Many poker players, especially recreational ones, have no idea where they stand in terms of overall winnings or losses. And if you’re a recreational player with all the money you will ever need, that’s fine. But for everyone else, it’s a good idea to keep track. Income from poker is considered earned income by Uncle Sam and is therefore taxable. So if you won or lost money for the year, you must keep records in order to accurately report your earnings and therefore pay the appropriate taxes. This also means that you may be eligible to deduct some or all of your losses, thereby reducing your overall tax burden, depending on where you live; some states do not allow gambling losses as deductions.
But before we get derailed, this article isn’t about taxes. For tax advice you should consult an accountant, preferably one who has experience working with poker players. This article is going to focus on recordkeeping, which includes everything required by the IRS (and your accountant) for tax purposes, but also will help you to choose the best places, times, and games (or tournaments) to play.
The sample given (image above) was prepared using Microsoft Excel. The data shown approximates my poker results from May 2011. Dollar amounts have been rounded to the nearest 10 (for data-entry fields), to make it easier to read. Take a moment to review the spreadsheet above. Here are the columns as shown:
- DOW (Day of the week)
- Type (RG for Ring game, T for Tournament)
- Start time
- End time
- Hours [Calculated field]
- Win / (Loss) [Calculated field]
- Net [Calculated field]
- Hourly Total [Calculated field]
- HTD – Hours to Date [Calculated field]
- P/L-TD – Profit/Loss to Date [Calculated field]
- HRTD – Hourly Rate to Date [Calculated field]
Most of these fields are self-explanatory, but allow me to expand upon a few.
The Expenses column wasn’t used during the month shown, but was added the following month to allow separate entries for tips paid at the conclusion of tournaments. I would also include any expenses for valets, food, beverages, etc. Tournament buy-ins and add-ons are not included in this column.
The Win / (Loss) column uses the following formula: (Cash-out – Buy-in).
The Net column uses the following formula: [Win / (Loss) – Expenses].
The Hourly Total column uses the following formula: (Net / Hours).
These last three fields allow me to maintain an ongoing history of my performance and analyze upward and downward trends.
The HTD column represents Cumulative Hours to Date and is calculated as a running total.
The P/L-TD column represents Profit or Loss to Date and is calculated as a running total.
The HRTD column represents the Average Hourly Rate to Date and uses the following formula: (P/L-TD / HTD).
The benefit of putting this information in a spreadsheet is that you are able to sort and isolate groups of data for statistical analysis. What day of the week do you show the most profit? Do you do better playing short sessions or longer ones? Are you profitable at Hard Rock but lose money at Osage? Do you perform better during the day or in the evenings?
It is important to note that the sample size has a significant impact on results analysis. The sample provided shows a single month of activity, during which you can observe the variance in results. At the outset, results were positive and encouraging. As the month progressed, over half of the accumulated profit was lost. The maximum hourly profit was $146.67 while the maximum loss was -$120 per hour for a single session. These extremes are normal for any poker player.
Therefore one must accumulate a sufficient amount of data to compensate for the periodic swings. As a general rule, you should judge your overall play over a six month period at a minimum to determine whether you are a winning player. To analyze subsets of the data, for instance if you were looking at Saturday results versus Wednesdays, you should use no less than 20 entries for each. Ideally, of course, a full year’s worth of data should be used (200 complete sessions or more) to determine overall profitability. Six months is sufficient, however, to determine the likely trend.
If you would like assistance setting up a spreadsheet like the one presented, contact me at Mark74105@cox.net.
With regard to taxes, I suggest you visit this page for more information, and encourage you to contact an accountant or tax professional in your area.
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