Despite the fact that the Civil Asset Forfeiture Reform Act makes online gambling illegal, it is not impossible for players to get their online poker winnings back. While prosecutors have an easy time connecting winnings from online poker with illegal betting, online poker players are lucky if they can get their winnings back from the federal government. In many cases, the government will simply return the money, rather than pursuing any other action against them.
If you’re wondering whether you’re liable for taxes on your online poker winnings, there’s no need to worry. Poker sites have no need to file tax forms with the IRS, so any money earned through online poker will never be taxable. Furthermore, online poker winnings will not count towards your taxable income, since you can’t claim losses against your earnings. Even though you’re not required to file a tax return when you win online poker, you should keep a record of your transactions and claim them in the future.
As with any form of income, if you win enough money to be taxed on your online poker winnings, you’ll need to declare them as Other Income. The amount that you win in a single session will determine the amount of taxes you have to pay, as casinos usually take a substantial chunk of your winnings. Therefore, if you’re consistently winning more than $5,000 a month, it is best to set aside a portion of each of your winnings to avoid paying taxes.