Many slot machine winners who land a major jackpot are unprepared to pay their taxes upon winning big; their excitement keeps them from contemplating this responsibility. It’s vital for all players to know how much tax may be owed on winnings and which documents are necessary to report it properly.
Slot winnings in the US are considered taxable income regardless of whether you win cash or non-cash winnings; all gambling winnings (both online and land-based slot wins) must be reported to the IRS using Form W-2G; depending on state laws, you may also need to file a separate tax return for that winnings amount.
When winning big from a slot machine, casinos require that you provide two forms of identification in order to confirm that you are indeed the legitimate recipient of that amount. Otherwise, federal taxes will be withheld at an even higher rate of 28 percent than for all other forms of winnings (24 percent is typically applied).
If you want to reduce the amount of withholding tax withheld from your casino earnings, requesting that they withhold less can have an adverse effect on your bank account balance and may even lead to rejection by the IRS if they believe you don’t meet criteria for such lower withholding rates.
Tax withholding on slot machine payouts varies based on how much money has been won and what kind of gambling game was played. The IRS requires gambling establishments to report winnings when they reach certain thresholds that vary for different games; typically this threshold is $600 for sports betting, $1,200 for slots and $5,000 for keno or poker games.
Casinos must withhold tax on winnings of $1,200 or more when using slot machines or playing other forms of gaming such as bingo and keno if the winner does not provide their Social Security number; if they provide their Social Security number however, casinos do not need to withhold any tax on jackpots under $5,000.
Winnings from table games like blackjack and roulette don’t fall under the same reporting requirements as other casino winnings; nonetheless, it is still beneficial to keep track of your wins and losses so that you can claim deductions when filing your income tax return. A log book will help you identify how much gambling loss offset against your cumulative gambling winnings annually.