Another couple is meeting us in Las Vegas next month. We'd like to take a shot at Megabucks. When we hit the jackpot (hey, a gal can dream, can't she?), what's the best way to split the winnings and account for the tax paperwork?
Yes, a gal can dream; you have a one in 50 million chance of grabbing the gold ring.
And when that happens (ahem), you should know about IRS form 5754, “Statement by Person(s) Receiving Gambling Winnings,” which allows the casino to issue W-2Gs to each member of a group for his or her part in the win, rather than the one winner (the person whose finger pressed the Spin button) 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, as long as you trust, and we mean 101%, the winner to share the prize.
The way the 1099 works is simple. The one W-2G jackpot winner issues 1099s to each of the partners for their agreed-upon share. That way the casino/IGT isn't involved at all; they just follow the established procedure for issuing a W-2G -- along with the check for the entire amount -- to the jackpot winner.
One thing is clear. In your Megabucks partnership, not to mention all transactions worth millions of dollars, a written agreement signed up front by the partners is desirable. It should be a contract that will hold up in a court battle.
