Lawmakers push for increase in W-2G threshold

Quote: FCBLComish

I agree 100% that the way gambling winnings are taxed is crazy. Having said that, the law is the law.

"The law is the law." And "the decline of casinos is the decline of casinos."

It is indisputable that taxes are disincentives on behavior. If people who makes hundreds or thousands of bets in a weekend are taxed on the winning bets and have limited ability to off-set the wins with their losses for tax purposes- then the entire structure of "the gambling experience" becomes non-functional. Becomes ruinous. Becomes deeply unattractive.

It will be the death-knell of casinos. The gambling industry cannot survive in its present form if the IRS taxes the winning bets and ignores the losing bets when calculating taxable income.

Everything you have worked for, FBCLComish, all of your life's work, will be reduced to sand and guano by these tax laws. But: "The law is the law."

Quote: darkoz

Also, any jackpot over $5000 (I dont believe it matters about the 300:1 win) is not only taxable but MUST have state and federal taxes removed at the top tax bracket. Again something that is not the case for regular slots where you can collect every penny and pay the taxes end of year

I do not think that lottery has the 300 to 1 rule for mandatory withholding.

Horse racing does though. That was updated a few years back to be total wager, not base unit of wager. Thus if you make a $1 pick 6 ticket that ends up as $232 with all the horses selected, you do not have W-2G or withholding on a $5220 win. Horse racing kept the $1200 and 300 times rules, but changed the base for the 300x calculation. With horse racing, the point was to keep more money circulating on horses to help the industry.

Quote: darkoz

In Atlantic city it does.

In NYS racinos it does not

It does in NY's actual casinos as well. NY has VLT halls, video bingo halls (Native American reservations), Indian casinos, and now commercial casinos. Where you play determines how tax reporting works. Like, I believe Monticello harness track was VLTs, but they pulled them out and sent everyone over to RW Catskills, which is a commercial casino. $600 wins at Monticello could be W-2G'd while $2000 wins might not be. At Resorts World, It is just $1200 and over.

Quote: itsmejeff

I do not think that lottery has the 300 to 1 rule for mandatory withholding.

Horse racing does though. That was updated a few years back to be total wager, not base unit of wager. Thus if you make a $1 pick 6 ticket that ends up as $232 with all the horses selected, you do not have W-2G or withholding on a $5220 win. Horse racing kept the $1200 and 300 times rules, but changed the base for the 300x calculation. With horse racing, the point was to keep more money circulating on horses to help the industry.
It does in NY's actual casinos as well. NY has VLT halls, video bingo halls (Native American reservations), Indian casinos, and now commercial casinos. Where you play determines how tax reporting works. Like, I believe Monticello harness track was VLTs, but they pulled them out and sent everyone over to RW Catskills, which is a commercial casino. $600 wins at Monticello could be W-2G'd while $2000 wins might not be. At Resorts World, It is just $1200 and over.

I am talking from personal experience

I have won a number of jackpots over $5,000 at multiple racinos in NYS and they always have 37% taxes removed mandatory even at $25 and $50 per spin which is where the bulk of my jackpots were won

Quote: Deucekies

A $100 bet getting paid 12:1 would not get a W2G.

On a slot machine it does!

Quote: gordonm888

"The law is the law." And "the decline of casinos is the decline of casinos."

It is indisputable that taxes are disincentives on behavior. If people who makes hundreds or thousands of bets in a weekend are taxed on the winning bets and have limited ability to off-set the wins with their losses for tax purposes- then the entire structure of "the gambling experience" becomes non-functional. Becomes ruinous. Becomes deeply unattractive.

It will be the death-knell of casinos. The gambling industry cannot survive in its present form if the IRS taxes the winning bets and ignores the losing bets when calculating taxable income.

Everything you have worked for, FBCLComish, all of your life's work, will be reduced to sand and guano by these tax laws. But: "The law is the law."

I never said I agreed with the laws, but I am an operator, not a legislator.

I did not realize how the VLTs worked. Very interesting. I learned something today.

Quote: darkoz

I am talking from personal experience

I have won a number of jackpots over $5,000 at multiple racinos in NYS and they always have 37% taxes removed mandatory even at $25 and $50 per spin which is where the bulk of my jackpots were won

Now on real slot machines, the $5000 rule does not apply. On table games it does.

The rules are very strange. There are several different types of wagers, and the taxation and withholding are different on each of them.

From the Federal Form

https://www.irs.gov/pub/irs-prior/iw2g--2019.pdf


1. Horse Racing, Dog Racing, Jai Alai, and Other
Wagering Transactions Not Discussed Later (this includes Table Games)
File Form W-2G for every person to whom you pay $600 or more
in gambling winnings if the winnings are at least 300 times the
amount of the wager. If the person presenting the ticket for
payment is the sole owner of the ticket, complete Form W-2G
showing the name, address, and TIN of the winner. If regular
gambling withholding is required, the winner must sign Form
W-2G, under penalties of perjury, stating that he or she is the
sole owner and that the information listed on the form is correct.
If more than one person shares in the winnings from a single
wager, see Withholding and Forms W-2G for Multiple Winners,
later.

Withholding
You must withhold federal income tax from the winnings if the
winnings minus the wager exceed $5,000 and the winnings are
at least 300 times the wager. Withhold 24% of the proceeds (the
winnings minus the wager). This is regular gambling withholding.
If the winner of reportable gambling winnings doesn't provide
a TIN, you must backup withhold on any such winnings that
aren't subject to regular gambling withholding. The backup
withholding rate is identical to the regular withholding rate of
24%. That is, backup withholding of 24% applies if the winnings
are at least $600 but not more than $5,000 and are at least 300
times the wager. Figure backup withholding on the amount of the
winnings reduced, at the option of the payer, by the amount
wagered

2. Sweepstakes, Wagering Pools, and Lotteries
File Form W-2G for each person to whom you pay $600 or more
in gambling winnings from a sweepstakes, wagering pool, or
lottery (including a state-conducted lottery) if the winnings are at
least 300 times the amount of the wager. The wager must be
subtracted from the total winnings to determine whether
withholding is required and, at the option of the payer, to
determine whether reporting is required. The wager must be
subtracted at the time of the first payment.
The requirements in this section apply to church raffles,
charity drawings, etc. In the case of one wager for multiple raffle
tickets, such as five for $1, the wager is considered as $.20 for
each ticket.

Withholding
You must withhold federal income tax from the winnings if the
winnings minus the wager exceed $5,000. Withhold 24% of the
proceeds (the winnings minus the wager). This is regular
gambling withholding. If the winner of reportable gambling
winnings doesn't provide a TIN, you must backup withhold on
any such winnings that aren't subject to regular gambling
withholding. that backup withholding rate is identical to the
regular withholding rate of 24%. That is, backup withholding of
24% applies if the winnings are at least $600 but not more than
$5,000 and are at least 300 times the wager. Figure backup
withholding on the amount of the winnings reduced, at the option
of the payer, by the amount wagered.

3. Bingo, Keno, and Slot Machines
File Form W-2G for every person to whom you pay $1,200 or
more in gambling winnings from bingo or slot machines, or
$1,500 or more from keno after the price of the wager for the
winning keno game is deducted. If the winnings aren't paid in
cash, the FMV of the item won is considered the amount of the
winnings. Total all winnings from all wagers made during a single
bingo or keno game to determine whether the winnings are
reportable. Winnings and losses from other wagering
transactions aren't to be taken into account in arriving at the
$1,200 or $1,500 figure.

Withholding
Regular gambling withholding doesn't apply to winnings from
bingo, keno, or slot machines. However, if the recipient of
reportable gambling winnings from bingo, keno, or slot machines
doesn't provide a TIN, you must backup withhold. That is, if the
winnings are at least $1,200 from bingo or slot machines or
$1,500 from keno, backup withholding of 24% applies to the
amount of the winnings reduced, at the option of the payer, by
the amount wagered.

4. Poker Tournaments
File Form W-2G for each person to whom you pay more than
$5,000 in winnings, reduced by the amount of the wager or
buy-in, from each poker tournament you have sponsored.
Winnings and losses of the participant from other poker
tournaments you have sponsored during the year aren't taken
into account in arriving at the $5,000 amount.

Withholding and backup withholding. If you file Form W-2G
for the person to whom you pay more than $5,000 in net
winnings from a poker tournament, and provide a copy of Form
W-2G to such person, regular gambling withholding doesn't
apply to the winnings. However, if the person who wins more
than $5,000 doesn't provide a TIN, you must apply backup
withholding to the full amount of the winnings from the
tournament. The backup withholding rate is identical to the
regular withholding rate of 24%. Net winnings of $5,000 or less
aren't subject to reporting, withholding, or backup withholding.

Quote: FCBLComish

Now on real slot machines, the $5000 rule does not apply. On table games it does.

The rules are very strange. There are several different types of wagers, and the taxation and withholding are different on each of them.

From the Federal Form

https://www.irs.gov/pub/irs-prior/iw2g--2019.pdf


1. Horse Racing, Dog Racing, Jai Alai, and Other
Wagering Transactions Not Discussed Later (this includes Table Games)
File Form W-2G for every person to whom you pay $600 or more
in gambling winnings if the winnings are at least 300 times the
amount of the wager. If the person presenting the ticket for
payment is the sole owner of the ticket, complete Form W-2G
showing the name, address, and TIN of the winner. If regular
gambling withholding is required, the winner must sign Form
W-2G, under penalties of perjury, stating that he or she is the
sole owner and that the information listed on the form is correct.
If more than one person shares in the winnings from a single
wager, see Withholding and Forms W-2G for Multiple Winners,
later.

Withholding
You must withhold federal income tax from the winnings if the
winnings minus the wager exceed $5,000 and the winnings are
at least 300 times the wager. Withhold 24% of the proceeds (the
winnings minus the wager). This is regular gambling withholding.
If the winner of reportable gambling winnings doesn't provide
a TIN, you must backup withhold on any such winnings that
aren't subject to regular gambling withholding. The backup
withholding rate is identical to the regular withholding rate of
24%. That is, backup withholding of 24% applies if the winnings
are at least $600 but not more than $5,000 and are at least 300
times the wager. Figure backup withholding on the amount of the
winnings reduced, at the option of the payer, by the amount
wagered

2. Sweepstakes, Wagering Pools, and Lotteries
File Form W-2G for each person to whom you pay $600 or more
in gambling winnings from a sweepstakes, wagering pool, or
lottery (including a state-conducted lottery) if the winnings are at
least 300 times the amount of the wager. The wager must be
subtracted from the total winnings to determine whether
withholding is required and, at the option of the payer, to
determine whether reporting is required. The wager must be
subtracted at the time of the first payment.
The requirements in this section apply to church raffles,
charity drawings, etc. In the case of one wager for multiple raffle
tickets, such as five for $1, the wager is considered as $.20 for
each ticket.

Withholding
You must withhold federal income tax from the winnings if the
winnings minus the wager exceed $5,000. Withhold 24% of the
proceeds (the winnings minus the wager). This is regular
gambling withholding. If the winner of reportable gambling
winnings doesn't provide a TIN, you must backup withhold on
any such winnings that aren't subject to regular gambling
withholding. that backup withholding rate is identical to the
regular withholding rate of 24%. That is, backup withholding of
24% applies if the winnings are at least $600 but not more than
$5,000 and are at least 300 times the wager. Figure backup
withholding on the amount of the winnings reduced, at the option
of the payer, by the amount wagered.

3. Bingo, Keno, and Slot Machines
File Form W-2G for every person to whom you pay $1,200 or
more in gambling winnings from bingo or slot machines, or
$1,500 or more from keno after the price of the wager for the
winning keno game is deducted. If the winnings aren't paid in
cash, the FMV of the item won is considered the amount of the
winnings. Total all winnings from all wagers made during a single
bingo or keno game to determine whether the winnings are
reportable. Winnings and losses from other wagering
transactions aren't to be taken into account in arriving at the
$1,200 or $1,500 figure.

Withholding
Regular gambling withholding doesn't apply to winnings from
bingo, keno, or slot machines. However, if the recipient of
reportable gambling winnings from bingo, keno, or slot machines
doesn't provide a TIN, you must backup withhold. That is, if the
winnings are at least $1,200 from bingo or slot machines or
$1,500 from keno, backup withholding of 24% applies to the
amount of the winnings reduced, at the option of the payer, by
the amount wagered.

4. Poker Tournaments
File Form W-2G for each person to whom you pay more than
$5,000 in winnings, reduced by the amount of the wager or
buy-in, from each poker tournament you have sponsored.
Winnings and losses of the participant from other poker
tournaments you have sponsored during the year aren't taken
into account in arriving at the $5,000 amount.

Withholding and backup withholding. If you file Form W-2G
for the person to whom you pay more than $5,000 in net
winnings from a poker tournament, and provide a copy of Form
W-2G to such person, regular gambling withholding doesn't
apply to the winnings. However, if the person who wins more
than $5,000 doesn't provide a TIN, you must apply backup
withholding to the full amount of the winnings from the
tournament. The backup withholding rate is identical to the
regular withholding rate of 24%. Net winnings of $5,000 or less
aren't subject to reporting, withholding, or backup withholding.

Yes, in AC when I ask them to withhold for me from slots (they give me a choice there) its 24%

NYS racinos do 37%. I don't know why. But I did get a decent sized tax refund this year as a result. In fact, it was waiting for me in my mailbox when I arrived home from the spring fling, a very nice way to end my vacation

New York mandatory withholding is federal, state, and, if applicable, city income tax. Federal is 24%, state is 8.82%, Yonkers is 1.477%, and New York City is 3.876%. For $5000 or more lottery win, the most you can walk away with is 67.118%. The least is 63.242%.

25 years ago, a tour bus operator told a bus full of seniors & me how much they put in the slot machines, and how much they won that day from the slot machines, based on the club card statistics. They had coin in & coin out stats for each of us on a daily basis. Like I may have put $312 into the nickel slots or won enough credits to make it seem that way, but won $316 back. I'd have a net of $4. It's easy to note wins and losses this way instead of through W-2G's, but after 100 trips to the casino it might be too much accounting for individuals who can't add. But for people who don't like tax forms, they may not like the coin in/coin out accounting method either.

Quote: darkoz

Yes, in AC when I ask them to withhold for me from slots (they give me a choice there) its 24%

NYS racinos do 37%. I don't know why. But I did get a decent sized tax refund this year as a result. In fact, it was waiting for me in my mailbox when I arrived home from the spring fling, a very nice way to end my vacation

How many hundreds of refund checks do you get? One for each player card? :)