Death, Taxes and Poker

Being a good U.S. citizen and all that, I did my taxes today at a cafe here in Santiago.

And that means trying to figure out how I should report poker winnings.

As I understand it, poker gross profits should be reported as "Other Income" on Line 21 of the 1040. Then you can deduct losses if you itemize.

The problem, of course, is that I don't itemize. The big error of the IRS is that it separates winnings and losses. It would make much more sense to just tax net earnings.

Because I just take the standard deduction, I decided to abide by the spirit of the law rather than the letter of it. I just reported my net winnings on Line 21 and was done with it.

Perhaps this isn't wise, but the other method is absurd and unfair. This way, I feel like I'm still giving the IRS its rake with a clear conscience.

My federal taxes owed came to $215 for 2004. The gambling portion of my income was a shade over $2,000, which accounted for an estimated $200 in taxes.

Links:
Poker and Taxes....This is why there is so much confusion
IRS: Gambling Income and Expenses