Tuesday November 15, 2011 : TAXING TIMES FOR POKER WINNERS
Two of this year's WSOP main event finalists get a free tax ride
The publication Taxable Talk published an interesting and unusual take on this year's World Series of Poker main event finalists this week, examining the tax liability on their multi-million dollar winnings.
The tax experts who undertook the study concluded that the nationality of this year's heads up duo, a German and a Czech, means that this year the US taxman picked up less than in previous years due to tax treaties.
Nevertheless, the spread of nationalities around the table ensured that taxmen elsewhere earned a cut, and Taxable Talk published a chart to summarise the overall picture:
Amount won at Final Table $28,279,219
Tax to IRS $3,819,362
Tax to Czech Tax Administration $814,963
Tax to Office of Revenue Commissioners (Ireland) $695,018
Tax to State Tax Service (Ukraine) $171,656
Total Taxes $5,500,999 or 19.5 percent of the final table prize pool, compared with last year's more American-oriented affair where the tax bite was 42.99 percent.
This year, two of the November Nine were exempt from any taxation.
Winner Pius Heinz is a German, and as such benefits from the German-US Tax Treaty, meaning he did not have a US tax liability on his $8.7 million plus main prize, saving him 30 percent of the win. Then, because Germany very sensibly treats gambling as the use of monies that have already been taxed, Heinz does not have to pay a cent to the German tax authority.
Contrast this with the case of an earlier winner, Peter Eastgate of Denmark, who had to give an estimated 73 percent of his 2008 win of $9.1 million to the Danish tax office.
The main event runner-up this year was Czech Republic citizen Martin Stazko, who also escaped the IRS tax net due to a Czech-US tax treaty. Stasko won the useful $5.4 million plus second prize, and therefore faces only Czech taxes as a professional player earning income, and will likely pay only 15 percent of his windfall over in tax – still a hefty hit at $814,963, Tax Table Talk points out. If Stasko was an amateur player he could claim his winnings entirely tax-free.
Taxable Talk looked at other players around the table, too. Professional ace Ben Lamb finished in the third spot, earning just over 4 million. Being a US resident, he'll be parting with over $1.5 million to the IRS in federal tax, although as a resident of Nevada he escapes state tax.
Matt Gianetti, who finished fourth, is in a similar position; as a Las Vegas resident he has no tax liability, but the IRS will claim an estimated $1 million or more from his fourth placing pay day of just over $3 million.
Phil Collins is also a Las Vegas professional and finished fifth to claim a prize of $2.2 million plus, from which the IRS will extract $852,480.
The remaining final tablers were all non-US players, and Taxable Talk reports on their individual tax liabilities, starting with Irishman Eoghan O'Dea who is exempt from US taxation through the Irish – US Tax Treaty, but as a professional player will have to cough up $695,018 of his $1,720,831 sixth spot win to the Irish government – at 40.4 percent the highest tax rate of any of his opponents.
Seventh-placed Belize resident Bob Bounahra earned $1,314,097, but due to the absence of a tax agreement between his country and the United States he has to fork out 30 percent ($394,229) of that to the US taxman. He can only hope that he will not also be faced with a 15 percent demand from his own government too.
Ukrainian poker pro Anton Makiievskyi, who finished eighth, collected a check for $1,010,015 and is again fortunate that a treaty with the US has been signed by his government. That means no US tax liability, although as a professional he will be required to pay over something like $171,656 to the State Tax Service of the Ukraine.
Finally, ninth-placed Sam Holden hails from the United Kingdom, and benefits from the UK-US Tax Treaty, losing nothing to the IRS. Like Pius Heinz, he is also in the happy position of not having to pay tax to his home government, because Britain does not tax gambling winnings.
The Taxable Talk assessment is an interesting and relevant piece that can be read in full here: http://www.taxabletalk.com/2011/11/09/the-real-winners-of-the-2011-world-series-of-poker/