We posed this timely tax question to professional gambler and co-author of the recently updated Tax Help for Gamblers, Jean "Frugal Gambler" Scott. This is what she had to say on the matter.
Wow! A $2,000 hit, just over a form that doesn’t really matter, if, as you imply, you are going to truthfully report all gambling income from wherever anyway. I guess I truly don’t understand your dilemma.
So, I tossed this question in the direction of my tax book co-author, Marissa Chien, EA. After she got over her initial amazement, Marissa sent me this reply:
"Cruise ships are not flagged under the U.S. normally, so even though the person who submitted this question might have won the money in international waters, he's actually subject to the laws of the country that the cruise ship is flagged under. However, even if the casino manager was incorrect, he should have gone along with what was asked of him. Now, the only remedy would be to sue in the courts of the cruise ship's flag nation."
Hummm. I'd wager that might cost a bit more than $2,000. Maybe you could write a nice… groveling?… letter to the manager of the ship’s casino, give him your Social Security number, as you should've done in the first place, and see if he sees fit to send your winnings. I’d truly be interested to hear how that works out, if you pursue it.
Actually, your question inspired me to revisit Tax Help for Gamblers, where I found a discussion of this very topic. (Hey, I’m not getting any younger and my rememberer doesn’t work as well as it used to, so I sometimes forget even what I have written.) Since 9/11 and the Patriot Act, most cruise ships have started issuing W2-G’s to American citizens and permanent American residents on wins of more than $1,199 on machines -- the same as land-based casinos do, which prompted Marissa to added this additional bit of information:
"In a U.S. casino, if you refused to provide your Social Security number, they would just automatically withhold 30 percent of your win for taxes."
