s Super System. My personal favorites, for some strange reason, include Phil Gordon’s Little Green Book of Poker and Daneil Negreaneu’s Hold’em Wisdom for All Players. You could also try the books of Phil Helmuth, Barry Greenstein, and Gus Hansen.
They’re all worth reading. https://ninpublic.netlify.app/casino-happy-day-praha-1.html.
Watch videos how the pros play and bluff their way. Watch Ivey, Dwan, Esfandiari, Mizracchi. Sooner or later all else will become clear and you’ll have an arsenal of tricks that could help you increase your bankroll.
Besides, when you’re just starting with the game, you learned the rules and felt it as you went along.
This time, you have to be smart. Really smart.
That’s how you prepare if earning a second income from poker is what you want.
I will leave you with an inspirational video from Doyle Brunson and after you can start playing some real poker.
Totaling a taxpayer's Forms W-2G, Certain Gambling Winnings, for the year would seem to be the straightforward way to determine the amount of gambling winnings to report on a tax return. Forms W-2G, however, do not necessarily capture all of a taxpayer's gambling winnings and losses for the year. How are these amounts reported and substantiated on a tax return? Does the answer change if the taxpayer seeks to make a living as a poker player? Do states tax gambling differently?
There are many nuances and recent developments under federal and state tax laws about gambling and other similar activities. With proper recordkeeping and guidance, a taxpayer with gambling winnings may significantly reduce audit exposure.
Income and Permitted Deductions
Under Sec. 61(a), all income from whatever source derived is includible in a U.S. resident's gross income. Whether the gambling winnings are $5 or $500,000, all amounts are taxable.
A taxpayer may deduct losses from wagering transactions to the extent of gains from those transactions under Sec. 165(d). For amateur gamblers, gambling losses are reported as an itemized deduction on Schedule A, Itemized Deductions. The law is not as kind to nonresidents: While nonresidents must also include U.S.-source gambling winnings as income, they cannot deduct gambling losses against those winnings. Nonresidents whose gambling winnings are connected to a trade or business may deduct gambling losses to the extent of winnings, however, under Sec. 873.
Poker Journal Vs Poker Income Tax
Case law and IRS guidance have established that a taxpayer may determine gambling winnings and losses on a session basis.
Neither the Code nor the regulations define the term 'transactions' as stated in Sec. 165(d). Tax Court cases have recognized that gross income from slot machine transactions is determined on a session basis (see Shollenberger, T.C. Memo. 2009-306; LaPlante, T.C. Memo. 2009-226).
What Is a Session?
In 2008, the IRS Chief Counsel opined that a slot machine player recognizes a wagering gain or loss at the time she redeems her tokens because fluctuating wins and losses left in play are not accessions to wealth until the taxpayer can definitely calculate the amount realized (Advice Memorandum 2008-011). This method is also recognized in both Schollenberger and LaPlante, as a by-bet method would be unduly burdensome and unreasonable for taxpayers. To this end, the IRS issued Notice 2015-21, which provides taxpayers a proposed safe harbor to determine gains or losses from electronically tracked slot machine play.
Under Notice 2015-21, a taxpayer determines wagering gain or loss from electronically tracked slot machine play at the end of a single session of play, rather than on a by-bet basis. Electronically tracked slot machine play uses an electronic player system controlled by the gaming establishment—such as the use of a player's card—that records the amount a specific individual won and wagered on slot machine play. A single session of play begins when a taxpayer places a wager on a particular type of game and ends when the taxpayer completes his or her last wager on the same type of game before the end of the same calendar day.
A taxpayer recognizes a wagering gain if, at the end of a single session of play, the total dollar amount of payouts from electronically tracked slot machine play during that session exceeds the total dollar amount of wagers placed by the taxpayer on the electronically tracked slot machine play during that session. A taxpayer recognizes a wagering loss if, at the end of a single session of play, the total dollar amount of wagers placed by the taxpayer on electronically tracked slot machine play exceeds the total dollar amount of payouts from electronically tracked slot machine play during the session.
There is little to no guidance defining a session for other casino games, such as poker. Furthermore, because there are different poker game formats (cash and tournament) and game types (Texas hold 'em, pot limit Omaha, etc.), it is unclear whether the one-session-per-day analysis would apply to poker in general. A taxpayer who plays different types of poker games may have to record separate sessions for each type of poker game played each day.
In a 2015 Chief Counsel memorandum (CCM), the IRS concluded that a taxpayer's multiple buy-ins for the same poker tournament could not be aggregated for purposes of determining the reportable amount on a taxpayer's Form W-2G (CCM 20153601F). This analysis implies that the IRS may view each poker tournament buy-in as a separate gambling session. A key point leading to the conclusion was that the buy-ins were not identical because the tournament circumstances were different each time the taxpayer made an additional buy-in.
Requirement to Maintain Accurate Records
In Rev. Proc. 77-29, the IRS states that a taxpayer must keep an accurate diary or other similar record of all losses and winnings. According to Rev. Proc. 77-29, the diary should contain:
- The date and type of the specific wager or wagering activity;
- The name and address or location of the gambling establishment;
- The names of other persons present at the gambling establishment; and
- The amounts won or lost.
It is hard to believe the IRS would disallow a taxpayer's gambling loss deduction solely because the taxpayer did not write down in her diary the names of other persons at her blackjack table. The IRS does acknowledge that a taxpayer may prove winnings and losses with other documentation, such as statements of actual winnings from the gambling establishment.
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Special Rules for Professional Gamblers
The professional gambler reports gambling winnings and losses for federal purposes on Schedule C, Profit or Loss From Business. A professional gambler is viewed as engaged in the trade or business of gambling. To compute business income, the taxpayer may net all wagering activity but cannot report an overall wagering loss. In addition, the taxpayer may deduct 'ordinary and necessary' business expenses (expenses other than wagers) incurred in connection with the business.
Whether a gambler is an amateur or a professional for tax purposes is based on the 'facts and circumstances.' In Groetzinger, 480 U.S. 23 (1987), the Supreme Court established the professional gambler standard: 'If one's gambling activity is pursued full time, in good faith, and with regularity, to the production of income for a livelihood, and is not a mere hobby, it is a trade or business.' The burden of proof is on the professional gambler to prove this status.
Despite receiving other forms of income in 1978, Robert Groetzinger was held to be a professional gambler for the year because he spent 60 to 80 hours per week gambling at dog races. Gambling was his full-time job and livelihood. Notably, Groetzinger had a net gambling loss in 1978. Thus, actual profit is not a requirement for professional gambler status.
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In addition to applying the standard established in Groetzinger, courts sometimes apply the following nonexhaustive nine-factor test in Regs. Sec. 1.183-2(b)(1) used to determine intent to make a profit under the hobby loss rules to decide whether a taxpayer is a professional gambler:
- Manner in which the taxpayer carries on the activity;
- The expertise of the taxpayer or his advisers;
- The time and effort the taxpayer expended in carrying on the activity;
- Expectation that assets used in the activity may appreciate in value;
- The taxpayer's success in carrying on other similar or dissimilar activities;
- The taxpayer's history of income or losses with respect to the activity;
- The amount of occasional profits, if any, that are earned;
- The financial status of the taxpayer; and
- Elements of personal pleasure or recreation.
What if a professional gambler's ordinary and necessary business expenses exceed the net gambling winnings for the year? In Mayo, 136 T.C. 81 (2011), the court held the limitation on deducting gambling losses does not apply to ordinary and necessary business expenses incurred in connection with the trade or business of gambling. Therefore, a professional gambler may report a business loss, which may be applied against other income from the year.
Limitations on Loss Deductions
Some states do not permit amateur taxpayers to deduct gambling losses as an itemized deduction at all. These states include Connecticut, Illinois, Indiana, Kansas, Massachusetts, Michigan, North Carolina, Ohio, Rhode Island, West Virginia, and Wisconsin. A taxpayer who has $50,000 of gambling winnings and $50,000 of gambling losses in Wisconsin for a tax year, for example, must pay Wisconsin income tax on the $50,000 of gambling winnings despite breaking even from gambling for the year.
Because professional gamblers may deduct gambling losses for state income tax purposes, some state tax agencies aggressively challenge a taxpayer's professional gambler status. A taxpayer whose professional gambler status is disallowed could face a particularly egregious state income tax deficiency if the taxpayer reported on Schedule C the total of Forms W-2G instead of using the session method under Notice 2015-21. In this situation, the state may be willing to consider adjusting the assessment based on the session method if the taxpayer provides sufficient documentation.
Changes Ahead Likely
Tax laws addressing gambling and other similar activities will continue to evolve as new types of games and technologies emerge. Some related tax issues that will come to the forefront include session treatment for online gambling activity and whether daily fantasy sports are considered gambling. As more and more states legalize online gambling and daily fantasy sports, Congress or the IRS will have no choice but to address these issues.
EditorNotes
Mark Heroux is a principal with the Tax Services Group at Baker Tilly Virchow Krause LLP in Chicago.
For additional information about these items, contact Mr. Heroux at 312-729-8005 or mark.heroux@bakertilly.com.
Unless otherwise noted, contributors are members of or associated with Baker Tilly Virchow Krause LLP.