Gambling Winnings Taxes
Written May 22, 2008 by Jack Jones
There are casino patrons on cruise ships who report that they do not get a W-2G on the spot for the jackpots that they win at sea. Don’t be fooled if you don’t get one, because you should. These winnings in the eyes of the IRS should be included in your “Other Income” on Form 1040 of the United States Individual Tax Return. This counts money earned from any source worldwide, so you aren’t going to get off the hook simply for earning it at sea.
Here is a list of the earnings that Uncle Sam thinks warrants paperwork:
- $1,200 of winnings from slot machines and bingo. There won’t have on-the-spot withholding for any jackpot less than $5,000 unless you fail to provide a valid social security number, then they can withhold 29% of the amount won. If the jackpot is more than $5,000 then the casino is required to hold 25% of the proceeds to pay Federal Income Tax.
- Winnings on progressive side bets at the tables with payouts of 300 to 1 or more are fair game to the IRS. W-2Gs are not required for typical wagers won from tables games even if you have a good amount on the table. However, casinos are subject to the Money Laundering Rules and will report to the IRS any aggregate cash transactions for more than $10,000 in one day.
- In Keno, winnings of $1,500 or more, less the cost of the tickets bought on the winning game.
- In Horse Racing, Dog Racing, or Jai Alai require winnings of $600 or more if the winnings are at 300 to 1 odds or higher.
- At poker tournaments, it’s winnings of $600 or more (although this isn’t enforced as strictly)
- State Lotteries start at $600
If you win a jackpot and get a W2-G, then don’t try to hide it from the IRS. They also receive a copy from the casino and their computers will red flag you if you don’t report the winnings.
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