If I Hit a Jackpot of $1,200 or More, Can I Avoid Tax Paperwork?

If I win a payoff of greater $1,200 (including the mandatory W-2G), can I tell the casino to pay me only $1,199 and avoid the W-2G?

We put this question to Jean Scott, a gambling-and-taxes expert who, along with her Frugal books, co-authored the book Tax Help for Gamblers (a new edition of which is currently being feverishly produced to update the situation since the new tax law took effect earlier this year and has a new section on sports betting to address the rapid expansion of that form of gambling).

She said, and we quote verbatim, "No." She added, "That directly contravenes IRS rules, so it's probably illegal."

And yes, you might argue that casinos offer $1,199 jackpots, which seem to encourage players to try for a payout that doesn't necessitate a W-2G. The fact is, however, that casinos can post any size jackpot they please. But if you hit one that's $1,200 or more (on machines), they're required to issue you a W-2G. No exceptions.

By no means are we tax attorneys or Enrolled Agents, but it seems like common sense that hitting one for that amount or more and asking the casino to lie about it so you're not issued any tax paperwork, even though they might get away with paying you less, is tantamount to attempting to enter into a conspiracy to evade taxes.

Besides, if you hit a jackpot of $1,199 or less, it doesn't absolve you from including the amount in your win column for the year. Even though no tax paperwork is generated, by law you still have to declare it and, insofar as your wins exceed your losses, pay taxes on it.

No part of this answer may be reproduced or utilized in any form or by any means, electronic or mechanical, without the written permission of the publisher.

Have a question that hasn't been answered? Email us with your suggestion.

Missed a Question of the Day?

Have a Question?

Tomorrow's Question

Has Clark County ever considered legalizing prostitution?

Comments

David Nov-03-2018

This is the symptom

The disease is the ridiculous amount of taxes we have to pay in this country. These winnings should not be taxed regardless of amount. The United States doesn't have a revenue problem, it has a spending problem.

Ray Nov-03-2018

Jackpot!!!

The scenario screams that what you are doing is trying to bribe the casino into falsifying tax records.

mofromto Nov-03-2018

Still ridiculous

I remember when I hit my first jackpot ($1500.00)  in 1990 and was given  paperwork and deducted 30% for being Canadian which I found very unfair seeing that gambling winnings in Canada are not taxed.. It's still $1200 today which means the amount has not moved with inflation. In other words, $1,200 in 1990 was equivalent in purchasing power to $2,250.53 in 2017, a difference of $1,050.53 over 27 years. The 1990 inflation rate was 5.40%. I'm surprised that the US casino lindustry doesn't lobby for a higher threshold.

Adumb Nov-03-2018

Another question

No worries I’m curious about multi line slot machines. Say I’m playing one of those bet 45 lines machines and I hit a jackpot on one line for $1199 and another line for $1.00 (equaling $1200). Do I pay taxes because each line is a separate bet?

mofromto Nov-04-2018

Multi-line machine taxes

@adumbgreen.

Unfortunately you do pay taxes. You bet only once overall to see what the outcome would be on 45 lines and so the proceeds of that win if it is $1200.00 or more is taxable. You could have won $200.00 on six lines on the one bet and would have to pay taxes.

Question of the Day - 03 November 2018

Comments