We sent this one to Jean "Queen of Comps" Scott, author of Tax Help for Gamblers. Here’s what she said:
The IRS considers all prizes and other "wins" as income, no matter the form in which they come and whether or not you get any tax paperwork. From the IRS Web site on this issue: "Gambling income includes, among other things, winnings from lotteries, raffles, horse races, poker tournaments and casinos. It includes cash winnings as well as the fair market value of prizes such as cars and trips. Even if a W-2G is not issued, all gambling winnings must be reported as taxable income..." You can get more details from the IRS website under "Reporting Miscellaneous Income."
Now for your second question – will the casino issue you a 1099? After more than 26 years of experience in dealing with casinos, I still can’t predict what a casino will do in any situation, especially on tax issues. So, my answer has to be: Maybe or maybe not.
In Tax Help for Gamblers, I call this the "battle of the forms."
It’s standard that winners of non-gambling prizes will be issued Form 1099-MISC for prizes worth $600 or more. But much isn’t "standard" when you’re talking about the policies of various casino companies... some casinos issue that form for a win of $600 or more in one tournament, while others add all the tournament wins of any amount for one person in one year and issue a 1099 for the aggregate prizes that total $600 or above. And to complicate matters, some casinos issue a W-2G instead of a 1099.
And do you want to be more frustrated? Sometimes they won’t give you any paperwork at the time of the win – but, bam... you get a 1099 or W-2G in January!
These questions bring up many others, particularly whether you can add prizes to your regular gambling wins when you are filing your taxes. This is a very complicated issue. Fortunately, I have a whole chapter in my tax book on these special gambling circumstances if you want/need more details.
