16/11/2010, Poker Tournaments

The newest poker champion, Jonathan Duhamel, who won the World Series Of Poker 2010, will share his $9 million money prize with the state.

The world champion of poker will be forced to give up nearly half of his prize for the US Treasury and for the federal and provincial governments as well. Let's see how much of the money prize the winner can actually keep for himself. According to the Canadian laws, the first $500,000 collected by Jonathan Duhamel would be taxed at 19%, while the surplus income would be taxed at 30%.

The IRS, the revenue service of the United States federal government, is the first authority to dip into the kitty of the poker player. According to the US-Canada Tax Treaty, the Canadian player loses 30 percent of his money in favor of the IRS. From Duhamel's prize of $8,944,310, the IRS will finally get $2,683,293! Jonathan Duhamel will see his winnings melted to $6.23 million.

Unfortunately, the tax rate do not stop here and it could finally reach 48.2%, which represents nearly $4.29 million. But, he can recover a part of this money, if he shows the gambling losses while in the US. Fortunately for the poker champion, the $2.68 million tax paid to the IRS can be deducted from the $4.29 million under a tax treaty between Canada and the United States.

In Canada, the amateur players do not pay income tax on their gambling winnings.
"Lottery winnings are not taxed in Canada, but Mr. Duhamel is a professional player. It is an independent worker who earns his living by participating in poker tournaments, "said the tax specialist Michel Lavoie.

In order to reduce the tax payments, Jonathan Duhamel could create an incorporated company. He can also choose to deduct his business expenses such as the price of a ticket, of the hotel room, etc.

In 2008, Peter Eastgate from Denmark, the winner of the 2008 World Series of Poker Main Event, was taxed with 45% for the first $4 million of the total amount and then the rest of the amount was taxed with 75%. Denmark is the country with the highest tax on gambling winnings in the world. At the end, he could only enjoy the $2.5 million from the total of $9.1 million win.