Finally your day has come and you have hit a good run of luck in Vegas. You either hit a jackpot on the slots, or you had a crazy run on the roulette table and won a few grand. Many of us don’t realize that the party is over almost as soon as it starts, because the IRS is watching and they want their cut of your good fortune. What you are playing when you win will determine whether or not you’ll have to pay taxes.

Any winnings over $1200 on the slots or $1400 for Keno will be taxed, and with all the bells going off it’s easy for the IRS agent to find you and give you your W2-G form. Most table game winnings are not taxed. If you have a good day on the blackjack tables the IRS will not come after that money. The theory behind this is that it would be too difficult to stop every high-roller game after a player won a $1500 hand and issue a W2-G form, so the table games are exempt. Tournament poker winnings are also taxed because the casino can easily figure out who won the money.

If you’re a resident of the U.S. you will usually be taxed about 28%, depending on the state in which you live. Non-U.S. residents are taxed 30%, and that amount is withheld by the casino and given to the IRS. Non-resident winners can sue for that amount back, but it’s a timely process that usually requires a lawyer to move it along. I don’t need to tell you what happens to most of that recovered money once the lawyer’s bill arrives.

One way to recover some of the winnings the government will take from you is to claim all the gambling loses you have for the year. If you keep track of all the money you’ve spent on gaming (credit card bills and ATM receipts for example), it is dollar-for-dollar deductible against any winnings, up to the amount that you’ve won.

This entry was posted on Friday, July 27th, 2007 at 6:38 pm and is filed under IRS, Gambling. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.