By poker_boy | 2 Comments
Last updated: Thursday, November 22, 2007 | 110 Views Tags: grey area, irs, poker, united states
What’s this week’s poker online question? Let’s dive straight in…
Question: Gambling is restricted to certain parts of the United States, however online gambling is taking its toll on people. I've heard its a grey area in the law…but how can you report winnings on your taxes if the activities are illegal to begin with?
Is there anyway for the IRS to discover whether or not you have been gambling online?
Answer: Online gambling is illegal in the US. It is considered a violation of the Wire Act. The problem is it is too hard to enforce. Most of the online gamgling sites are actually in other countries where it is legal, like Gambia and the Cayman Islands.
The IRS can find out if you claim gambling income or losses, or if you are audited and found to be living outside your means.
My advice is to stop online gambling activity before you draw attention to yourself. Certain states are working with the federal government to go after those who gamble illegaly online. I believe it is only a year or so before we start to hear about this in the news.
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Mike Smith
November 22, 2007
In New York, it is referred to as gaming (no b). Gambling is defined as when a person who is not a participant, takes a portion of the money. It is illegal in New York unless otherwise regulated. Some legal gaming activities include horses at Belmont, Aqueaduct and Saratoga, the new Racinos (electronic lottery machines), Off Track Betting and the New York State Lottery. Charities may apply for temporary licensing for Casino nights, or permanent licenses to operate Bingo. The Indian tribes operate casinos on their own land, with Federal permission, within the state.
This is the 21st century, it is easier to report and pay than hide and worry.
You are right about online gambling taking it's toll. Here's how: in isolation it is easy to drain the credit cards and then start on the college fund and finish with a home equity loan. Bankruptcy is no longer the easy out it once was. The newest victims are : college students, housewives, retirees and people in recovery from other addictions. One last piece of information, gamblers have a significantly higher rate of suicide completion than the general population.
November 22, 2007
The truth is that it is a pretty gray area. I think it's very likely that within the next year there will be some legislation deciding the fate of the industry.
As for the other poster's comments, I think that the asker's issues are not so much a concern about gambling being a destructive issue in his life. Much like myself, he's wondering how to explain all those deposits made into his bank account from shady escrow sites to the IRS.