EVERY MONDAY, NETG BRINGS YOU A GAMBLING POST FROM SOMEONE ELSE FOR YOUR INTEREST, ENTERTAINMENT, AND KNOWLEDGE. WE CALL THIS:
“THE MONDAY LINK”
According to Motley Fool’s Matthew Frankel, “The Tax Cuts and Jobs Act was the biggest overhaul to the U.S. tax code in decades, and it made some significant changes to the tax deductions that are available. Many tax deductions were kept intact, but others were modified, and some were eliminated entirely.”
So, where does this leave gamblers? What changes will impact you the most?
Here is the American Gambling Association’s coverage of the changes.
In part 1, I suggested to not have the taxes taken out immediately after hitting a jackpot over $1200. Instead keep a log and get win/loss statements from the casinos you play at the most.
Let’s see what the IRS thinks:
Your gambling winnings are fully taxable and must be reported on your income tax return, says Mike Dobzinski, a spokesman for the Internal Revenue Services. He has five tips for gamblers:
1) Gambling income includes winnings from lotteries, raffles, horse races, and casinos – whether it is cash or the fair market value of prizes such as cars and trips.
2) Gambling operators are required to give you Form W-2G, Certain Gambling Winnings, if you win $1,200 or more in gambling winnings from bingo or slot machines and more than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament.
3) Report all gambling winnings on the “Other income” line of Form 1040.
4) Claim your gambling losses up to the amount of your winnings on Schedule A, Itemized Deductions, under “Other Miscellaneous Deductions.” You must report the full amount of your winnings as income and claim your allowable losses separately. You cannot reduce your gambling winnings by your gambling losses and report the difference. Your records should also show your winnings separately from your losses.
5) Keep accurate records. “If you are going to deduct gambling losses, you must have receipts, tickets, statements and documentation such as a diary or similar record of your losses and winnings.”
Two things keep coming up in my research. Keep good records, logs and receipts – and that win/loss statements aren’t good enough by themselves. Remember – all wins AND losses are taxable!
Don’t make any royal tax mistakes. That’s all for now!
How many times have you finally hit that rare jackpot over $1200, your machine has locked up and here comes casino staff – much quicker than that 15-minute ago drink order.
“Congratulations!”, as they make the usual check for any machine malfunction or possible shenanigans on your part – to be expected, of course. The you are asked the famous question “would you like taxes taken out now, or will you be taking it out later?
What’s a person to do? You’re excited, nervous (unless this thing happens to you all the time like me…..lol), and have to make this decision, usually without a lot of experience in this area.
Well, I am going to try to look into what the experts say about gambling & taxes. Today we look at the question of “tax me now, or tax me later?”
A personal true story that stopped me from ever considering getting taxes taken out instantly: I was playing Triple Play Video Poker at the Palms in Las Vegas. Playing full-pay Bonus Poker I was dealt 10-J-Q-K of spades. Triple play, if you haven’t played it, is a VP game where you play three hands based on the deal of the bottom hand. Most Video Poker paytables jackpot of a Royal Flush is 4000 credits, and at the $.25 level, that’s under the taxable amount of anything over $1199. Well, I was extremely lucky at least I thought so at first. I drew an Ace of spades at the top hand and a Straight Flush 9 of spades draw on the bottom for a total of 250 credits – yeah! Oh wait a minute – that’s $1249. (Just over the $1199.)
I took the taxes immediately because I didn’t know any better and was handed a little over $900. I know I should be grateful, but on that extra $ 300 I could have played single VP all day – enough for comps, and future offers.
All casino winnings are subject to federal taxes however the IRS only requires the casinos to report any wins over $1,200 on slot and video poker machines or other games such as keno, lottery or hose racing. When you have a win equal to or greater than $1200, you will be issued a W-2G form. This form lists your name, address and social security number. The casinos are not required to take out withholding tax on jackpots under $5,000 as long you supply your social security number. If you don’t provide your social security number the casinos will withhold 28 percent on smaller jackpots.
You can request a specific amount of withholding tax to be taken out on any jackpot you win. Some players like to do this to avoid a big tax payment in April when the file their income tax returns. The additional withholding may not be necessary if you keep a log book. The law allows you to deduct gambling loses up to the amount of your winnings. You can only do this if you have documentation of your losses. Keeping a diary or logbook, is the way to do this.
However if you gamble at a specific casino, you should ask for a win/loss statement that the casino will provide to show the losses that offset your jackpot. Personally, I am able to gamble enough locally and once per year in Las Vegas to get whatever win/loss statements from different casinos to show my losses to offset that jackpot. (Boy, can I show the losses!)
IF you still don’t trust the players club, here is where it 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.
Tomorrow, we will get some tax tips from gaming experts. That’s all for now.