World Series of Poker - Taxes?

Question

Does anyone know the TAX RATE applied to Poker Winnings. For instance, Gold who just one 12 million at the WSOP, what % will need to be paid for taxes. At what amount are winnings taxable? For instance, over $5,000 is taxable.

Answer 1

The poker winnings count as regular income.
Just like any other gambling wins or contest wins.
(If you don't believe me, just ask Richard Hatch, the guy who won $1,000,000 on Survivor, didn't report it on his taxes, and is now serving 4 years)

For 2006, the brackets are:

Less than $15,100 - 10%
$15,100 - $61,300 ---- $1,510 + 15% of the amount over $15,100
$61,300 - $123,700 ---- $8,440 + 25% of the amount over $61,300
$123,700 - $188,450 ---- $24,040 + 28% of the amount over $123,700
$188,450 - $336,550 ---- $42,170 + 33% of the amount over $188,450
Above $336,550 ---- $91,043 + 35% of the amount over $336,550.

So, lets say in his regular job, he earned $100,000 salary, then $12.5M at the WSOP.

His income is $12.51M. His taxes are $91,043 + 35% * (12.51M - $336,550) = $4,351,750.50

Answer 2

All of it is taxable because its not gambling if you pay a flat fee as one does in a tournament. So Mr. Gold is paying whatever percentage rate he falls into. Its just regular income. Yes, I could make this much more complicated but chose not too.

When one is gambling say at a casino, you take your losses against your winning if you itemize. If you don't itemize you just declare the winnings. All income from any source is to be declared.........but, we know people only report what they get documents for.

Answer 3

Generally, if your net income is over $250,000 your tax bracket reaches 40% and moves very slowly up from there to a max (I believe) of 50%. The general rule of thumb when you win any major cash prize (i.e. Lotto or WSOP), is you will get to take home %50. He is likely going to pay $6,000,000 in taxes then.