Step-by-step instructions for poker players – filling out 3-NDFL and paying tax

Step-by-step instructions for poker players – filling out 3-NDFL and paying tax

The question in the headline gained new appeal for poker players from the Russian Federation in 2021. This is because this year the government of the country has directed a lot of efforts to take control of payment systems and transaction paths that poker players actively use.

The first victims in this “war” were YuMoney (Yandex.Money) and QIWI, which are no longer in any major room and will not be there yet. Visa and MasterCard are still working with varying success (in some rooms they are no longer available for Russians), as well as WebMoney. Foreign payments – Skrill, NETELLER, ecoPayz and others – continue to be relevant, but it is not possible to make a direct deposit from cards and from banks of the Russian Federation to them for gaming purposes. The most working and safe cryptocurrency now looks, but it is not a panacea either, since it is available only in a small number of rooms.

With such developments in the near future, poker transactions may well become completely “open” for supervisory authorities – that is why it is important for every player to know the procedure for declaring income and paying taxes.

Popular questions about paying tax on winnings in the Russian Federation

# 1 What are the best transaction methods for declaring?

From the point of view of the Federal Tax Service of the Russian Federation, it is easier, more transparent and safer to declare income received on bank account or bank card in Russia… In this case, transactions are easy to verify and fewer documents are required from the person to confirm the legality of the income received.

In second place are Russian payment systems… Although in 2021 they cannot actually be used for transactions, if you made withdrawals and deposits through them in 2020, then they can be reflected in the declaration – the FTS is also quite easy to check transactions in YuMoney, QIWI Wallet and other wallets of the Russian Federation, since they have pegging to banks.

Third – foreign bank account… Suitable only if the foreign bank exchanges information with the supervisory authorities of the Russian Federation or is located in a country that is a member of the EAEU. It is prohibited to receive income on an account in banks in other countries – this can be regarded as harboring income or even money laundering and is punishable by fines.

Fourth – foreign payment systems… Since they do not cooperate with the Federal Tax Service of the Russian Federation and do not provide there information about user transactions, it is more difficult for the tax authority to verify the legality of income – it can only rely on statements provided by the user. If the tax office does not want to believe you and cannot verify the income, then it may refuse to accept the declaration and even report you to the prosecutor’s office with suspicion of money laundering.

Fifth – cryptocurrency… At the moment, banks and the Federal Tax Service of the Russian Federation do not have functionality and mechanisms for verifying cryptocurrency transactions, so it is almost impossible to confirm the legality of such income there. Even if you sell cryptocurrency on an exchange and receive payment to a bank account, the Federal Tax Service may have questions about the legality of the cryptocurrency you received – and then you will face the problem of confirming your income.

# 2 What is the tax rate on poker winnings?

You do not need to pay tax on winnings up to ₽4K. Poker income is subject to the standard tax rate of 13% in the Russian Federation. Many people mistakenly believe that 35% is the correct rate, but it applies only to prizes in promotions, and it is not paid by an individual, but by the organizer of the action.

# 3 How long does it take to pay tax on poker income?

To pay personal income tax (PIT), the terms are the same, regardless of the source of income: you must file a tax return (3-NDFL) by April 30, and then pay tax by July 15.

# 4 Is it possible to conduct poker income through IE?

Gambling, to which poker is also referred to in the Russian Federation, is not an entrepreneurial activity – that is, by creating an individual entrepreneur, you will not be able to choose the appropriate type of activity for which you will report, which means that you will cheat the tax one. The Federal Tax Service of the Russian Federation willingly checks the individual entrepreneur for the slightest violations and assigns fines, and since you cannot confirm the source of income as an individual entrepreneur (playing online poker in the Russian Federation is not permitted by law), choosing this path may be problematic for you.

# 5 Can a poker player be self-employed and pay 6% tax?

According to the Tax Code of the Russian Federation, self-employed are individuals who are not individual entrepreneurs and provide services to individuals for personal, household and other similar needs without hiring employees. In a broad sense, this category includes people who receive professional income – hairdressers, tutors, manicurists, photographers and other people who provide services or create goods with their own hands. Poker players do not fit into this category – after all, they do not provide services to anyone and do not create any product.

At the same time, using self-employment as a cover for poker income is a very time consuming and dangerous activity.

Firstly, the self-employed work procedure implies invoicing for a service / product and receiving payment for them to a specific bank account, from which 6% tax is automatically deducted at the end of the month. Billing the room here disappears – because you cannot provide a service to it as a player, and if you try to carry it out as a fake service, then the FTS check will easily reveal the fraud by contacting the room for confirmation.

Secondly, the receipt of professional income in the Russian Federation implies approximately the same, not very large amounts of enrollment – if your amounts are greater, the tax authorities will request documents to confirm the legality of their receipt. In addition, the annual income for the self-employed is limited – it is ₽2.4M (~ $ 31K at the exchange rate at 13:00 Moscow time on 04/03/2021). So this option is not suitable for positive regulars with good income, and for regulars with less money, it is too laborious and dangerous.

How to fill out a tax return: instructions

Step 1. Create a personal account on the website of the Federal Tax Service of the Russian Federation. It can be done in two ways: verify by visiting the tax office at the place of residence, or log in through the State Services (ESIA) – if you have a verified account there, you will not need to go anywhere else.

Step 2. Go to the office in the section “Life situations”. Select “Submit 3-NDFL Declaration” there.

Step 3. Start filling out the declaration. Click on “Fill online” in the window that opens. In the “Data” section that opens, select the year for which you are submitting the declaration – 2020, in the lines “Are you submitting a declaration for the selected year for the first time?” and “Are you a resident of the Russian Federation?” put your choice on “Yes”. Then click on the “Next” button.

Step 4. Fill in the “Income” section. This is the main part of the declaration. First of all, select the “Outside the Russian Federation” tab in the section that opens and click on the “Add source of income” button there.

From this point on, you have two options for submitting information:

  • By sources of income for the year – each room will need to be entered into the declaration as a separate source, entering information on receipts from this room in one amount for the entire 2020. Here the amount of income will need to be calculated independently in the table, taking into account costs (deposits).
  • By the number of parishes – each income from each room will need to be entered in the declaration as a separate source of income. In this case, the declaration will be more voluminous, the tax will calculate the total amount of income for the year from the receipts you made, but your expenses (deposits) will not be taken into account.

Otherwise, the procedure for filling in the “Income” section is the same for both options.

After clicking on the button “Add source of income”, you will see the tab “Source of income No. 1”. Click on it – this is where all the main work on filling out the declaration is done.

First of all, fill in the “Name” and “Country” lines. In the first, you need to indicate the official name of the room from which you received income for the year or a specific transfer. You can find the name in the information about the receipt, which is in your online banking, or on the official website of the room. For example, PokerStars with a cashout to a Sberbank card is designated as TSG INTERACTIVE GAMING EUROPE LIMITED, and on the official website – Rational Intellectual Holdings Limited. Both of these names are suitable for a declaration. The country where the organization that owns the room is located can be found on the website. PokerStars has Malta.

The next subsection is “Income”. In it, we select the tax rate of 13%, the type of income – “3011 – The value of winnings received by participants in gambling and lotteries.” Since poker players cannot claim tax deductions, then in the “Provide tax deduction” item, you must select “Do not provide a deduction.” Of course, you can choose 511-Deduction from the amount of winnings received by a participant in gambling and lotteries and the same ₽4K that are not taxed will be deducted from you, but practice shows that this “deduction” is valid only for winnings in casinos and lotteries. and poker rooms are not counted by the Federal Tax Service in these categories.

In the item “Amount of income in currency” we enter the amount for the year or the amount of a one-time receipt in the currency in which you received the money.

In the item “Date of receipt of income” select the date: the last receipt (for the amount for the year) or receipt of a specific amount (to be filled in for each receipt).

Leave the item “Date of tax payment” empty.

We pass below in the subsection “Information about the currency of income”. Here you need to select a currency and indicate the rate at which your receipts were exchanged for rubles.

If you received income immediately in rubles, then in the “Name of currency” section, select 643 – Russian ruble and set the rate of 1 to 1.

For the US dollar and the euro, after selecting the currency, you can click on the checkbox “Determine the rate automatically” – if everything is filled in correctly, then the total amount of income in rubles will appear above in the line “Amount of income in rubles at the rate of the Central Bank”.

For other currencies, you will need to look at the rate at the time of exchange and specify it manually.

Important! For the annual amounts of receipts from different rooms and / or entering data on each receipt separately, each time you need to click on “Add source of income” and again perform the actions specified in Step 3. Do not click on the “Next” button until you have entered all the income that you want to be reflected in the declaration.

Step 5. Do not enter anything in the “Select Deductions” section. You can familiarize yourself with the list of deductions that are available to tax residents of the Russian Federation, but do not choose anything – poker does not give rights to any of the deductions listed in the screenshot below. So just click on the Next button here and then again in the Deductions section.

Step 6. Review the results and attach supporting documents. In the “Summary” section, you can see the amount of tax that you will need to pay and download your completed tax return in PDF and XML. Also here you can attach up to 20 MB of files containing proof of income. These can be spreadsheets for annual amounts, bank statements, cleared invoices, and other documents. It is not necessary to attach them – if the tax authorities need it, they will ask you for the necessary documents after checking the declaration.

Step 7. Confirm the submission and wait. The tax office can check your return for several weeks – in order not to miss the moment of changing the status of 3-NDFL to “Verified”, regularly check your personal account. After the status of the declaration changes, you can pay tax directly in the personal account of the Federal Tax Service, through the State Services or in the bank by downloading and printing the receipt.

In preparing the article, data from the website of the Federal Tax Service of the Russian Federation, articles from the Tinkoff Bank magazine, as well as data from the poker blog of tax consultant Dmitry “Julio” Tratas were used.

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