Changes in Witholding Tax on Jackpots

Hello there, I'm from Europe, regularly visiting and gambling in Las Vegas. According the info I have from a Laughlin Hotel, the tax threshold has been raised to 2000 for the W2 form (formerly 1199). Is this rule official and active at all casinos in Nevada and the U.S., or does anybody experience tax cuts based on the old rule?  Since I play 0.50 denom and 1 dollar denom machines, the 2000 Dollar threshold doesn't change much for me, it would be better if that rule had been set to 2001 dollars and up. Unless IGT comes up with new machines that are paying 1999 Dollars for the Royal Flush instead of 2000 Dollars, this rule for me is basically worthless. Quarter denom players have a little break when hitting a 1700 Dollar Royal Flush. I may consider this game over my standard 0.50 denom game in the future.  Best regards from Switzerland / Boris

It may be more helpful to you next year as the new W2G $2000 reporting threshold is indexed to inflation so it is likely to be greater than $2000 in 2027.

It's applicable to all of the U.S.; the new limit is $2,000 for a W-2 G, replacing the previous $1,200 limit.

As a $0.50 denom video poker player, I was disappointed it wasn't a higher limit, but as Inigo said, it is indexed for inflation.

Your thread title made me think that your question was about withholding a part of foreign player's winnings, to ensure that they paid income tax, and I believe that hasn't changed.

How would a thread title of "Changes in Witholding Tax on Jackpots" lead anyone to think it had to do with a foriegn players winnings?

Boris, The change will be helpful for your play about 50 weeks from now!  The new threshold is indexed to inflation, so even if that rises 1%, next year's trigger amount will be over $2000, at $2020 !

Because a W2G has nothing to do with any kind of withholding, and the OP is from a foreign country, which sometimes triggers a tax withhold. 

The OP misused the term "withholding", as no tax is withheld regardless of the size of the jackpot. Tax LIABILITY may occur, but the new rule doesn't change that one bit. And of course, you owe tax on all winnings, whether a W2G is issued or not.

Of course, most people won't report jackpots on their tax returns unless a W2G IS issued. And even fewer will do that now that the idiot Trump rule is in effect.

Thank you for explaining. I have 2 trips to Vegas every year. So if everything works as you guys have explained, from 2027 on that threshold will be over 2000, in which case the 2000 dollar royals should no longer have a withholding tax. This may change my results then to the better :)  Best regards from Switzerland / Boris

It will not go up in $20 increments. The minimum increment is $100 but they will round up, meaning that if inflation is 2.5% or over between 2025 and 2026 then the $2050.01 amount will be rounded to $2100 for calendar year 2027.

Have you had part of your winnings withheld for tax purposes?

I think there are some misconceptions here. First of all, tax treaties exist between the US and many European nations. There is a mandatory 30% withholding on jackpots, but it almost always has the same reporting threshold as the W2-G. 

The quickest way out is to show your passport and request a W-8 BEN. Foreign nationals are supposed to get those instead of W2Gs. If Suisse has a tax treaty with the US that allows it, you can get the full amount of your jackpot paid to you right then and there.

If that doesn't work, simply file a 1040-NR with the IRS and you'll get back whatever was withheld (albeit kind of slowly if it's tax season). 

It's really not a big deal either way.