Tax Query Relating to UK Poker Player Living in the USA.

[Smart Money]

I am a UK citizen living in the USA. I earn the majority of my income from online poker.

I believe the tax law is a bit of a gray area, but that ultimately I am not required to pay US taxes because I am a UK citizen. It hasn't really concerned me up until now anyway because, to be honest, I had no intentions of declaring my winnings anyway.

However I am now in a situation where my W-2 (US Wage & Tax Statement) shows a wage that is far less than even the deductable mortgage interest payments that I made last year. This means that my legitamate tax return would raise some red flags with such relatively small reported earnings.

The tax software that I use (Turbo Tax) is no help as it assumes that you are a US citizen when it comes to entering income from gambling, so it automatically assumes that you must pay tax on those winnings.

Ideally I'd like to be able to report my winnings, pay no tax, and include all my legitamate deductions. However I don't want to report my winnings and then get presented with a tax demand!

I intend to seek the advice of a local tax professional but thought I'd post on here in the hope that someone may have some knowledge or advice on the subject. Thanks in advance if you can help.

[byronkincaid]

do you have to pay tax on your other job?

[Wardonkey]

Wow, maybe you should have got advice earlier.

Are you sure that having a British passport exempts you from tax on gambling earnings even when you are resident in the US.

Be very careful, they take tax evasion very seriously over there.

[Smart Money]

do you have to pay tax on your other job?

Yes, but my reported earnings ($13k) was very small. (It was all earnt during the first couple of months of the year.) Whereas my monthly mortgage payments alone amount to $4,500, which results in a total deductable mortgage interest amount for the year of over $25k- twice my reported earnings!

[Moskvich]

Yes, I suspect the key here is not citizenship but residency. I don't know specifically about the US, but I have lived and worked abroad elsewhere. Typically, if you spend at least half the year in a country and work there then you will fall under their income tax rules first. As it sounds like you are working there and paying tax already on those earnings then it seems to me highly unlikely that you wouldn't be liable to tax on poker winnings too. I'm not a tax professional, but I fear that's what one is going to tell you. Good luck with it.

[Smart Money]

Wow, maybe you should have got advice earlier.

Are you sure that having a British passport exempts you from tax on gambling earnings even when you are resident in the US.

Be very careful, they take tax evasion very seriously over there.

To be honest, I thought I had earnt far more reported income (and therefore paid far more tax.)

I'm not 100% sure about the tax exemption for being a UK citizen, although I think it is correct. I'm hoping someone else will be able to clarify that. Aren't all UK (and many other foreign citizens) exempt from paying tax on WSOP winnings?

[AndrewT]

http://www.contractoruk.com/overseas_guides/it_contracting_usa_moneytax.html

Uncle Sam owns your arse.

Picking 'Smart Money' as a username seems a little ironic now...

[ericstoner]

Uk, Irish, and some other europeans get exemption from US taxes via ITIN form ,when they play live,cos they do not live in the States.You however do, therefore receive the benifits that that accrues.

Don't think you have a getout..........................Pay the taxes, on what you Ah Hum "Earned"online, if thats the rule.

I wouldn't want to be labelled as a tax evader in the good ole US of A.

[AndrewT]

Uk, Irish, and some other europeans get exemption from US taxes via ITIN form ,when they play live,cos they do not live in the States.You however do, therefore receive the benifits that that accrues.

Don't think you have a getout..........................Pay the taxes, on what you Ah Hum "Earned"online, if thats the rule.

I wouldn't want to be labelled as a tax evader in the good ole US of A.

Yes, that's right.

Expanding upon my, on reflection, somewhat brusque, reply, essentially if you live in the US for under half the year, you can classify yourself as a UK taxpayer under the Double Tax Treaty. As UK tax on gambling income is zero, this is a rather excellent idea.

Stay for one day over six months though, and you are a US taxpayer, gambling income included.

I am astonished that you didn't check this out before you went though. If the US taxman can get Al Capone, they'll get you. 'I'll probably be OK' seems a rather naive position to take.

[RED-DOG]

Less  brusque, but not much 

[byronkincaid]

do you have to pay tax on your other job?

Yes, but my reported earnings ($13k) was very small. (It was all earnt during the first couple of months of the year.) Whereas my monthly mortgage payments alone amount to $4,500, which results in a total deductable mortgage interest amount for the year of over $25k- twice my reported earnings!

If you have to pay tax on one job why not the other one as well?

[marcro]

If you live in the US you have to pay tax on all of your world wide income - the land of the free, home of the brave and the ever reaching hand!

[Smart Money]

I am astonished that you didn't check this out before you went though. If the US taxman can get Al Capone, they'll get you. 'I'll probably be OK' seems a rather naive position to take.

Fuck me. Calm down mate.

Jumping to conclusions seems a rather naive position to take. To put you straight I have lived in the US for almost 7 years. I came here as a maths teacher not a poker pro, but have worked in finance for the past 4 years or so.

By the way surely the IRS would find Al Capone a bigger target on their radar than one of several million anonymous online poker players!

[Smart Money]

do you have to pay tax on your other job?

Yes, but my reported earnings ($13k) was very small. (It was all earnt during the first couple of months of the year.) Whereas my monthly mortgage payments alone amount to $4,500, which results in a total deductable mortgage interest amount for the year of over $25k- twice my reported earnings!

If you have to pay tax on one job why not the other one as well?

For the reason I gave above.

[Smart Money]

Uk, Irish, and some other europeans get exemption from US taxes via ITIN form ,when they play live,cos they do not live in the States.You however do, therefore receive the benifits that that accrues.

Don't think you have a getout..........................Pay the taxes, on what you Ah Hum "Earned"online, if thats the rule.

I wouldn't want to be labelled as a tax evader in the good ole US of A.

OK, thanks for the info and advice.