Related to QOD 4/25/17, if a group of 4 people each play $21 in Megabucks and agree to split the big jackpot if anyone hits, what would be the best way for them to handle the annual payouts and taxes?
IRS form 5754, “Statement by Person(s) Receiving Gambling Winnings,” allows the casino to issue W-2Gs to each member of the group for his or her part in the win, rather than the one winner getting a W-2G for the total amount.
Presumably, IGT, which pays off Megabucks jackpots, would do the same, though we couldn’t get confirmation of it.
Anyway, in a casino-paid jackpot, the person who actually hit the big prize would fill out Form 5754 with the names and Social Security numbers of, in your example, the other three who share in this win. The casino is required to accept this form and issue individual W-2Gs based on the information furnished on it.
But here’s where it can get tricky. Many casino employees, especially those who pay off machine jackpots, are either unknowledgeable about this form or simply don’t want to bother with it. Players can insist, but most don’t, since that might invite more scrutiny from put-upon jackpot-paying employees and why risk it?
Especially since the alternative, going the 1099 route, is just as effective and efficient.
The way this works is simple. The one W-2G jackpot winner issues 1099s to each of the partners for the agreed-upon share.
One thing is clear from this, and the previous QoD this question came from: In all partnering cases, a written agreement signed up front by the partners is desirable.
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May-28-2017
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