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Hachem Vs. The Taxman

, 2005-08-04, by TwoGun

Tax laws regarding gambling winnings vary from country to country. In the United States, people have to almost always pay taxes on their poker income. Whether or not someone is a professional player will alter how they file their taxes, but everyone has to pay taxes on poker winnings nonetheless.

In contrast, almost no one has to pay taxes on poker winnings in the United Kingdom. Taxes on gambling winnings are viewed as an unfair "double tax" to the delight of British poker players.

In some other countries, such as Australia, professional players have to pay taxes on gambling winnings, whereas casual players do not. This is because the winnings from professional players are viewed as "income," whereas a casual player's earnings are viewed as just getting lucky.

This sort of law is tricky to apply to Joseph Hachem, an Australian citizen who recently won the WSOP Main Event and took home $7.5 million. After the event concluded, Hachem spoke about how he had strived to become a better player through practice and learning. He said that he "never realised you could make a career out of poker until a couple of years ago."

Soon after this remark, Hachem was quick to remark that he was not in fact a "professional player" but rather a mortgage broker who viewed poker as a serious hobby. When he was on the Jay Leno show, Hachem stressed that his occupation was a mortgage broker and not poker professional. While the Americans in the audience may have been baffled at his apparent modesty, those familiar with Australian tax law would know that Hachem was trying to save himself about $3.5 million.

If Hachem is viewed as a professional, he would have to pay regular income tax on this winnings. This means 47% of his income would go to the taxman.

Currently, Hachem is said to be getting professional tax advice about how to handle the situation. But let this be a lesson to his fellow Aussies. If you happen to win the WSOP, it's probably better to attribute your victory to luck than skill!

Please note: Nothing in this article should be construed as tax advice. Please consult a tax professional in your area for more information about paying taxes on gambling winnings.

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