What will the player who wins 1st place end up with after tax?
How Much Tax on the $350,000?
- Thread starter cuetechasaurus
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PoolSleuth
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Snapshot9 said:
AMEN Well said Scott....
O
onepocketchump
Guest
I think that foreigners get 30% taken out right away. And then they have to pay taxes in their home country on what is left over. Americans get to cash the full check and are then obligated to report the income on their tax returns. The American players better be watching their business end of this because the IRS will be looking for their money. The IPT MUST report all of the prize money they pay out.
I once forgot to claim my $1700 I won at a BCA event and the IRS pinged me for it because they were notified by the BCA that I had received it. I ammended my return and paid no tax on it AFTER I also submitted my expenses for attending that event - which exceeded my winnings.
John
I once forgot to claim my $1700 I won at a BCA event and the IRS pinged me for it because they were notified by the BCA that I had received it. I ammended my return and paid no tax on it AFTER I also submitted my expenses for attending that event - which exceeded my winnings.
John
All of the deductions, expenses and good accountants still won't change the fact that when someone receives a lump sum amount of cash like that, it is usually taxed at 39% by the IRS. Not sure if state taxes come into play, but the international players have to pay more juice.
Efren and KOTH
Not to long ago Billiards Digest did a cover on Efren in the Philippines. In the article I think he said Uncle Sam took 60k from his KOTH winnings. I don't know if the Philippine govt. got anything. It would be interesting to know how that works for the Pinoy players. Then he jokingly said relatives got another 20k. Because a lot of people are pretty poor in the Philippines, when famous people like Efren and Manny Paqcuiao win a lot of money a lot of "cousins" come out of the woodwork for a piece of the pie.
Not to long ago Billiards Digest did a cover on Efren in the Philippines. In the article I think he said Uncle Sam took 60k from his KOTH winnings. I don't know if the Philippine govt. got anything. It would be interesting to know how that works for the Pinoy players. Then he jokingly said relatives got another 20k. Because a lot of people are pretty poor in the Philippines, when famous people like Efren and Manny Paqcuiao win a lot of money a lot of "cousins" come out of the woodwork for a piece of the pie.
I know that they had better tend to it. That joker that won the million on the survivor show tried to slip by without paying. He starts his four year prison sentence TODAY........ One time I guessed on some interest income and they nailed me pronto. All I had to end up doing was to send in a check by mail for a couple of hundred. Got off easy because it was a small amount I suppose, but I have kept up with it since then.....
well the tax rates increase as u go up. For a single person, 0-7150 you pay 10%, then 7150 to 29050 you pay 15%, 29 to 70 you pay 25%, 70 to 146k you pay 28%, 146 to 319 you pay 33%, and all the income over 319 you pay 35%. So when you average all that out you are probably looking at a marginal tax rate of about 30%. Now if you considered pool your business, which i imagine most of these pros do, you would get to count off your expenses from your winnings, then you would pay your income tax, plus 12.4% fica on your winnings up to $90k, as well as 2.9% medicare on all of it. So for instance, if someone won 350k and that was all they won for the year, and lets say they had expenses (travel, equipment, entry fees, etc) of .........oh I dont know, lets say 50K to use round figures. So profit on the year of 300k, single with no kids.......the income tax would run $86289. The Fica would be $11160. Medicare would be 8700. So taxes on 300k would run you about $106, 149. Now that doesnt include state income tax, here in va the max rate is 5.75, so thats another 17250.
The Canadians would have a percentage withheld(I think it is 30% but it might increase for large amounts) and then they have to get an American tax number and file an American tax return to try to get some of it refunded. That is what people do here in Ontario when they win a jackpot at the casino in Michigan. On a small jackpot like $2000 they generally get it all back because the $2000 is the total American income they report on their return and people who make $2000/year don't pay income taxes.(yet?)
Not a huge difference, but don't the Fica, Medicare, and State tax come off the AGI? So if those three add up to, in your example, $37,000, then that would reduce the federal income tax owed by about $12,300, for a total income tax of $74,289, and other taxes of $37,000, for a total of about $110,000. An overall net tax of 37.1%.scottycoyote said:
A good accountant will definitely pay for himself. You would want to deduct not just entry fees and travel costs (including meals and expenses), but every minute of table time, cue repairs, plus a lot of small expenses I'm probably not thinking of right now.
At least for the US, I'm nearly certain that you don't get double-taxed on foreign income. If I make money in the UK, I pay UK taxes on that and that's it. Money made in the US gets taxed at US rates. Where it's hard to classify, you need a good accountant, who will try to get as much as possible allocated to the country with the lower rate.
Cory
well 1/2 the fica is a deduction on the front of the 1040, so that would be a 10,000 deduction, at 30% marginal rate, so thats 3000 less tax federal tax, not 12,300.. And yeah the state taxes are deductible on your schedule A along with your other personal deductions like mortgage interest, etc.......i just didnt want to get into figuring all that cuz then im doing the frickin return and someone owes me $$$$$$$$$$ lol, jus tryin to give you guys a rough idea of the tax liability. Im an accountant and enrolled agent for 15 years......although ive done some nonresident work not much, generally you are taxed on money in the country you earn it, then youre allowed a credit so you dont pay taxes on the same money twice, but its different with each country and what kind of tax treaty they have with the USA.
And lets not forget, if the player likes to do what everyone else does in Vegas, Vegas willl probably get it's cut too.
Cory in DC said:
That's not exactly correct.
The US is one of the few nations to tax its citizens (and permanent residents) for income earned abroad. They offer relief in the form of a foreign earned income exclusion (of 80,000 max, prorated for time worked in the US during the year) or a credit for foreign income taxes (but not both).
While this effectively means US citizens and permanent residents won't be double taxed on income, there are instances where people would still pay US tax on their foreign earned income.
Social security is another matter entirely.
Whenever you receive proceeds from government approved gambling, ie win more than $1199, you must complete the IRS paper work before you can be paid.
Depending on the location, they will give a choice to deduct tax's immediately or to take a copy of the completed paper work and claim this amount at the end of the fiscal year.
The government receives approximately 29% in tax from gambling.
So the net proceed to the winner of $350,000 would receive approximately $245,350 gross after a net tax paid of $104,650.
Seems like robbery, and it is!!!!!!!!
Craig
Depending on the location, they will give a choice to deduct tax's immediately or to take a copy of the completed paper work and claim this amount at the end of the fiscal year.
The government receives approximately 29% in tax from gambling.
So the net proceed to the winner of $350,000 would receive approximately $245,350 gross after a net tax paid of $104,650.
Seems like robbery, and it is!!!!!!!!
Craig
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manwon said:
I don't think professional sports are classified as gambling. Or am I wrong?
manwon said:
Gambling winnings are taxed as ordinary income. You can deduct any gamling losses on (on schedule A), to the extent of any winnings. Most people have more losses than winnings.
However, IPT payouts are not likely to be considered gambling. In all liklihood, any player will report it as business income, and, as mentioned earlier in the thread, deduct as many expenses as possible.
its actually going to be up to the recipient initially to classify the income. Me for instance, my main job is acounting, lets say i got lucky and entered the IPT somehow and won a big event and that was it........that would probably be viewed as hobby income........id claim it all as ordinary income and i could claim my expenses on my shedule a as hobby expenses. No fica just ordinary income tax.
But now someone who plays pool for a living, like johnny archer....would claim the income on schedule c, take off his deductions and pay tax and fica on the bottom line. He is in the business of being a pool player, im not. Winning a purse in an event like that wouldnt be looked on as gambling income.......and the event probably has to issue a 1099 to anyone it pays over $600 to.
But now someone who plays pool for a living, like johnny archer....would claim the income on schedule c, take off his deductions and pay tax and fica on the bottom line. He is in the business of being a pool player, im not. Winning a purse in an event like that wouldnt be looked on as gambling income.......and the event probably has to issue a 1099 to anyone it pays over $600 to.
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