Taxing Time For The November Nine2 years ago
When I wrote about Joe Mckeehen’s whopping $3,385,952 tax bill for lifting the most coveted prize in poker last year, I was as shocked as anyone at the chunk of change that the IRS took from him. This year I was prepared for the figures coming out, but it was no less painful to see what our 2016 WSOP November Nine had to pass on to the taxman!
Of the $25,445,388 prizepool for the lucky players who made it to this week’s final table, a massive $8,108,024 was immediately siphoned off to the IRS, with an additional $2,001,736 destined for the pockets of other tax authorities.
Everyone was hit by a huge tax bill, everyone except for Belgian Kenny Hallaert that is, his national taxation for gambling winnings being precisely zero! Meaning, just as with fellow countryman Pierre Neuville last year, his $1,464,258 winnings are all his to spend as he likes!
The others fared less well, and Russ Fox, E.A., of Clayton Financial and Tax of Las Vegas, Nevada has kindly put together their respective tax bills on Taxabletalk.com. Let’s start by looking at the deserving winner Qui Nguyen and his pre-tax payday…
1. Qui Nguyen - pre-tax $8,005,310 - after tax $4,682,153
According to Russ:
"Mr. Nguyen is a professional gambler, combining poker playing with baccarat, he’ll owe self-employment tax and federal income tax, because Mr. Nguyen resides in Nevada he doesn’t have to pay state income tax. I estimate Mr. Nguyen will lose only 41.51% of his win ($3,323,157) to tax. That’s the second-lowest tax hit of any of the Americans at the final table.”
Luck makes its own luck then? Well, of course it’s a massive return on the $10k buy-in Nguyen ponied up back in July, but it still has to sting!
2. Gordon Vayo - pre-tax $4,661,228 - after tax $2,262,428
"This year’s winner’s tax burden was nearly ten percent less than the second place finisher,” states Russ, asking rhetorically, “Why? As my mother would say, “Location, location, location. There are good tax states and bad tax states. Las Vegas may not have the beauty of the San Francisco Bay Area, but you sure do pay a lot in state taxes for living in California.”
Russ adds that:
"He will pay California’s top tax rate of 13.30%, on top of self-employment tax and federal income tax. Mr. Vayo is only the second individual since I’ve been writing these summaries to lose over half his winnings to taxes.”
3. Cliff Josephy - pre-tax $3,453,035 - after tax $1,778,428
"Unfortunately, New York is not a low-tax state,” states the tax specialist. “Mr. Josephy loses an estimated 48.50% of his winnings ($1,674,568) to federal and state tax. This isn’t as bad as California, but it’s certainly not as pleasant as here in Nevada.”
4. Michael Ruane - pre-tax $2,576,003 - after tax $1,397,478
"The professional poker player loses an estimated 45.75% of his winnings ($1,178,525) to tax. Because of the impact of taxes, Mr. Ruane finished in sixth place based on after-tax winnings.”
Ruane actually walked off with less than 6th-placed Hallaert, and although every player should consider himself lucky to be in such a position, it does seem a tad unfair to the Maywood, New Jersey pro.
5. Vojtech Ruzicka - pre-tax $1,935,288 - after tax $1,644,995
"Mr. Ruzicka was one of the two luckiest players from a tax perspective,” says Russ, explaining that “the US and the Czech Republic have a tax treaty exempting his winnings from withholding by the IRS and the Czech Republic has a flat 15% income tax. Only $290,293 of Mr. Ruzicka’s $1,935,288 in winnings will go toward taxes.”
6. Kenny Hallaert - pre-tax $1,464,258 - after tax $1,464,258
The Taxabletalk.com article by Russ states that:
"Mr. Hallaert is a poker tournament director in Belgium. Belgium does not tax gambling winnings of non-professional gamblers, so Mr. Hallaert’s pre-tax winnings of $1,464,258 are also his after-tax winnings! Even better, the US-Belgium Tax Treaty exempts gambling winnings, so Mr. Hallaert doesn’t owe any US income tax.”
7. Griffin Benger - pre-tax $1,250,190 - after tax $ 875,133
"The tax situation in Canada for gambling remains fluid,” according to Russ, who reveals that, “ The Canada Revenue Agency (the Canadian equivalent of the IRS) believes that gambling winnings for professional gamblers should be taxed. However, Canadian courts have generally disagreed, thus, today Mr. Benger does not owe any tax to Canada. However, 30% of his $1,250,190 in winnings ($375,057) were withheld for US income tax. Mr. Benger can file a US income tax return (Form 1040NR) to recover gambling losses up to the amount of his gambling winnings.”
8. Jerry Wong - pre-tax $1,100,076 - after tax $ 680,300
Of course, when we get to the lower placings the actual effect seems much tougher. Russ states of Wong that:
"He’s a professional gambler, so he will owe self-employment tax along with income tax. However, as a Floridian he avoids state income tax. I estimate he will lose $419,776 (38.16%) to tax.”
9. Fernando Pons - pre-tax $1,000,000 - after tax $ 550,416
"Spain taxes its residents on their gambling winnings no matter where the winnings are won, says Russ, “and Spanish tax rates make the US look good: Mr. Pons will lose nearly 45% of his $1,000,000 of gross winnings to tax.”
A big blow to the Spaniard, but still a massive amount compared to his previous earnings in poker which barely amounted to his buy-in for the WSOP.
So, a sobering read in some ways but none of the November Niners will be queueing up at foodbanks anytime soon by the look of things. Russ Fox’s full article on Taxabletalk.com can be read here, with excellent tables highlighting the tax owed by each player and where and why!
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