Taxes On Slot Machine Winnings

Taxes On Slot Machine Winnings

How To File Gambling Taxes
Slot Machine Penny
Taxes On Slot Machine Winnings
What Amount Of Casino Winnings Is Taxed
Congratulations on your big win! Whether you played your cards right, picked the right horses, or just got plain lucky, you can bet that the IRS would like to know about it. But how do you know what needs to be reported? What about losses?
Under the Internal Revenue Code, all income is taxable regardless of its source or amount, with certain exceptions. Whether you made $100 at the slot machine, $1,000 at the race track, or $1,000,000 in the lottery, all of these amounts are taxable and should be reported on Line 21 of your Individual Income Tax Return. However, gambling losses may only be deducted up to the amount of winnings reported. These are reported as itemized deductions on Schedule A of Form 1040.
Generally, the entity who pays out the winnings (i.e. the casino, race track, lottery, etc.) will issue a Form W-2G if you receive certain gambling winnings or have any winnings subject to income tax withholding. The form reports the amount won and any tax withheld along with details on the transaction, and is issued based on the requirements of the specific type of activity, shown below:
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. Understanding Taxes on Slot Machine Jackpot Winnings. It should be kept in mind that regardless of how you are paid all winnings from a casino are subject to taxes. The casino is only required to report winnings over $1,200 on slot machines.
Bingo or Slot Machines: $1,200 or more in winnings per session
Keno: $1,500 or more in winnings (net of the amount wagered)
Poker Tournament: $5,000 or more in winnings (net of the amount wagered or bought-in)
Horse Racing, Lottery, and Other Winnings Not Listed: $600 or more winnings when the payout exceeds the amount wagered multiplied by 300
For instance, if your game of choice in casinos is Slots, you need to provide proof of the slot machine number alongside the date and time you played the machine. This is obviously in addition to a list of all the winnings on that specific machine. Whether you made $100 at the slot machine, $1,000 at the race track, or $1,000,000 in the lottery, all of these amounts are taxable and should be reported on Line 21 of your Individual Income Tax Return. However, gambling losses may only be deducted up to the amount of winnings reported.
For this last category, a requirement to withhold 25% of gambling winnings may apply if the amount exceeds $5,000 and is from one of the following:
Sweepstakes
Wagering pools
Lotteries that are not state-conducted, or
Transactions involving horse or dog racing if the winnings exceed the amount wagered multiplied by 300.
If a group of players is involved in sharing winnings that are reportable on Form W-2G, each person can list their name, social security number, and respective share of winnings on Form 5754, which will then be used by the payer to issue Form W-2G to each winner for the correct amount.
It is essential to keep an accurate record of gambling winnings and losses. The IRS has maintained that records kept should contain information such as the date and type of wagering activity, the name and address of the establishment where wagers were placed (i.e. casino, race track), and the amounts won or lost. For example, if the activity is horse racing, track any wagering tickets received and keep the tickets not cashed for your records. At the casinos, keep track of the amount wagered and won. Many casinos are able to do this for you if you have a rewards or a player's account with them.
If you have any questions regarding the taxability of gambling income, or any other tax matters, please do not hesitate to contact your L&B professional at (858) 558-9200.
You 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. Planet 7 casino free spins. 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.
 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
How To File Gambling TaxesI 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?

 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.
 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
How To File Gambling TaxesI 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.com The 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. Play casino slot machine. The book Tax Help for Gamblers by Jean Scott & Marissa Chien has a whole chapter on this topic. 
Slot Machine Penny 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.
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. 
Taxes On Slot Machine Winnings 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. 
 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.
What Amount Of Casino Winnings Is TaxedFirst, 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.