Question of the Day - 25 June 2021

If I was to put in $2k into the machine - and immediately TITO out and took this to the cage would I be issued a W2G ? or is the W2G only triggered by a hand pay ?

No, you only receive a W-2G for gambling winnings in excess of $1,200 on slot machines.  It has nothing to do with coin-in or coin-out.

You will not be issued a W2G, but some casinos will ask you to show ID if you are cashing out a large ticket especially if it is a casino that tells you to go to a cahier if your ticket is refused at a self serve cashout terminal.

Your $2000 TITO would not generate a hand pay at the machine or cashier because it isn't a win.  It could be $5K or $10K, same thing. Just a cash transaction, so to speak.

Sometimes I save all my TITOs until ready to move on, call it a night, whatever.  Might be five or six TITOs totalling over $1200.  Before I leave a machine I'll run them all through (not playing) and TITO out, like you described.  That way I only have one ticket to cash at the ATM (or cashier) instead of standing there running a bunch through, people waiting behind me, etc.

Candy  

I echo the comment about needing to show ID for large TITO payouts in certain situations.  I aggregate my TITO slips at public casinos.  The kiosk may ask me to go to a cashier if it is a larger amount, but I have never been asked for an ID there.  The difference is in Native American casinos.  I have been asked for ID for any cash out TITO totals over $1200 in different Native American casinos.  No SSN, just an ID.  Not sure why.  My "local" casino (still 2.5 hours away) is Inn of the Mountain Gods in Ruidoso, New Mexico.  One time I just wanted to print out a TITO at the machine for $1250.  Not a win over $1200, just an accumulation of play.  The machine would not, and an attendant was called.  They hand paid me and asked for an ID.  I don't like the policy since it usually requires a tip, but I like Inn of the Mountain Gods enough I comply.  Side note - excellent casino if you are in southern New Mexico despite the ID requirement!

It's terminology. A W2-G is titled "Certain Gambling Winnings" but from a tax as well as reality standpoint, shows nothing of the kind--unless you never gambled before or after that one slot spin or VP hand that generated that W2-G. If you had a horrific day (or week, or year) at the slots and were down $7,000, would that W2-G you get along with your $1,500 jackpot actually represent "winnings"? Of course not. Likewise, if you were up $7,000 when you hit it, would you have "only" won $1,500?

A W2-G is just an accounting device, nothing more. You're expected to tally your gambling winnings for the year, subtract your gambling losses, then send the total to the IRS along with your underwear. That's true whether you have a foot-high stack of W2-Gs or none at all.

Of course, gambling winnings are taxed as regular income, but with this huge difference: net gambling losses can't be used to offset other income, the way business, investment, or casualty losses can. Unfair, by design.

As others have said, taxes are all about the winnings, and not how much you cash out. And certainly not how much you cash in.

Yes, you can deduct losses up to the amount of your wins, but only if you have an accurate accounting of your gambling activity, and only if you itemize expenses.

Cashing out can create a different problem.

Cashing out for large amounts (over $10K) will trigger a Cash Transaction Report (CTR). This has nothing to do with taxes or even winnings, and everything to do with preventing money laundering.

If you cash out for significantly less than $10K, the casino may still ask for your ID and keep a record of it, since the CTR reporting rule is about cash transactions that total over $10K PER DAY.

So, for example, if you cash out four times for $3K, not only will the casino file a CTR, but they may flag it for suspected structuring to avoid a CTR, which unless I'm mistaken, is a felony. 

Dave_Miller ...

As long as your $3K transactions have the appearance of being above board, you're fine (obviously, a CTR will be filed once you hit $10K). It's only when you do those transactions around shift changes, changes in the gaming day, refusal to show ID or use an "agent" (another person you know, often a spouse) that the casino files a SAR (Suspicious Activity Report).

To my knowledge, there's no penalty for attempting to structure a transaction, other than the casino not completing the transaction and/or trespassing you until you comply. The biggest penalties are against the casinos that fail to adhere to Title 31/BSA laws. Obviously, SARs the casino files can lead to an investigation into your finances, but I don't believe there's any local/state penalty for structuring.

Actually, what most people have written is not accurate (even though a couple of them also tried to clarify).  W-2G's are not issued for winnings of $1,200 or more, but rather, they are issued only for SINGLE HITS that are $1,200 or more.  If you have a lucky session at a $0.25 machine and hit a normal $1,000 royal flush and then hit AAAA4 for $500, and you cash out with a TITO that is greater than $1,200, you will not be issued a W-2G.  This "single-hit" structure applies to both 1-line machine and multi-line machines.  If you are playing on a 5-play $0.25 machine and get dealt 4 deuces, you will be paid $250 for each hand, but because all of those $250 payouts occurred from the same deal, that constitutes a single hit of $1,250, and you would thus get a W-2G for it.

The info Mr. Dancer didn’t relay was why he keeps records and that’s for tax purposes to write off his losses against his winnings including those W-2G’s. You need to keep records and it would be smart to buy the Tax Help for Gamblers on the LVA site if you want to know the details. 

With a non-answer answer, if only to assert that he considers himself to be the smartest guy on the internet.