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.

The 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.

Dear god... that means that the government will win more from your poker playing than you _ever_ will!

"And this is how Republicans are made...." :-D

I 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.

So?

Government policy should incentivize constructive industries.

This tax rate is for general work when self employed. It's not specific to gambling.

Honestly, 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.)

Her 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%.

Professional poker players are actually classified as athletes.

Depending on whether you're filing as a professional or not, you may be paying self-employment tax. But in general, gambling winnings of that nature (big tournament scores) are pretty likely to put you in a high tax bracket and/or trigger AMT. You can deduct losses but it's a bit of a fight with the IRS every year, since they have records of every time you've won $1200 or more, but no records of every time you've lost $10k entering a tournament and not cashing.

If you fail to keep a receipt for a $10k entry fee I think that's on you.

Edit: I think you can't carry over losses from prior years, so if you lose money one year and make money the next, your taxes on your net earnings can be higher. Rule of thumb for professional poker players: If you don't have a profitable tax year, it is time to quit.

I didn't follow that either. Wouldn't it just be ordinary income?

Perhaps it's adding local, state, federal, and sales tax altogether? I don't know.

Maybe European tournaments?