Is the W-2G Issued for the Win or the Win Plus the Bet?

I was under the apparently false perception that a W-2G tax form was filled out for "winnings" of $1,200 or more. I recently played a video crap machine where a pass line bet paid a total of $1,300. However, $500 of this was my money. Was a handpay necessary in this instance since my profit was only $800?

Yes. It doesn't matter how much of the money in the machine, any machine, is yours. What matters is the bottom-line payout. On a machine, if it's $1,200 or more, you get a W-2G.

For your reconciliation purposes, the W-2G is issued for the entire jackpot, which is not the same as the amount won.

Here's a good example, you're at $1 Triple Play video poker machine and are dealt and hold a $400 jackpot on each line. That totals $1,200. It's W-2G time. Many players have argued that this is a win of only $1,185, because they had to pay $15 to earn the $1,200. Solly, Cholly. The "win" (your quotes) is irrelevant for tax purposes. It's the bottom-line payout that counts.

Still, they argue. But these players can protest the point until the cow that jumps over the moon to chase flying pigs is blue in the face. Until they sign the W-2G, they won't get paid.

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Comments

Kevin Lewis Sep-14-2024

BOOOOOO IRS

It was odd to read this QoD, because my first thought was the memory of many moons ago, playing 50-cent Triple Play Double Bonus at the Tuscany and being dealt four Aces--$1200 hand pay. I vehemently resisted getting a W2-G because, I argued, I had only won $1,182.50.  My pleas fell on deaf ears. I did find out later, after a call to Gaming in Carson City, that it's the payout, not the winnings, to which the threshold applies. Which means, I suppose, that if I could bet $600 on a blackjack machine, and I won the hand, I'd get a W2-G.

Of course, for nobly honest folks such as MOI, it's a moot point, because I tell the IRS about ALL my winnings and other income. Why, the other day, I found a quarter on the sidewalk, and I immediately mailed the IRS a nickel.

Dave Kamsler Sep-14-2024

IRS

While it makes no sense, the IRS instructions for Form W-2G do say that a form is required if the “winnings (not reduced by the wager)” are at least $1,200.  Of course, that’s illogical, because the winnings, by definition, are the payout reduced by the original wager.  But that’s hardly the only case of IRS rules making no sense.  

The bottom line is, that is what the rule is, so there’s no sense arguing with a casino employee over it.  And, I’m a CPA, so even though Kevin was being facetious, he is correct — as I’m sure Jean Scott would like us all to remember, *all* of your winnings are taxable, whether you receive a W-2G or not.  (And yes, if you find a quarter on the street, technically that’s taxable )

Ken Orgera Sep-14-2024

Careful

That’s why when a progressive gets to $1100 I start to monitor my money in the machine!

Bob Nelson Sep-14-2024

Ken

That makes no sense to me.  The w2g isn’t issued when you cash out it is issued on hitting a hand $1200 or over.  You don’t get a w2g for feeding 20 Benjamins into a machine and hitting cash out…

John Sep-14-2024

Easy Peasey

Just think of the IRS as being The Mob and it all makes sense.

"If you pay me I will see that nothing happens to your business."

OMB13 Sep-14-2024

Ken

Bob is correct. No need to worry until the progressive is 1199.99....Good luck!

dblund Sep-14-2024

re:  IRS

Dave, I'm surprised a CPA would find the IRS rules illogical, as they are just saying that for REPORTING purposes, they are looking at gross winnings as opposed to net.  You may not like their rules, but they are consistent with their practices of separating income from expenses.  It also draws a clear and consistent line on what is to be reported - the payout from that specific play.  IMHO this definition isn't the problem; the real pain in the asset is that they haven't updated the trigger amount in far too long.

Tom Sweeney Sep-15-2024

I always thought  a 1199 jackpot(on quite a few games) would save you from a w2-g .  if not, why would they do that instead of 1200 ?

Lucky Sep-16-2024

Net income

Yes, you get a W2G for any single machine jackpot payout of $1,200 or more, no matter what the amount of the wager.  That is reported income.  If you are NOT a professional gambler, you can only deduct documented gambling loses against the gross winnings. If you list yourself as a professional gambler, you can deduct other expenses, like fuel or tickets to get to the gambling location.  When you get a W2G, you are reporting the income, before gambling losses.  Keep very detailed record of all your play. I am not an accountant, but this is how I have been doing it for years with no issues.  This year, I had to send in a payment to the IRS, as I won a large jackpot at a slot, as my accountant instructed. 25% of the win.

Ken Orgera Sep-23-2024

thanks

I thought the machine would lock at $1200

Question of the Day - 14 September 2024

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