- Tax On Pa Slot Machine Winnings Winning
- Tax On Slot Machine Winnings
- Slot Machine Winnings Taxable
- Winning Slot Machine Videos
After the thrill of collecting gambling winnings, comes questions about taxes.
The break point for taxable slot winnings is $1200. They don't actually take any taxes out, they just make you sign a 1099(?) Form and then you have to declare the winnings when you file your tax return. I don't know what the rate is, but you can offset some capital gains with losses (at least up to $3K, hopefully more).
Yes, gambling income, which includes winnings from slots, table games, horse racing, sports betting, lottery games, jackpots, and the like, is considered taxable income. As such, you are required to report them on your tax return. The car, boat, or Harley Davidson and other noncash prizes also need to be reported.
There are plenty of questions surrounding Pennsylvania taxes and gambling winnings. Now there are even more with the advent of sports betting, betting apps, and online casinos in Pennsylvania.
Here are some answers.
How much are my gambling winnings taxed?
Casinos withhold 25% of winnings for those who provide a Social Security number. If you do not provide your Social Security number, the payer may withhold 28%.
Currently, Pennsylvania’s personal income tax is a flat tax rate of 3.07% which applies to all taxable income, including gambling and lottery winnings. PA has the lowest rate of all states with a flat tax.
The new regular withholding rate
Effective for taxable years beginning after December 31, 2017, the withholding rate under Section 3402(q) applicable to winnings of $5,000 or more from sweepstakes, wagering pools, certain parimutuel pools, jai alai, and lotteries (formerly 25%) is 24%.
Federal Form W-2G, Certain Gambling Winnings
The organization that pays the winnings, in most cases, the casino, is responsible for sending the recipient of the winnings Form W-2G, Certain Gambling Winnings.
Form W-2G reports the amount of winnings to you as well as to the IRS.
The payer is required to send Form W2G only if the winner reaches the following thresholds:
- The winnings (not reduced by the wager) are $1,200 or more from a bingo game or slot machine
- The winnings (reduced by the wager) are $1,500 or more from a keno game
- The winnings (reduced by the wager or buy-in) are more than $5,000 from a poker tournament
- The winnings (except winnings from bingo, slot machines, keno, and poker tournaments), reduced by the wager, are:
- $600 or more, and
- At least 300 times the amount of the wager
- The winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding)
How to report PA gambling winnings on taxes
According to the IRS, you must report the full amount of your gambling winnings each year on your federal taxes. First, you report gambling winnings as
You may receive a Form W-2G showing the amount of your gambling winnings and any tax withheld. Include the amount from box 1 as “Other Income” on Form 1040, Schedule 1 (PDF).
That number then goes on your U.S. Individual Income Tax ReturnForm 1040 (PDF), line 7a (designated “Other Income”). You should attach the Schedule 1 form to your Form 1040.
Include the amount shown in box 2 on the W-2G on line 17 (designated as federal income tax withheld) of your Income Tax Return (Form 1040).
Pennsylvania state taxes for gambling
In addition to federal taxes payable to the IRS, Pennsylvania levies a 3.07% tax on gambling income.
You should report your Pennsylvania taxable winnings on PA-40 Schedule T (PDF). Include the total winnings from line 6 of Schedule T on your Pennsylvania Income Tax ReturnPA-40 (PDF), line 8 (“Gambling and Lottery Winnings”).
If your gambling winnings come during a trip to another state or country, you are still required to report.
Michelle Malloy, Esq. at AUA Capital Management, LLC in Conshohocken, Pennsylvania, commented:
“Pennsylvania takes the position that they are entitled to tax a portion of your worldwide income based on certain income items (wages, interests, dividends, capital gains, gambling winnings, lottery winnings, etc).”
What if I don’t receive a Form W2-G?
If you did not receive Form W-2G, your winnings are still considered taxable income and should be reported. A payer is required to issue you a Form W-2G if you receive certain gambling winnings or have any gambling winnings subject to federal income tax withholding.
According to Malloy:
“You are required to report all gambling winnings for federal and Pennsylvania taxes. If you hit a certain threshold they (the casino) will withhold money. In the instance where a casino doesn’t do their job and and fails to send you a W2-G you are still required to report your winnings, or you run the risk of underreporting your taxable income for the year.”
Do I have to pay taxes if a group of people win the lottery?
What happens when a group of coworkers chip in on a lottery ticket that wins? What about you and a friend who put money on a long-shot team to win the championship?
Meet Form 5754 (PDF). Payers use this form to prepare Form W-2G when the person receiving gambling winnings subject to reporting or withholding is not the actual winner or is a member of a group of two or more people sharing the winnings.
Don’t send Form 5754 to the IRS. Keep a copy for your records and return the form to the payer (usually the casino) for preparation of Form W-2G for each person listed as winners.
Are there any deductions available for taxes related to gambling?
Gambling losses can be deducted. However, they must be itemized on line 28 of Schedule A, Form 1040.
Also, you cannot deduct more than your winnings.
Expenses related to any gambling or lottery activities, (like your dinner at the steakhouse, celebratory drinks from the bar, or cost of hotel room) cannot be deducted.
If you are going to deduct gambling losses, keep these records:
- The date and type of each wager
- The name and location of the bet
- The amount won or lost
- Wagering tickets
- Canceled checks
- Credit card records
When using a players club/members card, casinos can track players’ spend. Therefore, you can request a win/loss report that will give you a fairly good sense of your activity in a casino. Online casino players can request the same report and most sites should be able to provide it without issue.
“A lot of people may under-report,” explained Malloy. “They might win $10,000 but have $3,000 of expenses so they think they are just going to report $7,000. That can be an issue, as Pennsylvania does not allow a deduction for expenses. If you win a lot of money in June, for example, you might want to make an estimated tax payment [due Sept. 15 and Jan. 15] so you don’t have an underpayment penalty the following April.”
How to claim gambling winnings and/or losses
Pennsylvania provides a helpful resource to determine how to claim gambling winnings and/or losses.
There is a prompt where you can start a ten-minute interview.
Be sure to have the following information ready:
- Your and your spouse’s filing status
- Amount of your gambling winnings and losses
- Any information provided to you on a Form W-2G
Taxes on multistate lotteries
The Pennsylvania Department of Revenue considers multi-state lottery prizes, like those from Powerball and Mega Millions, awarded on tickets purchased through a licensed Pennsylvania state lottery ticket vendor, a prize by the Pennsylvania Lottery.
“Such prizes are considered Pennsylvania source income and both residents and nonresidents are subject to tax on such income if the prize is a cash prize. Multistate lottery prizes awarded on tickets purchased through a vendor in another state lottery are considered prizes awarded by that state lottery. Such prizes are not considered Pennsylvania source income and only residents are taxed on such income regardless of whether the prize is a cash or noncash prize.”
Due to a 2016 law change, any cash prize won from a Powerball of Mega Millions ticket in any state is taxable for state purposes, in addition to federal taxes.
What happens if you win a few thousand dollars on a winning PA lottery ticket?
Lottery winnings are included in taxable income. Pennsylvania Lottery winners of an individual prize valued at more than $600 will receive a Form W2-G by mail.
If your spouse also wins, they must report their winnings separately.
“For a significant windfall, like over $5 million, it definitely makes sense to talk to an attorney or accountant to determine if they should take a lump sum payout or annuity. They may also need to think about estate tax planning, financial planning and/or asset protection planning for their windfall,” said Malloy.
Sports betting winnings and taxes
Sports betting winnings are taxable income.
The IRS states:
“Gambling winnings are fully taxable and you must report the income on your tax return. Gambling income includes but isn’t limited to winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes, such as cars and trips.”
Even though sports betting isn’t specifically listed, it falls under the umbrella of “gambling winnings.”
Wherever your sports betting win occurred – at the OTB, the casino, on a sports betting app – they payer should send Form W-2G.
Sports betting losses might also be used as deductions if you itemize your deductions and keep a detailed record of wins and losses.
Based on your tax bracket, sports bettors in Pennsylvania could owe up to 35 % of winnings to the federal government in addition to the 3.07 % Pennsylvania taxes net gambling winnings.
Online gambling and taxes
Sports betting apps and online casinos provide unmatched convenience. You may also enjoy the anonymity of playing behind a screen name instead of in person. However, it still comes with the same tax responsibilities. Online gambling winnings are considered taxable income at the same rate as other gambling winnings.
For online gambling winnings, the payer is required to send Form W2G only if the winner reaches the following thresholds:
- The winnings (not reduced by the wager) are $1,200 or more from a bingo game or slot machine
- The winnings (reduced by the wager) are $1,500 or more from a keno game
- The winnings (reduced by the wager or buy-in) are more than $5,000 from a poker tournament
- The winnings (except winnings from bingo, slot machines, keno, and poker tournaments), reduced by the wager, are:
- $600 or more, and
- At least 300 times the amount of the wager
- The winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding)
In terms of deductions for taxes, players can request a report from online casinos detailing wins and losses.
Yes, they are taxable. You are on the honor system to report the income. The casinos will not report any winnings to the IRS. It isn’t just on-line casinos, ANY net gambling winnings are taxable, regardless of where or how they were won.
Whether to cash out it all out at once is your decision. Assuming you are a U.S. citizen you are obligated to declare the income on your next tax return. If you don’t you could be charged with tax evasion. However this sort of thing is largely on the honor system. You are also allowed to deduct any gambling losses in the same year against your winnings.
Zero. You can not deduct a net loss at all. However if you have some W2G forms (generally given on wins of $1200 or more in slots, video poker, and keno) then you can deduct other losses against these wins. You should keep documentation for any losses you claim. You may be thinking of deducting losses on stocks. There you can deduct up to $3000 a year, and can carry over amounts larger than that to the next year. I’m still carrying over losses from the tech crash in 2000.
W2G forms are definitely something to think about when playing video poker at the larger bet amounts. Although you are obligated to pay taxes on your net win at the end of the year regardless of how many W2G forms you have, a payout of $1200 or more will necessitate a wait and obligate you to tip the person paying you. In less classy casinos a hand pay will also cause the tip vultures to start hovering around you. To avoid all of this sometimes the player should consider deviating from optimal strategy. For example with AAA88 in 10/7 double bonus the odds marginally favor keeping the aces only. However in a $2 to $10 game hitting four aces will pay over $1200, necessitating a W2G form, while a full house will stay under the limit. Considering the tax implications keeping the full house is the better play.
To answer your question I’ll assume a four of a kind pays 25 times the bet. Then a four of kind on the deal in a $0.20 50-play game will pay $0.20 * 5 * 50 * 25 = $1250. You will get a four of a kind on the deal once every 4165 hands, on average. If you were to drop the number of hands to 47 the win for a four of a kind on the deal would be 47 * $0.20 * 5 * 25 = $1175, staying under the W2G threshold.
I believe the policy at most casinos is that for large transactions you can have the funds any way you want. Before you consider laundering money by turning cash into checks be aware that casinos ask for a Social Security number and make a record of any transaction involving $10,000 or more.
You are subject to tax for any gambling winnings. However table games players are basically on the honor system. An exception that a W2G form is generated if a win is 300 for 1 or more odds and is over $600. That is usually only an issue with progressive jackpots. Also, if there is a cash transaction of $10,000 or over the casino is obligated to fill out a CTR, which stands for Cash Transaction Report. Yet these are nothing to worry about, and I think many big bettors are overly paranoid about them.
Only single wins of $1,200 or over are subject to withholding. If you won over $1,200 in small wins you would not be subject. When you press the cash out button the machine doesn’t know your citizenship and will just print a voucher for whatever you had. Any $1,200 or over win will always lock up the machine until an employee unlocks it. On high denomination games, usually starting at $10 or $25, the casino may keep a log of all your taxable wins. On a $500 machine, I’m sure they would have somebody standing right next to the machine do the paperwork. When you are done they will give you a single W2G form for the sum, and in your case subtract the withholding from that.
The W2-G is based on the gross win, not the net win. So, yes, if the player got a $5000 push on a Red, White, & Blue, he would get a W2-G.
Cliff from Aiea
In the U.S., any gambling winnings of any kind and any amount are taxable. However, with table games, it is on the honor system to report.
I forwarded this one to Brian, who is a former gaming regulator, and currently a casino manager. Here is what he said,
The casino would not know that someone was in the country illegally. If he had a valid passport, the jackpot would be honored. The illegal may not know this, be scared or they may not have a valid ID to show. Whenever someone wins $1,200 or more, ID is required for tax purposes. If someone doesn’t have his ID, the jackpot would be held in the cage waiting for them to claim it. In most cases, the person has legitimately forgotten their ID; however, sometimes you run into a problem, such as a minor who was gaming. If he doesn’t claim it, the money has to be added back into revenue because the deduction (jackpot) was never paid or there are abandoned property rules that prevail. Also, like the U.S., most countries tax worldwide income. To that end, the U.S. has tax treaties with several countries to withhold or notify the respective governments of monies won in the U.S. so Uncle Sam always gets his cut.
This is getting out of my area, but I'll try to help. The IRS web site says that for this purpose, the U.S. has tax treaties with the following countries: Austria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russian Federation, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom. Note that New Zealand is not on the list.
If you are a resident of one of the listed countries, and you hit a jackpot of $1,200 or more, then you should ask to fill out a form W8BEN. That should reduce, or in most cases, eliminate the withholding.
Even if you are not from one of the listed countries, or don’t fill out the form, you can still get the withholding back by filling out form 1040NR, or the simplified version the 1040NR-EZ.
My own tax accountant is Marissa Chien EA, author of Tax Help for Gamblers. She does an outstanding job, but some might consider her expensive. For a 1040NR she says she charges about $1,000. She adds this form is usually incorrectly filled out by most others. Her e-mail is .
IRS PDF’s:
- 1040NR-EZ instructions (PDF)
- 1040NR-EZ form (PDF)
- 1040NR instructions (PDF)
- 1040NR form (PDF)
- W8BEN instructions (PDF)
- W8BEN form (PDF)
Marissa is on Twitter at @taxpro4gamblers, where she occasionally answers tax questions to followers.
Tax On Pa Slot Machine Winnings Winning
Title 31 is a regulation stating that the casino should make a record of cash transactions of over $10,000 by a single player in a single day. In such cases, a CTR must be filled out, which stands for Cash Transaction Report. This includes making multiple transactions, adding up to over $10,000. If you cash chips close to, but under, $10,000, the cage will likely want to make a note of it, in case you come back later that day, and go over the $10,000 daily limit.
My advice is to give them what they ask for. You have a lot more to fear by looking like you are avoiding CTRs than the CTRs themselves. In fact, I think there is nothing to fear from a legitimate CTR; the casinos generate lots of them. Personally, I have generated hundreds, to no known detriment. However, it raises lots of attention when you look like you are going out of your way to avoid them. I know one person who was rebuffed when he tried to cash in chips, because he had too many previous redemptions of just under $10,000. So, that is my two cents. Better suited to answer this is 'Brian,' a current Las Vegas casino manager, and former regulator, whom I like to turn to for procedural questions like this.
Tax On Slot Machine Winnings
In a nutshell, Title 31 is the U.S. Department of Treasury Code designed to prevent money laundering. It requires that certain large cash transactions be reported to the Government. These are filed on FinCEN Form 103 “Currency Transaction Reports by Casinos” (FinCEN is the Financial Crimes Enforcement Network). Casinos are required to report all currency transactions in excess of $10K in a single day. The “day” doesn't follow the clock − a casino picks their day (e.g., 3 a.m. to 2:59 a.m.).
All Financial Institutions comply with Title 31. Casinos are considered financial institutions because of the types of transactions they perform, which are similar to those of a bank (e.g., check cashing, wires, loans, cash exchanges). Unlike traditional financial institutions, casinos conduct a great deal of transactions with unknown patrons. When you set up your checking account at the bank, you give them all of the necessary information needed to fill out CTRs. However, when cashing chips at the cage, the only way the casino can get this information is to ask. Casinos have to get all of the necessary information to fill out a CTR before the patron crosses the $10,000 threshold. Since the fines for non-compliance are hefty, they make a diligent effort to comply.
Casinos are apprehensive to give patrons too much information on Title 31 for fear of inadvertently breaking the law. Casinos are specifically precluded from aiding patrons in structuring transactions in such a manner as to allow them to skirt the requirements. When you ask questions, they prefer to point to a preprinted informational card and don’t like to discuss the matter for fear of divulging inappropriate information.
Circumventing Title 31 is relatively easy for undocumented transactions (e.g., chip buys, chip redemptions, etc.), but why would you want to? If the casino has reason to believe that you are purposefully conducting your transactions in an effort to avoid the reporting requirements of Title 31, they'll fill out a Suspicious Activity Report by Casinos form (aka SARC). If a casino learns that you exceeded the $10K threshold and they didn't get the required information, they will bar you from gaming until they get it. — Brian
Here is what the bill says:
Slot Machine Winnings Taxable
In the case of a taxpayer other than a corporation, there is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to 5.4 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $1,000,000. -- Section 59C(a) page 337 H.R. 3962 (PDF — 3270 KB) or CNN.comThe surcharge would be applied before the gambler could deduct any offsetting losses. I verified this with Marissa Chien, co-author of Tax Help for Gamblers. For high-level slot players, it is not difficult to rack up W2-G forms in the millions per year. Most of these players will still have a net loss on an annual basis. Past the million point in gross income, the player will pay a 5.4% tax on any win of $1,200 or more, even if there is a net loss for the year. This is just my opinion, but I think that isn’t fair. If we must tax gambling winnings (which they don’t in Canada), it should be on the net, not the gross winnings, on an annual basis. Should this become law, it will ruin high-level slot play in this country.
Marissa is on Twitter at @taxpro4gamblers, where she occasionally answers tax questions to followers.
According to page 12 of IRS publication 529 (PDF), the minimum a gambling log should include is:
- Date and type of wager or wagering activity.
- The name and address or location of the gambling establishment.
- Names of other persons present during the gambling activity.
- Amount won or lost.
In addition, you should keep other documentation, such as W2-G forms and losing tickets. Personally, I keep my log in Excel and always retain W2-G forms and losing sports tickets. The book Tax Help for Gamblers by Jean Scott & Marissa Chien has a whole chapter on this topic.
This question was raised and discussed in the forum of my companion site Wizard of Vegas.
Marissa is on Twitter at @taxpro4gamblers, where she occasionally answers tax questions to followers.
I’m told that said provision (section 59C) was dropped from the final bill. That is the good news. The bad news is there is a new Medicare tax on unearned income above $250,000 for a married couple, starting in 2013. It looks like this may apply to gambling winnings before itemizing any gambling losses. Please ask me about this again in about two years for a status report.
This question was raised and discussed in the forum of my companion site Wizard of Vegas.
gambler
That is quite the difficult and controversial question. Before I answer, let me say that tax law is not my area of expertise, so you should consult a tax professional about your personal situation. Another better source than me about this is Tax Help for Gamblers by Jean Scott & Marissa Chien. Chapter three deals with this topic.
The general rule of thumb is that earnings are taxable and gifts are not. So a no-obligation comp would not be taxable. Anything that was given to you based on points, a drawing, a tournament, or earned some other way would be taxable. Granted this is not going to cover every situation, and some situations can be in a gray area. If you’re in doubt, consult a tax professional.
This question was raised and discussed in the forum of my companion site Wizard of Vegas.
Winning Slot Machine Videos
First, you'll have to produce photo identification, or the casino will hold onto the money until you do. If you show identification but decline to produce or declare a valid social security or other tax identification number, then 25% to 30% will be withheld depending on whether the jackpot is more or less than $5,000, and whether you are from the United States or a foreign country with a reciprocal tax treaty.
As of 2011, such countries were Armenia, Australia, Austria, Azerbaijan, Bangladesh, Barbados, Belarus, Belgium, Bulgaria, Canada, China, Cyprus, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Mexico, Moldova, Morocco, New Zealand, Norway, Pakistan, Philippines, Poland, Portugal, Romania, Russia, Russia, Slovakia, Slovenia, South Africa, South Korea, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Thailand, The Czech Republic, The Netherlands, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Ukraine, United Kingdom, Uzbekistan and Venezuela.
I've been trying to figure out the rules exactly, but it is giving me a headache. Please refer to IRS rules for issuing a W2G form for more information.
My thanks to Marissa Chien, co-author of Tax Help for Gamblers , and MathExtremist for their help with this question.
This question is discussed in my forum at Wizard of Vegas.