What Winning $250k at Poker Taught Me About Money

Re:What Winning $250k at Poker Taught Me About Money by cjlars on Wednesday March 27, 2019 @03:50PM (#19505215)

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.

[ Parent | on HN ]

Re:What Winning $250k at Poker Taught Me About Money by howard941 on Wednesday March 27, 2019 @03:54PM (#19505261)

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.

[ Parent | on HN ]

Re:What Winning $250k at Poker Taught Me About Money by RyanRies on Wednesday March 27, 2019 @03:51PM (#19505232)

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

[ Parent | on HN ]

Re:What Winning $250k at Poker Taught Me About Money by lwhalen on Wednesday March 27, 2019 @11:11PM (#19508860)

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

[ Parent | on HN ]

Re:What Winning $250k at Poker Taught Me About Money by webninja on Friday March 29, 2019 @09:45AM (#19521604)

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.

[ Parent | on HN ]

Re:What Winning $250k at Poker Taught Me About Money by drjesusphd on Wednesday March 27, 2019 @06:47PM (#19506990)

So?

Government policy should incentivize constructive industries.

[ Parent | on HN ]

Re:What Winning $250k at Poker Taught Me About Money by topmonk on Wednesday March 27, 2019 @08:59PM (#19508049)

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

[ Parent | on HN ]

Re:What Winning $250k at Poker Taught Me About Money by baking on Wednesday March 27, 2019 @11:05PM (#19508829)

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.)

[ Parent | on HN ]

Re:What Winning $250k at Poker Taught Me About Money by adventured on Wednesday March 27, 2019 @05:24PM (#19506198)

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%.

[ Parent | on HN ]

Re:What Winning $250k at Poker Taught Me About Money by edoo on Wednesday March 27, 2019 @05:23PM (#19506178)

Professional poker players are actually classified as athletes.

[ Parent | on HN ]