I get inspiration for columns from all sorts of places. This was a question sent in to [email protected] for Richard and me to answer on the podcast. I will answer it there the next time we have a “Bob and Richard answer their mail” show (which is usually when we haven’t been able to schedule a guest for that week), but I’ll answer it here first.
I earned $1,000 in a drawing. The casino insisted I show my Social Security Number, even though it was below $1,200. They said they wouldn’t pay me if I didn’t show it. So, I did. Were they legally entitled to demand my SSN?
Yes, they were.
The $1,200 you refer to is the lower limit for a W2G, which is a form called “Certain Gambling Winnings,” and for video poker players, it is issued when you hit a jackpot of sufficient size.
For drawings, the appropriate form is called Form 1099-MISC. The magic number for 1099s as applied to drawings is $600 PER YEAR. Your $1,000 prize is more than that, so yes, they should issue you a 1099 and they need your SSN to do this.
Some casinos collect your SSN for ALL winnings simply because the $600 figure is an annual figure. If you win $50 in February, $250 in April, and $300 in October, the casino should send you a 1099 at the end of the year. Some do. Some don’t.
The casino cannot know in February if you’re going to win any additional drawings throughout the year, so they are entitled to collect the SSN every time.
In addition to drawings, earning money in a tournament qualifies towards the same $600 1099 threshold. On occasion I’ve been issued a W2G rather than a 1099 for a tournament winning. When that happened, I simply recorded it in my records the same way as the tax form was issued.
Can you get around this?
Sure. You do not have to provide your SSN for drawings. You keep your SSN and the casino keeps the money. Similarly for W2Gs, if you hit for $4,000 and simply walk out of the casino, you will not have to give your name or SSN. They will not chase you! The casino will keep the $4,000, of course, along with whatever credits you had remaining on the machine when you hit the jackpot. There are people who have gone this route. I’m not one of them.
W2Gs and 1099s are reported to the IRS and you need to account for them on your tax return. Exactly how you do this is a question for someone more expert than I am in this. Failure to account for 1099s and W2Gs can trigger audits and penalties, which I am expert enough to tell you is no fun at all.
You say they need my SSN. I understand that, butt they dont need to physically see my SSN Card do they? I’ve been told by several people smarter than myself to NEVER carry that card w/ me. I keep it in a safe here @ home. If they do need to see it…would a copy of it suffice??
They believe you when you tell them verbally! I never carry it!
They can have you fill out a W9 in lieu of a SS card.
Render to caeser the things that are caesers
Most casinos will now enter into a program the name and amount of every prize given out, and the program will inform them when a particular customer has reached $600 for the year and are therefore required to provide their SSN. In general, casinos don’t want to bother someone for their SSN if they don’t have to!
I’m sorry to everybody out there….My main question was never asked…When they ask for my SSN today?? Will they accept me telling them my # now?? Do they need to SEE the SSN Card?? Admittedly….I’ve only had 2 Royals since I started playing VP in 1980. Both of those were for .25 Royals soooo there was never any big deal.
In rereading my previous comment…I see the stupidity in bringing a copy SSN. Or the original!! Hope Ur all havin a good laugh….though….Im sure Im not alone wondering….???? haha…
If the SSN you give matches the name on your id provided according to Federal database, you should not need your SS Card
What if the drawing win is paid in free play that is loaded on your players card? Does this change the casino’s reporting requirements? Further, the free play can have an expiration date so they won’t know if you have “walked away” until that date.
Same question as Gary, if the win is in promotional chips, i.e. 1-bet only or play until you lose them?
Free play does not require any IRS paperwork.
Couple of years ago I was playing a bar-top tito machine betting the 25 cent increment, $1.25 per hand. I got a royal and the machine slowing clicked up 4000 25 cent credits on the meter. I hit cash out, took my ticket to the cage, got my money, and left.
I was curious if I had been betting the $5.00 increment if it would have been a hand pay.
Bob, I disagree with your answer based on the instructions for the IRS forms involved. When I have received Form 1099-MISC for winnings from drawings, the winnings were stated in Box 3. IRS instructions for Box 3 state,
“Enter other income of $600 or more required to be reported on Form 1099-MISC that is not reportable in one of the other boxes on the form.
Also enter in box 3 prizes and awards that are not for services performed. Include the fair market value of merchandise won on game shows. Also include amounts paid to a winner of a sweepstakes not involving a wager. If a wager is made, report the winnings on Form W-2G.”
Wikipedia defines “sweepstake” as,
“a type of contest where a prize or prizes may be awarded to a winner or winners.” “By definition, the winner is determined by luck rather than skill.”
Most casino drawings involve entries earned through wagering. For example, one may earn 1 drawing entry for every 100 points earned and 1 point is earned for every dollar wagered. Since casino drawings fit the definition of a sweepstake and wagers are involved in earning the sweepstake entries, the winnings should be reported on Form W-2G. The instructions for Form W-2G state,
“Report gambling winnings on Form W-2G if:
4. The winnings (except winnings from bingo, slot machines, keno, and poker tournaments) reduced, at the option of the payer, by the wager are:
a. $600 or more, and
b. At least 300 times the amount of the wager”
In most cases, the wagering necessary to earn a drawing entry multiplied times 300 far exceed the amount of the prize. In the example mentioned above, $100 of wagering is required to earned 100 points. 100 points was required to receive the entry that won the prize. $100 of wagers times 300 equals $30,000, so the winnings are only reportable on Form W-2G if they exceed $30,000.
Winning a prize in a promotional drawing is not the same as winning on the game. That is why it is reported on a 1099. Even if you had to play on a table or machine to get your entry into the promotional your actual participation has nothing to do with your wager. That is the IRS’s take on it. Also, you will get a W2G for a tournament if it is a poker tournament all other poker prizes like bad beat or high hand are reported on a 1099.
Paul:
You are trying to be logical. Casinos and even the IRS interpretation of laws and rulings can often not be explained “logically.” We spend several pages discussing government forms for drawings and tournaments in the book “Tax Help for Gamblers.”. Actually there is no uniformity in this area for casinos. Down through the years we have experienced many different ways casinos issue forms for drawings and tournaments. I call it the “battle of the forms.”
I agree that casinos treat drawing winnings in different ways. I think that is really the issue. Bob stated, “For drawings the appropriate form is called Form 1099-MISC.” This is subject to debate. If you look at guidance published by the IRS, an acceptable interpretation (and I think the most appropriate) is that Form W-2G should be used for drawings…and in most instances, following this route eliminates the need for casinos to keep, file and mail detailed records to the IRS and drawing winners, a timing consuming and costly process.
Obviously, many casinos have operated successfully without processing Form 1099-MISC’s for drawing winnings. So why do unnecessary work? We drawing winners would also happily forego the Form 1099-MISCs we receive.
At the racino I play at, they ask for your SSN when ever you win at the triggering level. This is entered into a computer to see if you are on Public Assistance , SNAP or behind on Child Support payments. If so, they will deduct that amount from your winnings. Sounds unfair. Maybe, but this is an unfair World we live in.
I got 1099 Misc from casino for the monthly drawing box 3 and I had to gamble there to earn entry for the drawing. So why can’t I deduct my gambling losses against this drawing income on my taxes?