Unfortunately, many jackpots and payoffs in your casino are taxable. Even if you win a special promotion drawing and get to take home a free wide screen TV, you will get a value-in-kind taxable from the casino. If they say the TV is worth more than $600, you will get an IRS 1099 form from the casino. You will owe taxes on that amount. Yuk.
Now the good part is that you can offset any losses against your winnings for the calendar year, so have no fear, you may owe nothing. First, you need to know what a taxable jackpot is.Slots and Video Poker
If you are playing any type of slot machine or video game, the taxable jackpot threshold is $1199. If you win $1200 or more, before the attendant pays you for the jackpot they will ask for a photo ID and your social security number. If you are a US citizen and don't have your social security card for them to scan, you will need to fill out a W-9 IRS form. Again, don't fret, that only takes two minutes - but you need to know your social. No social security number - no payoff.Keno
In Keno, the payoff threshold is $1499. If you hit a ticket for $1500 or more, before you get the bucks, you get to give up the photo ID and your social security number. At some casinos the payoff will be made without a social, but 31 percent will be withheld for tax purposes.Parimutual - Racebook
If you drop by the local casino and bet on the Kentucky Derby and your horse wins, well, you might have to pay the tax man. You will need to supply a photo ID and social security number before the casino prints you out an IRS W-2G form if your payout is $600 or more and 300 times more than the wager.Poker
Poker players sometimes hit a tax wall when they participate in a bad-beat jackpot. So, your four 8's get cracked by four 9's and you lose the pot, but there's a jackpot. Whoo-hoo! Tax time. If that payoff is $600 or more, you are probably getting a 1099 form.
Even tournament players are liable to get 1099 forms when their payoff is more than $600. Welcome to the wonderful world of casino gambling.Table Games
Just when you thought it was safe to go in the pit, it turns out that you can get dinged for taxes there too. No, you won't get hit if you just happen to play great blackjack and win a few $500 bets, but any pooled-money jackpot or bonus bet is a possibility.
If you happen to play a bonus bet like Lucky Ladies and hit those elusive double queen of hearts, get ready for an "I got'cha" from the IRS. That's a 1000-1 win, and any 300-win for $600 or more wins you a free W-2G. Expect the same thing with a straight flush or royal on Let it Ride or a royal flush on Caribbean Stud and even World Poker Tour Texas Hold'em.If you prefer to play a game like Pai Gow with a progressive, should you hit the 300-1 and over $600 numbers, you'll get a W-2G. In fact, if you do play Pai Gow, and bet the bonus, and somebody else hits the monster jackpot with a 7-card straight flush, you might have a surprise in store for you.
The surprise is saved for anyone who played $5 or more on the bonus that hand, because they will get an "envy" bonus of $5000. YEAH! And, really, I get a W-2G on that too? Well, sure, you bet $5 and got 1000-1 on your money. That qualifies for the IRS to take a chunk or your winnings before April 15th. Unless…..Keeping Your Winnings
The IRS doesn't like you to keep all your winnings, simple as that, you know, taxes, schools, infrastructure, etc. However, you can offset your winnings by keeping track of your bets and making sure you only have to pay on what you really won in the casinos for the year.The Player's Club is Your Friend
If you hit a big jackpot, you'll be so happy you were a player's club member you might just dance in the streets. If you weren't, you might be out in the street.
Using your player's club card will allow the casino to keep track of your wins and losses. At the end of the year you can ask for a win/loss statement and they will either email or snail (if the post office is still in business) mail you a copy. That should shrink your big jackpot's tax liability.
Also, if you keep your own ledger of casino gambling, you can use that for other casinos and the success you had there. Your ledger or log has to have four items to be used with your taxes:
- The type of game you played, such as slots, craps, poker, keno
- The date and location where you played
- Your wins and losses for each session or game - break them down individually
- Additional evidence of gambling activities such as used Keno tickets, sports wagers, etc.
Keeping a record of your casino gambling may seem time consuming and a big pain in the craps game, but it makes sense for several reasons. Obviously, it could save you plenty of money at tax time, but there is another reason to keep a log. By actually keeping track of your play, you can see where you seem to do better or worse, what games you spend the most time and money on, and which games you might want to skip.
That little bit of knowledge, and accountability, for your gambling can be a good thing. Do it.