There are many things a player needs to consider when choosing a casino and playing at one. One of the things that often gets overlooked in regards to this is taxation. That’s an afterthought for most players and they tend to consider it only when they start winning.
This part of the process is not handled by the casinos and you can’t get much help in regards to that so every player is left to their own devices and the help of tax accountants.
Are the Winnings Taxable?
The first thing you need to figure out is do you have to pay taxes on slot machine winnings. The answer depends on which country you’re in, how much you’ve earned, and in what kind of currency the payments were made. When it comes to the rules set up by the IRS the money you’ve made counts as income and is therefore taxable.
There are also fines for those who don’t report and don’t pay taxes on this income. The fines for being late are smaller but fines for not reporting can include jail time.
The non-Taxable Amount
The non-taxable amount set up by the IRS depends on the game you were playing. The amount for most games is set at $600 and anything you win above that is taxed based on the tax rate you’re in when it comes to the rest of your income. There’s a difference however for a few games and a few tournaments.
When it comes to slots, poker tournaments, and keno, the non-taxable amount is set at 300 times the amount you’ve bet in the first place. For most poker tournaments that’s about $5000 and for slots, it’s $1200.
Can You Deduct Gambling Losses?
Gambling losses can be deducted as an expense. That can only be done based on the amount you’ve won at the end. The deductible losses can equal the amount you’ve won and you can’t deduct more than that regardless of how much you’ve “invested” into a game.
The losses can be itemized with other expenses, such as travel expenses and like. The whole sum of the itemized deductions can’t be more than the amount you’ve won at a game for which you’re taxed, meaning that other expenses don’t count separately.
Filing a Request to Show Your Winnings
Many players don’t keep track of their winnings and bets since they start small and the bets keep increasing over time. After they win big they’ll need this information for the IRS. The casino can provide you with the list of winnings and bets since they keep track of them for a limited amount of time at least.
The request can be made in a casino or you can send an email or chat with the tech support. The document will be recognized by the IRS since it’s a relatively common practice for them to tax such income.
What Information Do You Need to provide?
The casino will require you to provide certain information to get the win-loss statement you can use with the IRS. For the most part, this information is easy to find and provide if you’re requiring the data for your own personal use.
The info in question includes the date of birth, first and last name, the year for which you need the statement, and a player’s card name as well as the method with which you want the data delivered. For the most part, you can get it via email or in your mailbox.
Make Sure to Report All Your Winnings
It’s essential that you report your winnings as is the case with any other income that you otherwise make and that is taxed. It’s against the law to hide your income or diminish it and therefore it’s illegal to do so when it comes to the winnings made from gambling.
This is done via the same form that you would report any other income. That form is known as form 1040. It’s the document that’s used to report so-called “other income” which is income made from sources other than your job and investing.
Withholding
Withholding is required when it comes to the income that you make from gambling. The amount to withhold is 24 percent and the exact amount is specified when you get to fill the next form in the row, needed to pay taxes for gambling income.
This form is known as W-2G. When you fill in the first form we mentioned you need to include the amount that’s withheld and it will be deducted from your taxes later. You can also pay someone to do this for you, but there’s a fee involved in using an accountant’s services.
The Importance of Keeping Records
It’s essential that you keep good records when reporting taxes as is the case with taxes that are paid for other sources of income. This will allow you to clearly state what you’ve made and how much you need to pay for it. It’s also useful to do so for deduction purposes.
The casino can help with this greatly and that’s something to keep in mind while playing and especially as your winnings increase and go over the threshold when taxes need to be paid in the first place. Make sure you don’t lose your player number since it’s needed to get the info in the first place.
Thomas Jackson is a dynamic and talented content writer at WonderWorldSpace.com, renowned for his engaging and informative articles. Beyond his professional pursuits in writing, Jack is also known for his deep passion for fitness, which not only shapes his lifestyle but also influences his work.