Don't forget Uncle Sam knows you won that jackpot
If you're a recreational casino gambler, it can mean some unusual record keeping, especially if luck is on your side and you win a jackpot playing the slot machines.
In the event you didn’t maintain the appropriate records for your 2022 return, don’t drop too far behind when it comes to keeping track of your casino outings this year.
Collect a slot jackpot of $1,200 or more and the casino is obligated to notify the Internal Revenue Service of your good fortune in the form of a W-2G (certain gambling winnings). This means you must report the winnings on your federal income tax return.
The expansion of gambling that has taken place across the United States during the past two decades has meant that more people than ever are required to do this.
That's the bad news. The good news is that you can claim losses up to the amount of the winnings if you are eligible to itemize deductions. But you had better have the proper documentation to support those losses in the event the IRS calls looking for proof.
It is no secret that the IRS has stepped up efforts in recent years to hold gamblers accountable, primarily because of how rapidly state sanctioned casino gambling and sports betting have spread across the country.
Another reason is that with the reporting threshold set at $1,200, the number of people having to file has grown exponentially.
Since 1977, $1,200 has been the threshold which triggers a hand-pay and alerts the casino that the machine must be taken out of service until the winner is paid by members of the staff and presented with a W-2G tax reporting form that is sent to the Internal Revenue Service.
At one point a number of years ago, some slot machine games were even programmed with a $1,199 top award to attract gamblers who were willing to sacrifice one dollar for the perk of not having to report the winnings to the IRS.
A lot has changed in 45 years. The number of reportable jackpots and the deluge of paperwork completed by casino operators and funneled into the IRS every year is an administrative nightmare.
According to a report issued by the American Gaming Association (AGA), a $1,200 jackpot in 1977 would be equivalent to more than $5,000 today when adjusted for inflation.
There have been rumbles from some members of Congress in recent years about raising the threshold, but nothing had the support for any action.
“Increasing the slot tax threshold to account for inflation is a long overdue change that will alleviate unnecessary administrative burdens on casino operators, their customers, and an understaffed and overwhelmed IRS,” Bill Miller, president and CEO of AGA, has said.
Audits on gambling winnings are not uncommon. Being held accountable for supporting losses against gambling winnings have always been a component of tax preparation. According to the experts they were once loosely enforced, not anymore.
The best plan of action is keeping a daily log to track your gambling activity. The information should include the name of the casino, the date, the particular game you played, the machine's serial number and the length of time you played.
Other forms of documentation to keep include canceled checks, receipts from ATM withdrawals, records of cash markers from casino credit departments, parking and dining receipts; anything which proves that you withdrew cash from the casino or were present on that date.
The win/loss statements that you can request at the end of the year from casinos you have patronized may not be good enough documentation if you wish to claim losses to offset federal tax liability on gambling winnings.
To play it safe, you can request that the taxes be taken out on the spot when you win a jackpot.
If you can substantiate losses at the end of the year, you will take a credit for the amount they withheld and you'll get back some if not all of the money.
AMERISTAR: The grand finale drawing in the month-long “Gas & Cash” promotion is set for Saturday (March 25). Three winners each hour from 7 to 9 p.m. will be awarded $250 in gas cards and an automatic berth in the Grand Finale at 10 p.m. when 11 qualifiers will win a share of $25,000 in mycash. There will also be a $15,000 cash winner. MyChoice players club members can claim free tier-based entries daily and earn an additional entry for every 25 tier points earned playing slots and table games.
HARD ROCK: The complimentary casino-side entertainment at Council Oak Bar Stage this weekend features Larry Taylor on Friday and Mississippi Heat on Saturday for 8 p.m. performances. Over at Hard Rock Café Stage look for Kashmir on Friday and Breakfast Club on Saturday for 9 p.m. curtain raisers. On Saturday at Hard Rock Live it’ll be Fantastic Five of Fourteen of Rupaul’s Drag Race Tour for a 7 p.m. show. Visit ticketmaster.com.
Opinions are solely those of the writer. Reach him at [email protected].