Poker Taxes in the US: Managing Your Winnings and Losses Properly

By: Olena

Posted: September 22, 2023

Updated: September 22, 2023

Learn the main information about poker taxes in the US
How to pay taxes and deduct your losses if you are a beginner?
Useful tips and tricks for professionals who play poker for a living

Are you a new poker player with no idea how taxation works in the gambling industry? We are here to provide you with the main information about poker taxes in the US. Whether you are an online player or a frequent guest at a casino table, these rules apply to you if you reside in the United States. Scroll down to learn more about taxation policies for poker players in the US. In particular, we will explain how to determine taxable income from poker games, why you should record your spendings, and how to make calculations related to gambling taxes in the US.

Poker Taxes in the US Explained

In brief, casino players (and real-money poker players) have to pay taxes in the United States. Whether you are a citizen, resident, or tourist, all your winnings that come from gambling-related activities must be declared and taxes must be paid depending on the prize amount. The same touches upon poker fans living in the US. Following the taxation policy, if you are a poker player winning over $5,000 in land-based casinos or at online poker sites in the US, you’ll need to fill out a W-2G form for large jackpots or Form 1040 with Schedule 1. If you win a non-cash prize, then you’ll need to add its value into your calculations, too.

You should also check what state laws say about poker taxes for American players. The federal government treats gambling winnings as taxable income, and you must report them on your annual tax return. Besides federal law, there are state laws that implement their own rules about poker players. Each state has its own policy regarding gambling activities, their legality and taxation, so make sure you are familiar with the policy in our state even if you are a tourist. Finally, poker taxes in the US also depend on your status. Obviously, professional players like Phil Ivey or Erik Seidel have to pay more taxes than average poker fans playing the game at Everygame or participating in local tournaments.

Paying Taxes as an Amateur Poker Player

If you are far from reaching Phil Hellmut’s status as an American poker superstar, you will pay taxes as an amateur player. Even if you take part in poker tournaments or play on high stakes in casinos, you are still considered an amateur as long as you don’t play poker for a living. Players who don't consider poker as their main source of income must use Line 21 in the Form 1040 to declare their incomes and expenses.

They must show their winnings associated with the card game on the ‘Other Income’ line of the form, and then deduct their losses against their winning sums. So, make sure you have notes about every session at a live or virtual poker table, as each is counted as an individual session. It will also help you to manage your deductions in the future. Don’t try to hide your winnings, as all land-based and online casinos in the US operating legally share the data about jackpot winners. So, if you happen to win a large prize, but the IRS finds out about your past income, they will have questions for you.

Taxation for Professional Poker Players

As a poker pro who plays the game to pay for bills, you have another procedure of reporting your poker taxes in the US. In this case, you are considered a self-employed person, meaning you need Schedule C to declare your income. You also must include Social Security expenses, and pay self-employment tax on all your poker winnings. Good news for professionals is that they can deduct more expenses than amateurs. While non-professional poker players can only deduct their losses, those who earn in poker can do the same with tickets, hotels, books, training, etc. Surely, they all must be related to poker to be eligible for deduction.