Gambling Winnings / Tax Question - Experts Needed!

Hi,

I won over 200k this summer playing poker.

When tax season comes, the IRS is going to want their share.

I know their is a form for backers/stakers… but my question is
Do I simply just get the forms… and send them in saying I really only “netted” 30k?

If I had 5 backers, they each get 30ish grand, then they have to worry about the IRS and their taxes? Then with my net of 30k, I can use the 10k buy in slip and other tourney tickets to make that 30k even less?
Whats preventing people that win big to find friends who lost even more and say they were staked, to offset all winnings?

Am I missing something here?>

You need a tax accountant.

I have some vague understanding of this, but with $200,000 at stake, I’m not going to say anything: you should probably pay somebody to make sure it’s done right.

You need detailed contemporaneous records of all your winnings and losings and expenses.

And you need a written business contract between yourself and any backers. With written contemporaneous records of all payments in either direction.

Absent all that you’ve just got a big mess where the IRS can pretty much choose which parts of your story they believe and which they ignore.

Ok…

So if I have 3 guys and we sign a piece of paper saying I gave them 30-40k cash…

I present that on the form?

Then if they lose ~100k a year on horses they can write off the 40k I gave them?

I have all buy ins kept for the year, the only thing “untraceable” would be cash handed to them. Whats preventing the IRS from thinking I never paid them and are just using them as “backers” b/c they have enough losses to write off the “money” I gave them?

Yeah… if you called my office with a question like that I’d tell you we needed to talk for half an hour before I could even determine all of the potentially relevant facts and only then could I start coming up with a recommendation.

There might be a partnership. There might be a business. There might be forms 1099-MISC to file. It might be a hobby with itemized deductions.

Or it might be a money laundering exercise

What do you mean?

I just don’t want to take a hit on “winnings” that I don’t possess

You need professional tax advice. Please consult an accountant in real life rather than relying on strangers on a message board. If you earned as much as you claim then the money spent on professional advice will be both affordable and well worth it.

I am going to, just wanted to see if anyone had any personal insight.

We do, and you have been given some decent background ideas. Yes, if you do this right, you might end up with very little tax liability. But you have to do it right, which means hiring a Pro. My suggestion is a Enrolled Agent, aka “E.A.”. Dont go to the Block.

And the IRS wants to make sure that all winnings are taxed. They’re not particularly concerned with getting the “right” person as long as all income is accounted for, although I’m sure they’d like it to be correct. If your name is on the form then they’re going to start with you unless you can document things otherwise.

TL; DR - talk to an accountant. Personal insight is going to be useless since no one here knows the particulars of your case.