When you’re gambling at a casino, you may win a few bucks here and there and leave with more dollars than you brought with you. It may be as little as $20, or as much as $1,000. When cashing out you were never presented you with a form to declare your winnings to the IRS. If you think you’re home free, think again. As a U.S. citizen, you owe Uncle Sam a piece of the action regardless of the amount. Many players think that just because they were not given a tax form there’re home free. Not so.
So, what does get reported to the IRS? Larger amounts that are won at gambling establishments such as casinos, lottery retailers, horse race tracks and off-track betting parlors. They will issue a form W-2G, one copy to you and one to the IRS. Here are some details:
$1,200 or more won at a slot machine, video poker, video keno, video blackjack, etc. This only applies to a single jackpot payout amount. Accumulated credits are credit meter wins and do not count.
$1,200 or more won at a live bingo game will also trigger a W-2G, and $1,500 or more at a live keno game (minus your wager amounts).
The casino will not withhold any gambling taxes from awards in the $1,200 to $1,500 range provided you present a valid photo ID and social security number. If you do not provide this information, 28% will be withheld.
Live Table Games
Winnings from live table games are not reportable on a W-2G, except if there is a very large prize amount offered for a small wager, such as a dollar bet for a shot at a progressive table jackpot, where the winning odds are over 300/1 and the win is more than $600. For example, Caribbean Stud offers a huge progressive jackpot for wagering only $1, if you’re lucky enough to hit a Royal Flush.
If you win $600 or more in any other wagering game, such as horse, dog racing or sports betting, and the amount is at least 300 times your bet minus your wager amount, the establishment will gift you with a W-2G. If your winnings exceed $5,000 and the amount is more than 300 times your bet, 25% will be withheld. The same withholding percentage also applies to any cash prize of $5,000 or more in poker or other card tournaments minus the buy-in amount.
Winnings on state lottery games such as lotto, numbers, scratch-offs, etc. can be collected at your local retailer up to $600. Any more and you’ll have to visit the main lottery office in your community, where a W-2G also awaits you. This information is from the New York lottery. Other states may have different rules.
Winnings on Daily Fantasy Sports (DFS) contests at this time are considered games of skill. DFS sites will issue a 1099-MISC, not a W-2G for winnings of $600 or more.
Video Lottery Terminals (VLT)
$600 or more in winnings from any class II âVideo Lottery Terminal game will also invite a W-2G. This includes any winnings on machines at jurisdictions that are operated by a state lottery. For example, New York State has nine race tracks with VLT’s that are pseudo slot and video poker machines.
The good news in all of this is that gambling losses are tax deductible but only up to the amount of your winnings, and only if you itemize deductions on your tax return.
The IRS wants to make sure that you indeed lost what you claim you lost, so a record of all your losses is required. Win- loss statements are available from most major casinos at the end of the year, provided you used your player’s club card when playing machines. Save those losing scratch-off tickets, Lotto, Powerball, and Mega-Millions tickets, daily numbers, Quick Draw, OTB, etc.
For losses on Daily Fantasy Sports contests, the IRS position at this time is unclear. Because of the skill factor, your winnings are in the hobby category. Therefore, any losses would not be deductible, although this situation could change at any time.
You don’t have to record the tickets on your tax statement, but they may be necessary if you are audited. All the IRS wants to know is the type of wager, the amount of the bet and the date of the transaction.
Always play it safe and check with your tax preparer for your personal needs.[ad_2]
Article Source by Dennis J Occhino