Just an example to show how dumb the tax laws are with respect to gambling (as I understand them):
Regular job: Earn 40K
Poker earnings: 10K
Other gambling losses: -5K
Net income is 45K, yet you have to pay state income taxes on the 40K + 10K, disregarding any losses. You are not allowed to net wins/losses, you must declare all wins, and then deduct all losses.
The other problem with this is that in many cases, you lose some of the standard deductions that you would normally get, when your adjusted gross income reaches a certain point.
Hopefully with the proliferation of online gaming, the tax laws are modified to actually make a little bit of sense in this regard.
I imagine that in the end the IRS is screwing themselves, as people who either don't understand or don't want to bother with an "unfair" system don't bother declaring anything.
For the record I do declare my gambling, as much as I disagree with the present system. Dealing with an unjust system sounds like a better alternative then (a) jail time - however unlikely, or (b) a large fine, penalties and interest.
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