Do Professional Gamblers Pay Tax? Professional gamblers, or those who live off the proceeds of fixed odds gambling, do not need to pay tax whatsoever on their winnings. Conversely however you of course cannot get a tax refund on your loses either. If you are a resident in another country, other than the UK, you may be liable to pay tax on your winnings. If you e-File your tax return, you do not have to send any W-2Gs or other documents to the IRS (but you must keep them for your records in case of audit). Professional Gambling The rules described on this page are for the majority of people with gambling income—those who are not professional gamblers. Essentially betting is ‘tax-free’ in the UK – the professional gambler is outside the scope of tax. This is confirmed in HMRC’s Business Income Manual at BIM22015. The basic position is that betting and gambling, as such, do not constitute trading. This is not a new precedent either. If you mean do they pay income tax on their winnings, the answer is 'it depends on the facts of the particular gambler'. if the gambling was classed as their 'trade' then the answer might be yes. However, the fact that a taxpayer has a system by which they place their bets, or that they are sufficiently successful to earn a living by gambling does not make their activities a trade. October 1, 2016. Professional gamblers are treated differently from amateur gamblers for tax purposes because a professional gambler is viewed as engaged in the trade or business of gambling. The professional gambler reports gambling winnings and losses for federal purposes on Schedule C, Profit or Loss From Business. (The main drawback of claiming professional status is if you have a net win for the year, you have to pay the 15.3% self-employment tax, in addition to the ordinary income tax. Recreational gamblers don’t have to pay this SE tax, because the gambling win isn’t categorized as “earned” income.) If you have paid tax on gambling winnings on the advice of your accountant you are a fool.However the revenue obviously can ask for proof of winnings which can be difficult if you are using an alias or two.Make sure that you keep hold of your bank statements because a friend of mine (who incidentally was also told by an accountant that winnings were taxable !) had to produce a years worth of Professional gamblers whose expenses are equal to or greater than their winnings will have zero gambling income to list on their tax return and pay tax on. Also, professional gamblers get to deduct their business expenses from their winnings. If you do not report gambling winnings, you risk being pursued by the government for tax evasion. If you are then found guilty of tax evasion for not reporting your gambling winnings, you will face the same consequences as people evading tax on other taxable income. Not paying taxes on all $8.3 million. Since a federal court ruling two years ago, there are tax deductions for professional gamblers similar to those for self employed contractors and small businesses. Expenses like travel, meals, and lodging can be cut from their total income. This means that if a professional player won $1 million and showed
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