How Do Casinos Pay Taxes on All the Handpays?

I've been fortunate enough to get 1099s or W-2Gs from a casino. I tend to have federal taxes taken out. If I'm local, state taxes come out too. Makes my life much easier as a self-employed person. But it makes me curious: How do the casinos send that money to the tax entities? Daily? All in one lump weekly with the SSNs attached? That would be a very big deal to sort.

Boyd Gaming spokesman David Strow kindly supplied the answer for you, as he's done many times over the years.

He writes, “One universal standard doesn't apply across the country. Each jurisdiction (federal, state, and local) has different payment requirements, so our payment frequency follows those requirements. When funds are sent, they're sent as a lump-sum total (i.e., not individual payments).”

Strow adds, “With respect to the IRS, we provide the IRS a file once per year that details individual taxable events. The IRS then reconciles the file with the lump-sum payments we made throughout the prior year.”

With a little sleuthing on our own, we determined that like the federal requirement, most states require annual submissions of handpays, though in some states (we couldn't find which), casinos must submit more frequently. That's usually quarterly, but it can also be monthly.

As far as local jurisdictions, it seems there are too many to make any assumptions, but we imagine they're similar to state requirements.

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Kevin Lewis Jul-25-2024

Frequency

A private entity that collects taxes on the federal government's behalf is obligated to remit those taxes on a schedule that varies according to the amounts collected. For a small business payroll, that could be as infrequent as every quarter. For a large business, the maximum requirement would be every one-eighth of a quarter, or roughly once every eleven days. Those requirements apply whether the tax money is payroll taxes withheld or portions withheld from gamblers' jackpots--in either case, the business is acting as the government's agent.

Lucky Jul-25-2024

Taxes

In Nevada, Arizona and California, I received a W2G for the taxable jackpot, but never had anything deducted for city, state, or fed taxes.  In New Orleans, I had one jackpot, and they took out state taxes, but not fed taxes.  And I sent in a refund form and received my state taxes back.

Captain Jul-25-2024

Deposit requirements

Kevin close but not accurate. I’m required to deposit within 5 days of end of pay period, which is weekly.   As you mentioned it’s based on how big your annual deposits total.

Dan McGlasson Jul-25-2024

But what if . . .

I read a comment about taxes several years ago that recommended against allowing the casino to withhold taxes.  You would then pay the owed taxes at the time you filled out your yearly return, or quarterly depending on your tax situation.  The concern was that if a casino failed to get the withholding to the IRS due to bankruptcy, mismanagement, etc., the IRS could still come after you.

Does anyone know if this is correct or not?

Randall Ward Jul-25-2024

taxes

wonder what it's like to hit $1200 at the casino in NY C, state taxes are bad enough

David Sabo Jul-25-2024

Mississippi gets there's up front!

If you hit a taxable jackpot in Mississippi they automatically take 3% out to pay the state. Since I don't bother to file in Mississippi it's just gone.

O2bnVegas Jul-25-2024

for Dan

Fed or state taxes held when a jackpot is paid would show on the W-2G. You would show this to your tax preparer for proof of taxes withheld. Just be sure to hold onto your W-2Gs.  

My friend had an astounding year of jackpots, ended up with well over 100 W-2Gs.  She had not had any taxes withheld, and usually played it all back in by end of trip.  Her tax bill was enormous.  Lesson learned, she now has taxes withheld.

True about Mississippi.  They deduct MS state tax. You have no say if you live in another state.  Years ago your tax preparer could file for it separately.  That ended some years ago. Probably cost more having the tax preparer file the separate return anyway.

Candy

Dave Kamsler Jul-25-2024

Kevin

CPA here — payroll tax deposits to the federal government can be required to be as often as every 3 days (semiweekly).  Non-payroll amounts are generally not required to be that frequently.  

In any event, further to the original question, the federal withholding amounts are remitted to the IRS as required during the year, in lump sums.  At the end of the year, the entity that withheld the taxes (in this case, the casino) provides the IRS with a recap by Social Security Number.  In other words, we withheld (and paid to the IRS) a total of $X during the course of the year……of this, $Y was on behalf of taxpayer 123-45-6789, $Z was on behalf of taxpayer 987-65-4321, etc. 

Then when those individual taxpayers take credit for the withholding on their 1040s, the IRS checks it against the recap provided by the casinos.

Kevin Lewis Jul-25-2024

Yes

I conflated payroll withholding with other types of withholding. The one-eighth of a quarter rule no longer applies to payroll. I'm pretty sure it still applies to other types of withholding, but I could be wrong about that as well. Hard to find the rules that casinos are supposed to follow.

Question of the Day - 25 July 2024

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