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Taxes and Poker

Taxes and Poker

By , Rakeback.com Content Manager

Depending on where you live in the world, you may have wondered, "are my poker winnings taxable? Read on to see whether your winnings are taxable or not, at what rate, and by which government(s).

Disclaimer: you should use the following as a general guide and not as professional tax advice. We highly recommend you consult a tax professional for specific tax laws in your jurisdiction.

Sample Tax Rates Around the World - Recreational vs Professional

Tax rates differ around the globe depending on if you are considered a recreational poker player or a professional poker player.  In most countries a professional is defined as pursuing poker as a full time job and having no other means of earning income. Some sample countries and the taxes for recreational and professional players are noted in the table below:

Country Recreational Player Tax Rate Professional Player Tax Rate
Australia 0% 37%
Canada 0% 26%
France 0% 40%
Germany 0% 42%
Great Britain 0% 0%
Russia 0% 13%
United States 25% 25%

Are Poker Winnings Taxable in the United States?

Like most good poker related questions, the answer is “it depends”. If you are a U.S. citizen, all poker winnings are taxable. This applies to Americans playing overseas as well.

If you are not a U.S. citizen, you may be subject to a tax withholding on your winnings. The United States has tax treaties with several countries. If you are a citizen of one of these countries you are not subject to tax withholding on your winnings. If you are a citizen of a country without a tax treaty, you are subject to a withholding of up to 30% on your winnings.

Countries with Tax Treaties

Tax Treaty Countries with the U.S. (PDF - 8k)

Players from these countries who cash in tournaments within the United States will not have any of their winnings withheld for taxes. Players are subject to tax laws within their own counties however.

Countries without a tax treaty are subject to a withholding of up to 30%. The most notable country without a tax agreement is Canada. Players from these countries can file a form with the United States Internal Revenue Service to get the withholding back at the end of each year.

Countries Subject to 30% US Tax Withholding

Americans Winning Overseas

If you are an American and you have poker income which was not earned on U.S. soil, the law still requires you to self-report and pay taxes on the winnings.

Simply put, Americans must pay taxes on poker winnings no matter where they play; be it online, on U.S. soil or on foreign soil.

Are Players from the U.K and Canada Taxed on Poker Winnings?

In a word: no, they are not. However, if you are considered a professional in Canada, you are taxed on your winnings. The Canadian government treats professionals and non-professionals differently when it comes to taxes.  The tricky part is defining when someone crosses the line between hobbyist and professional as the Canadian tax code does not clearly define when that line is crossed.  

 

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