Filing as a professional poker player (Schedule C)

It is possible to file as a professional poker player. As a professional, you can claim your net win as business income using Schedule C. This avoids all the costly problems caused by adding gross wins to your income and then deducting losses later. Also, a professional poker player may be able to classify as a business expense certain costs incurred as part of his professional activity. For offline players this is typically travel expenses; an online player could make a reasonable argument that reliable high-speed internet access and money transfer fees are costs of doing business.

The catch is that the IRS holds professional gamblers to a very high standard. If you have other sources of substantial income, or if you haven't posted wins for the last several years running, there is a good chance that the IRS will reject your claim of being a professional. Even if they accept your status, they may deny your expenses or consider your records to be deficient.

Another negative to filing as a professional is that you must pay 15% self-employment tax on your profits. This might be reduced if you are also employed in a regular job, but then your case for being a professional is weaker.

A good reference on filing your taxes as a professional gambler is the recent book Tax Help for the Frugal Gambler by Marissa Chien and Jean Scott.

(Remember, the information here is not tax advice. For advice you will need to see a tax professional.)