Taxes

Do casinos tax your buy-in/bankroll? If you buy in with 500 and turn it into 700, does all 700 get taxed? Or just your winnings of 200? Thanks

Quote: Sjmagri

Do casinos tax your buy-in/bankroll? If you buy in with 500 and turn it into 700, does all 700 get taxed? Or just your winnings of 200? Thanks

Hi sjmagri, and welcome to the forums.

First, I'll start by saying any real concerns with taxes should be addressed by a qualified tax professional.

Now with that disclaimer said, of course tons of us are quite familiar with the tax code surrounding "gambling." More than likely in the case you've mentioned you will have ZERO tax liability. For the mass majority of states/etc it breaks down to two types of bets... Either machines, or tables:

1) For machines, anything that is ONE SINGLE WIN of $1,200 or more will be taxed immediately. That is to say if you're playing a slot machine and hit a bonus round for $1,199 you will NOT receive a W2G tax document from the casino. So even if you buy in for $10k and cash out $10k, you will not be taxed. Hell, even if you buy in for $100 and cash out for $2k, so long as no ONE individual win was over $1,199 you won't get any tax forms.

2) For table games that have odds in "most" states the threshold for receiving a W2G is any bet that pays 300-1 odds (or more). If you hit a bet that pays 300-1 (or more) and your win is over a certain threshold (usually $1200) then you will be presented with tax documents and a W2G.

Also, your buy in only matters if you're buying in at one casino for more than $10k in 1 day. That is most states limit for buying in without ID. You can still buy in for even more, but then you must present them with some form of identification because transactions of $10k or more in 1 day at 1 casino require the casino to file a CTR report which simply tracks the larger players in the room and for potential reporting to the IRS. No, a CTR won't get you in trouble or cost you money, but if you get audited and you were there laundering money (cash from drugs let's say) then you will have to explain the large transactions of cash. Casinos could also file a SAR (suspicious activity report) for people that buy in for large swarms of money and maybe don't seem like they should have it or whatever... This is rarely done, from my understanding, but could definitely trigger an audit from the IRS.

Lastly, any NET winnings you have from a casino for the year, you're supposed to report to the IRS for tax purposes. However, the VAST MAJORITY of people whom gamble for an entire year are NOT positive. Only AP's (for the most part) are positive and most of them file as professional gamblers. That being said, if you played poker 3-4 times in one year and you happen to make $100 each time, then you're technically up $400 for the year. I believe there's a certain amount that if you're under the IRS just says "we don't care" basically, but past that it's up to you whether or not to report this because while you're supposed to there's zero way for them to track this information. Unless you're an AP I honestly wouldn't worry about it because even if you won $10k tomorrow, if you play every day you're more than likely negative for the year... and if you play small stakes, then you'd have to track EVERY SINGLE TIME you played to tell if you're a yearly winner or not. So winning $200 today doesn't mean crap considering you could lose $200 tomorrow... or maybe you lost $200 yesterday.

The long answer is more complicated than that, but the short answer is "income tax only taxes income, and gambling winnings are income." The $500 was yours already so that doesn't get taxed. Read this:

https://www.irs.gov/taxtopics/tc419.html

Quote: Romes

More than likely in the case you've mentioned you will have ZERO tax liability.

That is not correct, you are taxed on daily winning sessions. So let me correct what Romes said this way:

More than likely in the case you've mentioned you will have realize the IRS has no clue that you won and you will act like you have won ZERO tax liability

You may have ethical issues with this, in which case you are free to report your daily winnings honestly. In this case expect the IRS to be so surprised that they begin to suspect you aren't keeping a proper diary - you could be audited. If this sounds like no fun at all then I suggest just not gambling.

Also, make sure you aren't from one of the bad states, see link

https://wizardofvegas.com/forum/off-topic/other-casinos/18536-the-bad-states/

A question.
You are playing electronic craps and bet $1500 on black. You win $3000. Don't they give you tax form for $3000?

Quote: billryan

A question.
You are playing electronic craps and bet $1500 on black. You win $3000. Don't they give you tax form for $3000?

I've never seen an electronic craps machine where you can bet $1500 on black. :)

My bad. Suppose you win a $1500 even money bet.

Before PA had table games, all the blackjack was "virtual"...the Shufflemaster machines.

I had never played a machine before visiting Mt. Airy Casino, and when I bet $500 of my own money and was dealt a blackjack, the machine locked up, and I received my first-ever hand-pay for $1250 and a W2G to boot.

I had not won $1250, I only won $750, but that's what happened...I had tax liability for money that I had not won.

I just don't understand how players bring words like gambler, hustler, advantage player, sharpie along with the words like upstanding young citizen, tax payer, moral person, honest abe... Etc. Etc. I love how some of you case the casinos and crush them and pay a percentage of your win to the government but stiff the lowly employees that really could use the bump. If these machines start over paying you or your sports book win that you collected was a mistake are you heading back to pay them or call slots over and tell them this machine is showing I still have 100 credits even though I just cashed out??

Not as bad as the math guys who beat the casinos for millions and next turn around and get paid for being advisors telling them where the leaks are. That's the worst scum in my book but I guess playing both sides of the street is the best play financially!

Quote: Romes

2) For table games that have odds in "most" states the threshold for receiving a W2G is any bet that pays 300-1 odds (or more). If you hit a bet that pays 300-1 (or more) and your win is over a certain threshold (usually $1200) then you will be presented with tax documents and a W2G.

Minor correction, which is that the, 'At least 300x the original wager,' is correct, but the $$$ threshold is $600, or more. not $1,200. That's why a $1 bet on the Craps Fire Bet will result in tax forms if one hits a six-pointer and wins $1,000. (Well, technically wins $999)

Quote: coachbelly

Before PA had table games, all the blackjack was "virtual"...the Shufflemaster machines.

I had never played a machine before visiting Mt. Airy Casino, and when I bet $500 of my own money and was dealt a blackjack, the machine locked up, and I received my first-ever hand-pay for $1250 and a W2G to boot.

I had not won $1250, I only won $750, but that's what happened...I had tax liability for money that I had not won.

That's because electronic Table Games are treated as slot machines, for the purposes of taxation and W-2G's. The amount that you initially wagered could be deducted when you file your taxes, which is why the W-2G itself says the amount of your wager, but it doesn't matter that you didn't actually profit $1,200 (or more) on that play.

Boy some bad info in this thread. Op you should consult a tax professional for "correct" info.

I put correct in quotes because the tax law for recreational gambling is quite ambiguous.

First off, in this thread there is a lot of mentioning of w2gs. W2gs mean nothing when you are reporting all taxes. W2gs are just a way for the government to track your big wins.

You are supposed to pay taxes on your wins per session. Now the ambiguous part of the tax law is, what is a session. From everything that I hear, a day is a session. Some tax agents may say that when you leave the table that is a session. I believe it has been pretty much accepted that a session is a day. So that being said I would say a session is a day. Your buyin to a table really means nothing. If you enter a casino with 1k in your pocket and leave with $1500 then you have a session win of $500.

Say the next day you go with 1k and leave with $500 then you have a session loss of $500.

For simplicity, let's say you don't go back for the rest of the year. You would enter $500 as gambling income but on your deductions you can write off the $500 loss for a net win of $0.00. However, you can only claim the $500 lost on your schedule A (I believe that is the correct place). That is important because if you are taking the standard deduction then you can not write off that $500 so you will be paying taxes on a $500 win even though you broke even for the year. Now let's say you are itemizing. You now have zero tax liability on the gambling for the year however your AGI is now $500 higher which has the potential to put you in a different tax bracket which could change your tax owed for the year. Not only that but it could effect anything that you get assistance for such as student loan payments or obamacare.

That is the short version even though it was long. Of course that was only federal. You then may owe state depending in whay state you live in.

tidbits from Turbotax

*your AGI is also worthy of your attention, since it can directly impact the deductions and credits you’re eligible for

* the lower your AGI is, the more of your medical and dental expenses you can deduct

*your adjustments to income are subject to AGI limitations despite the fact that those deductions are necessary to calculate your AGI*. If you’re eligible to deduct some of your tuition payments, your modified adjusted gross income (MAGI) determines whether you qualify.

*If you live in a state that requires you to file annual income tax returns, your AGI can also impact your state taxable income. This is because many states use your federal AGI as the starting point

*if you claim a tax credit, such as the lifetime learning credit, for your school expenses, the IRS requires that your MAGI be below certain thresholds in order to claim the credit.

they could go on but don't. In addition to the student loans and obamacare GWAE mentions, I believe there are others like social security taxability - even medicare somehow -I forget how see second link which brings up:

*If you file your taxes as “married, filing jointly” and your MAGI is greater than $170,000, you'll pay higher premiums for your Part B and Medicare prescription drug coverage.

OK, on that last one it affects the fairly well to do only; but remember they used to say that about the income tax generally, that it was just taxing rich folks only. True in the beginning.

All I can say is I avoid W2g's like the plague

*that statement requires 8 years of post-graduate study to understand

https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/What-is-Adjusted-Gross-Income--AGI--/INF19180.html

https://www.google.com/#q=agi+and+medicare+premiums