Oct 15, 2020 Your gambling winnings are generally subject to a flat 24% tax. However, for the following sources listed below, gambling winnings over $5,000 are subject to income tax withholding: Any sweepstakes, wagering pool (including payments made to winners of poker tournaments), or lottery. Apart from slot machines, the same applies to winnings from lottery, bingo, keno, poker or other games of chance. So, if the amount won on a slot machine is higher than $1200, the casino is required to report it. In other words, all your gambling winnings have to be reported on your tax return as 'other income' on Schedule 1 (Form 1040), line 8.
- What Amount Of Casino Winnings Is Taxed
- Do I Have To Pay Taxes On Slot Machine Winnings
- Casino Winnings Tax
- Free Slot Machine
- Do I Have To Pay Taxes On Slot Machine Winnings
- Jackpot Winnings Taxable
- Are Winnings Taxable
Whether it’s in Las Vegas, Atlantic City or the local casino, thousands of people dream of winning big and changing their lives forever.
Most people that go end up with thinner wallets than what they went with but there are the occasional few that take home the big bucks.
However, if Lady Luck is on your side, you don’t get to keep all the money to yourself.
Gambling winnings count as taxable income, meaning that it’s not just your lucky day; you get to share it with the Internal Revenue Service (IRS).
So before you spent it all have the taxman knocking on your door for its share of the spoils, you must understand how gambling taxes work.
Whether it’s sports betting, poker, fantasy sports, casino or even the lottery, everything you win from gambling is taxable. While this may cause you to sigh or to grit your teeth, unfortunately, that’s just the way it is.
This guide will show you everything you need to know about gambling taxes, including how they are taxed, the important requirements you must fulfil and how to report your gambling income.
![Winnings Winnings](https://fthmb.tqn.com/cdR9IWRS0exvsQfreLuG2m5bw7c=/768x0/filters:no_upscale()/GameKing-56be6cac5f9b5829f8648a24.jpg)
How Gambling Winnings Are Taxed
The federal income tax process with regard to gambling remains the same across the US.
Unlike income tax, US gambling taxes are not progressive. No matter how small or how large you win, you are required to pay 25% to the IRS.
However, things can be different at the state level.
Each state in the US has its own tax structure. Therefore, you must first find out the tax structure of your state of residence.
Here’s a brief summary of how you can expect federal and state law to tax your gambling winnings.
First of all, you must know where your winnings came from, specifically the type of game which you were playing and cash out from.
There are certain thresholds you must meet, and they are as follows:
- $600 or more at a horse track or 300x your original bet;
- $1,200 or more from slot machines or bingo;
- $1,500 or more at keno;
- $5,000 or more playing poker
Now, for example, if you won $1,000 from horse racing and won $5,000 playing poker, you don’t report a lump sum of $6,000 won from gambling. Instead, you report each individual game.
This means that in the event you do win big, racetracks and casinos will require your Social Security Number before they pay you your winnings. You are also required to fill out IRS Form W2-G and report your winnings.
The reason for this detailed breakdown of winnings is because the casino will deduct 25% from your winnings before paying you. This is the money you are taxed by the US Government and you will be issued a receipt by the casino as proof.
But what about the gambling taxes on winnings less than the above thresholds?
As per the IRS, you must report them on your federal tax return as income.
It’s better to be safe than sorry, so always report your gambling winnings, no matter how small they are. Even if it’s just a few dollars from the slots, write it down.
Some states have an income tax rate of their own. If so, you must report your winnings on your state tax return too. This is particularly important now that gambling is becoming legal.
It’s worth mentioning here though that Nevada, the only state where gambling in a casino was legal, did not use to tax gambling income. Always check your state’s laws to see if you are legally required to report gambling winnings.
Many questions are asked about online gambling winnings and how they are taxed.
Online gambling taxes are in a bit of a grey area. Currently, online gambling is illegal in most states anyway but in those where it is legal, most are in the form of online sports betting. This is subtle but very important to be aware of.
The IRS specifies what is classed as taxable income and what is classed as non-taxable income.
Those that play daily fantasy sports for a living through DFS contents must be careful when it comes to gambling taxes.
For those living in a state where online sports betting will become legal in the future, through an online sportsbook, it’s recommended to read IRS Publication 525. It goes into detail about what they class as taxable income and what they deem as non-taxable income.
It’s rare for gambling winnings to be categorized as non-taxable income. Therefore, if you do win money from online gambling, be prepared to treat it exactly the same as you would for gambling winnings in a traditional casino.
Reporting Gambling Winnings To The IRS
One of the main reasons state governments want to legalize sports betting is because of the potential windfall of cash. How to pick a slot machine.
This means that they will be putting a lot of effort into making sure they get as much as possible from players’ winnings.
Not reporting gambling winnings to the IRS and/or state government is a much bigger risk than the games you are playing.
With the lottery, for example, the state will obviously be made aware of winning tickets. It’s also certain that the federal government will be made aware of the winner too.
In terms of gambling, each state in the US has a gaming commission. They are responsible for keeping an eye on all gambling activities.
Casinos have an obligation to report all winners to the gaming commission, so any plans to avoid reporting winnings should be short-lived.
If you do not report gambling winnings, you risk being pursued by the government for tax evasion.
If you are then found guilty of tax evasion for not reporting your gambling winnings, you will face the same consequences as people evading tax on other taxable income.
Casinos’ Gambling Earnings Reports
As part of their operating license, casinos must report winnings to the IRS. However, they are required to report gambling winnings at the same thresholds as if it was an individual:
- $600 or more at the horse track or 300x your original bet
- $1,200 or more playing bingo or on slot machines
- $5,000 or more from poker
There are certain games that casinos are not required to issue Form W2-G or withhold taxes. These games include roulette, blackjack and craps.
The reason for this isn’t so clear cut. The IRS says that table games require a degree of skill while slot machines come down to pure chance. But casinos find it tough to be certain how much a player cashes out with compared to the amount they started with.
Nevertheless, just because you don’t get From W2-G or don’t have taxes withheld from these games, you are still required to report all of your winnings to the IRS.
Do it yourself when it’s time to file your taxes.
Professional Gamblers
Some people gamble professionally for their livelihood.
For these players, gambling winnings are considered regular income for tax purposes, meaning that they are taxed at the normal income tax rate, rather than the gambling tax rate.
All income and expenses for professional gamblers much be recorded on Schedule C, not Schedule A.
Gambling Winnings Records
Always report your gambling winnings; the consequences of not doing so are not worth facing.
With all this in mind, keep a record of all your receipts. This includes both winning and losing sessions. Gambling losses can also be deducted against income but without proof, you will not be able to claim these losses. Good record keeping will ensure you can itemize your losses and use them to offset against your income.
Here are a few things you should record:
- The type of bet
- The date of the bet
- The name of the casino or sportsbook you bet with
- The casino’s or sportsbook’s address
- The names of people you were with
- The total amount you bet
- The total amount you won or lost
- Documentation as evidence of your placing your bet
In terms of the documentation, here are some examples you can use.
For keno winnings, keep a copy of the tickets you bought as validated by the casino, your credit records and check-cashing record.
For slots winnings, record the slot machine number you won from, how much you won each time and the date that you played that machine.
For table games winnings, such as poker, blackjack, baccarat and craps, record the number of the table you were playing at and, if applicable, any information where credit was issued by the casino.
For bingo winnings, make a record of the game numbers you played, the price of the ticket and how much you collected.
For horse and racing winnings, make a record of the race you bet on, how much you bet and how much you won on the winning ticket and how much you lost on a losing ticket. Include any unredeemed tickets as supplementary evidence.
Finally, for lottery winnings, make a record of the tickets you bought, the dates you bought the ticket, how much you won from a winning ticket and how much you lost from a losing ticket. Again, you can include any unredeemed tickets as supplementary evidence.
If you gamble casually from time to time and you miss a few receipts on accident, you will be fine. Just make sure you are accurate with your reporting next time.
There are two IRS forms you must complete to report gambling winnings: the U.S. Individual Tax Return 1040 and IRS Form W-G2 Certain Gambling Winnings.
All profits from gambling are subject to a 24% gambling tax.
However, some sources of gambling winnings are automatically subject to withholding tax.
What Amount Of Casino Winnings Is Taxed
For more information on this, see the IRS guidelines.
They will help prevent you from making mistakes on your tax form and reduce the shock of being faced with a big bill at the end of the financial year.
Frequently Asked Gambling Taxes Questions
Do I Have To Pay Taxes On Slot Machine Winnings
Do I Have To Pay Taxes On Gambling Winnings From A Casino?
Yes, you must pay taxes on gambling winnings from a casino. A more detailed explanation of how gambling winnings are taxed can be found above. You are legally required to report your income from all types of gambling activities.
Different games have different guidelines for when the income becomes taxable, but each must be reported on the tax return. Keep an organized record of all winnings and losses, which can be used to offset against profits.
Do I Have To Pay Taxes On Gambling Winnings From An Online Casino?
Casino Winnings Tax
Yes, you must also pay taxes on gambling winnings from online casinos. This is because federal and state governments categorize winnings from gambling as income you are generated in an attempt to make more.
It doesn’t matter if it’s from playing the odd slot machine on your smartphone or from the poker table on your computer at home. As long as you win, the IRS wants their share.
Do I Have To Pay Taxes On Winnings From Daily Fantasy Sports?
Once again, yes, you must pay gambling taxes on winnings from DFS. Providers of these games will be documenting your winnings to the federal government. If you try and avoid paying taxes on daily fantasy sports winnings, you can land yourself in a lot of trouble.
Do Non-US Residents Have To Pay Gambling Taxes On Gambling Winnings?
Yes, non-US residents must pay taxes on gambling winnings. Whether it’s in the lottery or in a casino, they must pay a percentage of their winnings to the federal government. Non-residents must complete and file IRS Form 1040NR.
Gambling income for non-residents is taxed at 30%.
Unlike US residents, non-resident aliens cannot deduct gambling losses from their tax bill.
However, a tax treaty between the US and Canada allows Canadian citizens to deduct gambling losses up to the amount of their gambling winnings.
Can I Write Off My Gambling Losses On My Tax Return?
Yes, you can write off gambling losses on a tax return.
You must first report some gambling winnings, so having a record of your results will be very useful. From here you can start to itemize tax deductions for all losses.
Nonetheless, there is a limit on the losses you can claim; it depends on how much you won.
In order to claim tax deductions, you must be able to prove you actually lost the money. This places even more emphasis on keeping your gambling records in order.
At the end of the day, you are deducting losses so you aren’t required to pay income tax on your gambling winnings. This is important as it impacts how the winnings affect your Modified Adjusted Gross Income (MAGI).
MAGI is based on all of your other tax deductions. It helps to determine if you need to pay more tax on other income or lose some of your deductions.
Do I Have To Pay Taxes If I Keep All My Money In My Account?
Even if you don’t withdraw your winnings from your account, you must still pay taxes. After all, you have still profited from gambling. Record all of your winnings throughout the year and report them on your tax return according to the IRS guidelines.
Am I Taxed On Group Gambling Bets?
Yes, you are taxed on group or team gambling bets. In fact, it’s the same the tax system used to gambling winnings for individuals.
If you are betting with a team, it becomes even more important to track your bets and keep a record. You don’t want to be taxed on the entire payout when you only took home a percentage of it.
Do You Need To Report Gambling Winnings After You Retire?
Even if you’re retired, you can still be taxed on gambling winnings. If anything, it is even more important when you’re retired to report gambling winnings. If you don’t, you can run into a few problems.
For starters, if you don’t report gambling winnings, you can be moved into another tax bracket. You could even have medical coverage changed and the premiums could increase too.
All because you didn’t report your bingo winnings to the IRS.
Be diligent with your reporting and ensure it’s all accurate, even during your retirement.
Free Slot Machine
Summary
If you had no idea about gambling taxes and what you need to do, these basic principles should give an idea.
Above all else, make sure you always report your gamblings. It’s a much better alternative than being hit with a massive tax bill at the end of the year.
Do I Have To Pay Taxes On Slot Machine Winnings
It’s also a good idea to keep records of your winnings too. These can be used to deduct losses and you will also know how much you need to pay in taxes from your winnings before the bill even arrives.
It might seem a bit over the top to keep winnings receipts if you gamble every once in a while. But in the eyes of the IRS, there’s always a chance you won big.
Tags
Gambling earning reportsgambling taxesprofessional gamblersYou seem to know a lot about on-line casinos. I’m curious if the winnings are taxable income. I have tried the IRS site and they do not specifically mention off-shore or on-line gambling.
Yes, they are taxable. You are on the honor system to report the income. The casinos will not report any winnings to the IRS. It isn’t just on-line casinos, ANY net gambling winnings are taxable, regardless of where or how they were won.
Hey dude I had a random question and I didn’t know who else to ask!! I won 12000 on an online casino. Should I cash it all out at once? Do I have to do anything related to reporting it on my taxes? If I don’t report it will I get in trouble? What would you do in this situation? Thanks for the help!!!
Whether to cash out it all out at once is your decision. Assuming you are a U.S. citizen you are obligated to declare the income on your next tax return. If you don’t you could be charged with tax evasion. However this sort of thing is largely on the honor system. You are also allowed to deduct any gambling losses in the same year against your winnings.
I know that you are allowed to deduct gambling losses up to a certain amount on your tax returns..what is that limit?
Zero. You can not deduct a net loss at all. However if you have some W2G forms (generally given on wins of $1200 or more in slots, video poker, and keno) then you can deduct other losses against these wins. You should keep documentation for any losses you claim. You may be thinking of deducting losses on stocks. There you can deduct up to $3000 a year, and can carry over amounts larger than that to the next year. I’m still carrying over losses from the tech crash in 2000.
Hello! I was recently playing 50-way 20-cent video poker in Detroit, and was lucky enough to hit 2 four of a kinds on the deal- both hands were two deuces and a pair- and resulted in a jackpot and W-G. Not that I was complaining, but it occurred to me that because both pay outs were only slightly over the $1200 limit, that I could have avoided the jackpot tax if I were to play a few less hands. So my question is this: what is the maximum number of hands I should have played to minimize getting hit with the tax burden when getting dealt four of a kind on the deal? Keep up the great work with the site!
W2G forms are definitely something to think about when playing video poker at the larger bet amounts. Although you are obligated to pay taxes on your net win at the end of the year regardless of how many W2G forms you have, a payout of $1200 or more will necessitate a wait and obligate you to tip the person paying you. In less classy casinos a hand pay will also cause the tip vultures to start hovering around you. To avoid all of this sometimes the player should consider deviating from optimal strategy. For example with AAA88 in 10/7 double bonus the odds marginally favor keeping the aces only. However in a $2 to $10 game hitting four aces will pay over $1200, necessitating a W2G form, while a full house will stay under the limit. Considering the tax implications keeping the full house is the better play.
To answer your question I’ll assume a four of a kind pays 25 times the bet. Then a four of kind on the deal in a $0.20 50-play game will pay $0.20 * 5 * 50 * 25 = $1250. You will get a four of a kind on the deal once every 4165 hands, on average. If you were to drop the number of hands to 47 the win for a four of a kind on the deal would be 47 * $0.20 * 5 * 25 = $1175, staying under the W2G threshold.
By what method do casinos pay you when you cash out? For example, if you were to win say $10,000-$15,000 playing Roulette or Black Jack can you get that money in a cashiers check, money order, etc.? As one certainly doesn’t want to be walking around with or driving back to Canada with a bunch of cash on them!
I believe the policy at most casinos is that for large transactions you can have the funds any way you want. Before you consider laundering money by turning cash into checks be aware that casinos ask for a Social Security number and make a record of any transaction involving $10,000 or more.
On TV they had a program the Do & Don’ts in Las Vegas. On this program they advised you that when playing Blackjack and win you are not subject to taxes?? I can’t believe this.
You are subject to tax for any gambling winnings. However table games players are basically on the honor system. An exception that a W2G form is generated if a win is 300 for 1 or more odds and is over $600. That is usually only an issue with progressive jackpots. Also, if there is a cash transaction of $10,000 or over the casino is obligated to fill out a CTR, which stands for Cash Transaction Report. Yet these are nothing to worry about, and I think many big bettors are overly paranoid about them.
Quick question about withholding tax. As a Canadian I know the casino will withhold 30% on any slot winnings over $1200. My question..on the ticket out system in most Vegas hotels would the tax be charged on any ticket cashed out over $1200? Even if it wasn’t won on one specific jackpot and had accumulated over time? Will any $1200 always be a hand pay jackpot? and how do casinos handle players on high denomintaion machines? ie. three of a kind on a $500 machine would require a tax form.
Only single wins of $1,200 or over are subject to withholding. If you won over $1,200 in small wins you would not be subject. When you press the cash out button the machine doesn’t know your citizenship and will just print a voucher for whatever you had. Any $1,200 or over win will always lock up the machine until an employee unlocks it. On high denomination games, usually starting at $10 or $25, the casino may keep a log of all your taxable wins. On a $500 machine, I’m sure they would have somebody standing right next to the machine do the paperwork. When you are done they will give you a single W2G form for the sum, and in your case subtract the withholding from that.
How does the taxation (Form W2-G) work on machines whose coin-in values are near or greater than the $1200 threshold? Hypothetically, if a player bet $5000 on a Red, White, & Blue slot machine, and got three blanks, which returns the original bet, would the player get a W2-G?
The W2-G is based on the gross win, not the net win. So, yes, if the player got a $5000 push on a Red, White, & Blue, he would get a W2-G.
Cliff from Aiea
In the U.S., any gambling winnings of any kind and any amount are taxable. However, with table games, it is on the honor system to report.
Recently I visited Charles Town Races and Slots, betting on the Kentucky derby. A Hispanic guy had hit a good payout on a slot machine for $6,000 and seemed to be having some sort of ID problem. I was in the casino for about an hour. In passing him on the way out, still standing by the machine, he still seemed to be having a problem. My question is if he has no ID (for whatever reason) can he still get the payout? The casino is in the state of WV. Would the rules prohibit a person in the country illegally from betting or wining if he or she has bet?
I forwarded this one to Brian, who is a former gaming regulator, and currently a casino manager. Here is what he said,
The casino would not know that someone was in the country illegally. If he had a valid passport, the jackpot would be honored. The illegal may not know this, be scared or they may not have a valid ID to show. Whenever someone wins $1,200 or more, ID is required for tax purposes. If someone doesn’t have his ID, the jackpot would be held in the cage waiting for them to claim it. In most cases, the person has legitimately forgotten their ID; however, sometimes you run into a problem, such as a minor who was gaming. If he doesn’t claim it, the money has to be added back into revenue because the deduction (jackpot) was never paid or there are abandoned property rules that prevail. Also, like the U.S., most countries tax worldwide income. To that end, the U.S. has tax treaties with several countries to withhold or notify the respective governments of monies won in the U.S. so Uncle Sam always gets his cut.
Hi, I Recently won a large slots jackpot in Vegas. Had around $38k deducted for taxes. I’m a New Zealand citizen & tax resident. New Zealand has no gambling tax. The United States and New Zealand do have a joint tax agreement but I still had money deducted. I do believe I can get all or some back. I'm getting conflicting advice from tax people here. Can you recommend a good US tax accountant, or offer any advice? Enjoyed your site (esp. tipping re dealers & hosts)
This is getting out of my area, but I'll try to help. The IRS web site says that for this purpose, the U.S. has tax treaties with the following countries: Austria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russian Federation, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom. Note that New Zealand is not on the list.
If you are a resident of one of the listed countries, and you hit a jackpot of $1,200 or more, then you should ask to fill out a form W8BEN. That should reduce, or in most cases, eliminate the withholding.
Even if you are not from one of the listed countries, or don’t fill out the form, you can still get the withholding back by filling out form 1040NR, or the simplified version the 1040NR-EZ.
My own tax accountant is Marissa Chien EA, author of Tax Help for Gamblers. She does an outstanding job, but some might consider her expensive. For a 1040NR she says she charges about $1,000. She adds this form is usually incorrectly filled out by most others. Her e-mail is .
IRS PDF’s:
- 1040NR-EZ instructions (PDF)
- 1040NR-EZ form (PDF)
- 1040NR instructions (PDF)
- 1040NR form (PDF)
- W8BEN instructions (PDF)
- W8BEN form (PDF)
Marissa is on Twitter at @taxpro4gamblers, where she occasionally answers tax questions to followers.
Las Vegas casinos, namely Caesars and Bellagio, have recently been giving me a harder time when cashing out over a few thousand dollars in chips. This past trip when I cashed out $8,000 at Caesers they asked for my Social Security number. When I naturally asked why, they said they couldn’t tell me exactly and all they could do was give me a card mentioning something vague about Title 31. Could you explain to me and your audience in greater detail what exactly is title 31 and, specifically, what will and will not get your flagged by the IRS. Thanks!
Title 31 is a regulation stating that the casino should make a record of cash transactions of over $10,000 by a single player in a single day. In such cases, a CTR must be filled out, which stands for Cash Transaction Report. This includes making multiple transactions, adding up to over $10,000. If you cash chips close to, but under, $10,000, the cage will likely want to make a note of it, in case you come back later that day, and go over the $10,000 daily limit.
My advice is to give them what they ask for. You have a lot more to fear by looking like you are avoiding CTRs than the CTRs themselves. In fact, I think there is nothing to fear from a legitimate CTR; the casinos generate lots of them. Personally, I have generated hundreds, to no known detriment. However, it raises lots of attention when you look like you are going out of your way to avoid them. I know one person who was rebuffed when he tried to cash in chips, because he had too many previous redemptions of just under $10,000. So, that is my two cents. Better suited to answer this is 'Brian,' a current Las Vegas casino manager, and former regulator, whom I like to turn to for procedural questions like this.
In a nutshell, Title 31 is the U.S. Department of Treasury Code designed to prevent money laundering. It requires that certain large cash transactions be reported to the Government. These are filed on FinCEN Form 103 “Currency Transaction Reports by Casinos” (FinCEN is the Financial Crimes Enforcement Network). Casinos are required to report all currency transactions in excess of $10K in a single day. The “day” doesn't follow the clock − a casino picks their day (e.g., 3 a.m. to 2:59 a.m.).
All Financial Institutions comply with Title 31. Casinos are considered financial institutions because of the types of transactions they perform, which are similar to those of a bank (e.g., check cashing, wires, loans, cash exchanges). Unlike traditional financial institutions, casinos conduct a great deal of transactions with unknown patrons. When you set up your checking account at the bank, you give them all of the necessary information needed to fill out CTRs. However, when cashing chips at the cage, the only way the casino can get this information is to ask. Casinos have to get all of the necessary information to fill out a CTR before the patron crosses the $10,000 threshold. Since the fines for non-compliance are hefty, they make a diligent effort to comply.
Jackpot Winnings Taxable
Casinos are apprehensive to give patrons too much information on Title 31 for fear of inadvertently breaking the law. Casinos are specifically precluded from aiding patrons in structuring transactions in such a manner as to allow them to skirt the requirements. When you ask questions, they prefer to point to a preprinted informational card and don’t like to discuss the matter for fear of divulging inappropriate information.
Circumventing Title 31 is relatively easy for undocumented transactions (e.g., chip buys, chip redemptions, etc.), but why would you want to? If the casino has reason to believe that you are purposefully conducting your transactions in an effort to avoid the reporting requirements of Title 31, they'll fill out a Suspicious Activity Report by Casinos form (aka SARC). If a casino learns that you exceeded the $10K threshold and they didn't get the required information, they will bar you from gaming until they get it. — Brian
I have heard that to finance the health care bill, a surcharge will be imposed on GROSS income above a certain point. This will have a big impact on high-level slot players, who accumulate hundreds of W2-G forms, like me. Do you have any insight?
Here is what the bill says:
In the case of a taxpayer other than a corporation, there is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to 5.4 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $1,000,000. -- Section 59C(a) page 337 H.R. 3962 (PDF — 3270 KB) or CNN.comThe surcharge would be applied before the gambler could deduct any offsetting losses. I verified this with Marissa Chien, co-author of Tax Help for Gamblers. For high-level slot players, it is not difficult to rack up W2-G forms in the millions per year. Most of these players will still have a net loss on an annual basis. Past the million point in gross income, the player will pay a 5.4% tax on any win of $1,200 or more, even if there is a net loss for the year. This is just my opinion, but I think that isn’t fair. If we must tax gambling winnings (which they don’t in Canada), it should be on the net, not the gross winnings, on an annual basis. Should this become law, it will ruin high-level slot play in this country.
Marissa is on Twitter at @taxpro4gamblers, where she occasionally answers tax questions to followers.
I have a resolution this year to try and keep as accurate a track as I can on my gambling trips. Obviously, bankroll taken and net outcome are key entries. Since I play almost 100% craps, I don’t have to worry about tracking lots of games. This log needs to have enough information so I can use it to prove losses to offset the big jackpot my wife is going to win this year.
According to page 12 of IRS publication 529 (PDF), the minimum a gambling log should include is:
- Date and type of wager or wagering activity.
- The name and address or location of the gambling establishment.
- Names of other persons present during the gambling activity.
- Amount won or lost.
In addition, you should keep other documentation, such as W2-G forms and losing tickets. Personally, I keep my log in Excel and always retain W2-G forms and losing sports tickets. The book Tax Help for Gamblers by Jean Scott & Marissa Chien has a whole chapter on this topic.
This question was raised and discussed in the forum of my companion site Wizard of Vegas.
Marissa is on Twitter at @taxpro4gamblers, where she occasionally answers tax questions to followers.
Marissa is on Twitter at @taxpro4gamblers, where she occasionally answers tax questions to followers.
In your Nov 6, 2009 column you warned that to help finance the health care bill any gambling winnings from W2G forms over $1,000,000 would be subject to a 5.4% tax, and this would be applied before the deduction of gambling losses. This could have a big impact on very high-end slot players, who rack up stacks of W2G forms. My question is, what is the status of that?
I’m told that said provision (section 59C) was dropped from the final bill. That is the good news. The bad news is there is a new Medicare tax on unearned income above $250,000 for a married couple, starting in 2013. It looks like this may apply to gambling winnings before itemizing any gambling losses. Please ask me about this again in about two years for a status report.
This question was raised and discussed in the forum of my companion site Wizard of Vegas.
gambler
That is quite the difficult and controversial question. Before I answer, let me say that tax law is not my area of expertise, so you should consult a tax professional about your personal situation. Another better source than me about this is Tax Help for Gamblers by Jean Scott & Marissa Chien. Chapter three deals with this topic.
The general rule of thumb is that earnings are taxable and gifts are not. So a no-obligation comp would not be taxable. Anything that was given to you based on points, a drawing, a tournament, or earned some other way would be taxable. Granted this is not going to cover every situation, and some situations can be in a gray area. If you’re in doubt, consult a tax professional.
Are Winnings Taxable
This question was raised and discussed in the forum of my companion site Wizard of Vegas.
I didn't realize this until I started hitting W2-Gs from casinos, but are there any ways to get paid without giving a Social Security number? I'm a bit paranoid about casinos getting more information than necessary. I hit a few royals and hand pays and do not like that the casino holds on to my license and I have to write in my social.
First, you'll have to produce photo identification, or the casino will hold onto the money until you do. If you show identification but decline to produce or declare a valid social security or other tax identification number, then 25% to 30% will be withheld depending on whether the jackpot is more or less than $5,000, and whether you are from the United States or a foreign country with a reciprocal tax treaty.
As of 2011, such countries were Armenia, Australia, Austria, Azerbaijan, Bangladesh, Barbados, Belarus, Belgium, Bulgaria, Canada, China, Cyprus, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Mexico, Moldova, Morocco, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russia, Russia, Slovakia, Slovenia, South Africa, South Korea, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Thailand, The Czech Republic, The Netherlands, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Ukraine, United Kingdom, Uzbekistan and Venezuela.
I've been trying to figure out the rules exactly, but it is giving me a headache. Please refer to IRS rules for issuing a W2G form for more information.
My thanks to Marissa Chien, co-author of Tax Help for Gamblers , and MathExtremist for their help with this question.
This question is discussed in my forum at Wizard of Vegas.
As of 2011, such countries were Armenia, Australia, Austria, Azerbaijan, Bangladesh, Barbados, Belarus, Belgium, Bulgaria, Canada, China, Cyprus, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Mexico, Moldova, Morocco, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russia, Russia, Slovakia, Slovenia, South Africa, South Korea, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Thailand, The Czech Republic, The Netherlands, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Ukraine, United Kingdom, Uzbekistan and Venezuela.
I've been trying to figure out the rules exactly, but it is giving me a headache. Please refer to IRS rules for issuing a W2G form for more information.
My thanks to Marissa Chien, co-author of Tax Help for Gamblers , and MathExtremist for their help with this question.
This question is discussed in my forum at Wizard of Vegas.