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Your Jackpot And The IRS

So, you’ve just won a hefty slot machine jackpot. Congratulations! Hitting it big and triumphing over the one-armed bandit is every player’s dream. Make sure you take the time to savor your win and have some fun. Okay – ready to come back down to earth? Paying income taxes on your haul is likely the last thing on your mind when those reels line up and that rollup goes higher and higher – but make sure it doesn’t slip your mind entirely.

Uncle Sam always takes his share, and slot game winnings are no exception. Any time you hit a fruit machine jackpot of more than eleven hundred ninety-nine dollars, the casino from which you won it is required to withhold any applicable income taxes and send you a 1099 form to officially report your income to the IRS. If you were to win multiple jackpots (lucky you!), you would be required to file multiple forms, as they are only good for once per jackpot. Don’t think that you are getting off scot-free if you win less than twelve hundred dollars, either – the lower limit simply means that casinos do not have to tax you at the time of your winnings. A lower win will just be taxed later on, at filing time (so don’t go and spent it all!).

We don’t mean to put a damper on your win, of course. The only good news is that, if you are smart, you can deduct the amount of money that you spent gambling, up to the amount of your winnings. If you have been on a serious losing streak, this will count as a big advantage. If you have experienced a short win, this won’t help! The best and most technical way to keep track of what you’ve spent is to play the slot games with your casino players card. You can call up the casino and give them your information, and they can send you a report of how much you’ve spent and won.

Back to September 2008 Archive.