4 ms·
Professional gamblers are supposed to pay self employment tax, which is 15.3% (half is deductible), and then all ordinary income taxes. So that's a top federal
by cjlars 8y ago
Professional gamblers are supposed to pay self employment tax, which is 15.3% (half is deductible), and then all ordinary income taxes. So that's a top federal rate of 37%, plus -- she's presumably a New York City resident -- another 8.82% at the top rate for NY and 3.82% for NYC. That's about 65% gross, then once you factor in the deduction... about a 60% net marginal tax rate.
So she's not wrong, but she'd only be hitting those numbers if she won a really big tournament or two.
Edit: I forgot that the self employment tax phases out at ~$120k labor income, so she'd need a lot of investment income (or a high earning spouse) to pay both the top marginal income tax rates and the and 15% employment tax.
- RyanRies 8y agoDear god... that means that the government will win more from your poker playing than you _ever_ will!
- drjesusphd 8y agoSo? Government policy should incentivize constructive industries.
- topmonk 8y agoThis tax rate is for general work when self employed. It's not specific to gambling.
- baking 8y agoHonestly, it is for ordinary wages also. The self-employment tax is basically the same as the employee and employer portions of the FICA taxes. (I think the only difference is that the self-employment tax basis is the before tax income while the wages tax basis is after the employer portion has already been paid.)
- lwhalen 8y ago"And this is how Republicans are made...." :-D
- webninja 8y agoI used to believe this sentiment about 8 years ago, but after many republican presidents, our nation is only further in debt. Only Bernie Sanders seems to care about our nation’s increasing debt and he’s a registered independent.
- deleted 8y ago[deleted]
- howard941 8y agoThe big self employment tax hit is for SS, and that maxes out well before she gets anywhere near the 37% rate. And it's not 37% for entire ride. Nevertheless I'd wager that you're mostly spot on and she's adding in the top local rates and applying it to the first dollar of income.
- edoo 8y agoProfessional poker players are actually classified as athletes.
- adventured 8y agoHer effective federal income tax rate on $250,000 is 23.6%. Someone correct me if my figures are wrong, her total tax rate all-in (based on NYC), appears to be closer to 41%. $1m gets you to ~48%. $10m gets you to ~56%.