In the past, poker players, gamblers, and accountants were left in a gray area of law where it wasn’t made clear whether expense deductions were permissible. However, as a result of the conclusion of a ten year old case involving Californian horse bettor Robert Mayo, the gray area has been clearly established. A professional gambler is considered a business trade, not any different than any other profession.
Poker tax expert Ann-Margaret Johnston said: “The recent ruling is a victory for poker players for a change. This makes it where we can finally treat the expenses by pros as actual write-offs even though they may not have income…All we need now is a ruling that losses can be taken when they exceed income and we will have it made!”
Previously, professional gamblers were only allowed to deduct expenses up to the amount they won but now following the landmark ruling will be permitted to adjust their past three years’ of returns, accordingly.However, a key caveat to the law is that a player must be considered a professional gambler. In other words, most of their income should be derived from gambling, be it playing cards, betting on sports or racing, playing at the casino, or any number of other gambling related activities.
This is good news for poker players who have expenses like flying to tournaments, hotel fees, and meals. In the case of cross-country trips or sojourns out of the country, these expenses can add up fairly quickly. Expenses are entered on Schedule C of a person’s tax return and this year, every resident of the United States must file his or her taxes by April 18th.
