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November 12, 2008
Big Winner of World Series of Poker: The Tax Man
The big winner at this year's World Series of Poker: the tax man. Russ Fox computes the tax liability of the final nine players on their $32.7 million of winnings as $14.3 million -- a 43.7% tax rate:
- Peter Eastgate (Denmark) won $9,152,416 -- $6,660,545 Denmark tax (72.8% rate)
- Ivan Demidov (Russia) won $5,809,595 -- $755,247 Russian tax (13.0% rate)
- Dennis Phillips (IL) won $4,517,773 -- $1,568,950 federal tax, $135,533 state tax (37.7% rate)
- Ylon Schwartz (NY) won $3,774,974 -- $1,396,304 federal tax, $387,966 state tax (47.3% rate)
- Scott Montgomery (Canada) won $3,096,768 -- $929,030 withholding tax (30.0% rate)
- Darus Suharto (Toronto) won $2,418,562 -- $725,569 withholding tax (30.0% rate)
- David Rheem (CA) won $1,772,650 -- $651,262 federal tax, $170,302 state tax (46.3% rate)
- Kelly Kim (CA) won $1,288,217 -- $470,995 federal tax, $121,074 state tax (46.0% rate)
- Craig Marquis (TX) won $900,670 -- $328,911 federal tax (36.5% rate)
November 12, 2008 in Celebrity Tax Lore, News | Permalink
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Comments
I'm no 800-900's or treaty guy, but I thought money EARNED in the U.S. was subject to U.S. taxes. Isn't that one of the reasons why there are the new rules on reporting income won in poker tourneys?
Again, I don't know the sourcing rules that well, but I'm pretty sure poker winnings do not have a special rule sourcing them to your country of origin when earned in the U.S. So I think the foreigners/non-U.S. citizens or residents owe U.S. income tax too (although they may get a credit for it in their home country).
And what about SECA for the pros? isn't SECA is gonna hit them too? (every $ counts when you had a gazillion dollar deficit to pay off.)
I'm no SALT guy, but it looks like NV doe not have an income tax (or some form of gambling winnings tax)? So at least they get a break there. (good thing they play out west and not in A.C.)
Posted by: the tax man cometh | Nov 12, 2008 6:35:53 AM
I am guessing the Dutch tax man would appreciate collecting the tax from a Dane.
Posted by: Justin | Nov 12, 2008 11:05:54 AM
Wouldn't the guy from Denmark be paying Danish, not Dutch, taxes? Either way, from a quick internet search it looks like both countries' tax rates are below 72% (52% for the Netherlands [http://www.expatax.nl/tax_rates_2008.htm], 59% for Denmark [http://www.taxindenmark.com/article.31.html]).
Posted by: ada | Nov 12, 2008 11:27:51 AM
Do these calculations seem terribly flawed to anyone else? The seem to be calculated only on the highest marginal tax bracket. I've also reviewed a summary of Denmark tax information, and it seems clear that they have graduated rates and a rate ceiling that is lower than what is being shown.
Posted by: Aaron | Nov 12, 2008 1:05:58 PM
In response to TMC @ 6:35AM, clicking through the link to Russ Fox will answer your first question. The Canadians are the only foreigners that owe $ to the IRS.
Posted by: CNote | Nov 12, 2008 2:42:55 PM
Jct: Why hold tournaments in the US where there's a minimum 30% of the whole lost in taxes when they could be held in Canada where non-professional winnings are non-taxable windfall. Think about it, they lost 1/3 of their pot by playing in the US when they could keep the whole thing.
Posted by: John Turmel | Nov 12, 2008 3:43:17 PM
Since they broke this tournament up after July and waited until November to finish off the final table, would it have been possible for the people in high tax states who know they are going to earn 900K+ to move to a non-tax state and avoid state taxes? This would have been substantial savings for many of them.
Honestly, I am not sure why Rheem who is a pro says he is a California resident anyway. Seems like a huge waste to pay that massive rate.
Posted by: jkoerner | Nov 12, 2008 6:03:54 PM
Russia and Denmark have treaties with the US, which is why no federal taxation.
Diane Offutt, EA
Posted by: Diane Offutt | Nov 13, 2008 10:11:09 AM
Interesting that due to Russia's low tax rate, 2nd place finisher Davidov had more "take home" than 1st place finisher Eastgate.
Posted by: AngelEyesGBU | Nov 13, 2008 5:08:34 PM
Supposedly Eastgate now "lives" in London and will pay no taxes at all (or minimal). Supposedly.
Posted by: Frankie2 | Nov 13, 2008 5:45:34 PM
