PLEASE HELP- online poker winnings - earned income?

I need to know for IRA purposes . i know i have to pay taxes but is it "earned" income or "unearned" . wasnt there a supreme court case which ruled poker winnings as "earned"? I had heard about this. Please help. THank you.
PLEASE HELP- online poker winnings - earned income?
Yes it is earned income, the case went all the way to the highest courts when Billy Baxter said all income from poker should be earned income, and the courts agreed with him. I might also like to say about online poker, that he is dead wrong. Many sites still take u.s players, and i myself being one of them take money out of my online poker account all the time, and have no issue in doing so.
Reply:You have bigger problems afoot. On-line gambling is ILLEGAL in the US. You risk confiscation of ALL of the winnings. Many on-line sites won't even attempt to transfer funds to a US bank (it's illegal for the bank to accept them) since the operators risk arrest if they ever travel to the US. This HAS happened!
Reply:If you are a professional poker player, it is earned income and subject to self-employment tax but you can write off all your expenses. If you play for amusement, it is a hobby and you can take an itemized deduction for your losses to the extent of winnings.
Reply:You can set up and make contributions to a traditional IRA if:


1. You (or, if you file a joint return, your spouse) received taxable compensation during the year, and


2. You were not age 70陆 by the end of the year.





Generally, compensation is what you earn from working. Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services. The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans).





Scholarship and fellowship payments are compensation for this purpose only if shown in box 1 of Form W-2.





Compensation also includes commissions and taxable alimony and separate maintenance payments.





Compensation does not include any of the following items.


1. Earnings and profits from property, such as rental income, interest income, and dividend income.


2. Pension or annuity income.


3. Deferred compensation received (compensation payments postponed from a past year).


4. Income from a partnership for which you do not provide services that are a material income-producing factor.


5. Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs.





Even though the IRS rules don't specifically mention "gambling winnings," I would say that unless your gambling winnings are indicated in Box 1 on a W-2 form, that they would not count towards earned income for IRA purposes.