Although the federal government usually turns a blind eye to most of what goes on in Indian Reservations one thing is for sure, the IRS doesn’t. Most casinos in the United States are located on Indian Reserves due to the passing of the Indian Gaming Regulatory Act of 1988. With the passing of this act came the opportunity for Uncle Sam to collect huge tax revenues to fund the states and federal government. Rhode Island alone, in 2011 brought in over $300 million dollars of tax revenue from casinos; while in 2007 Connecticut brought in over $780million from its two Indian casinos (compare that to Las Vegas which brought in a little over $1billion in tax revenue in 2007!).
So how does all of this affect you? Well, casinos are not just the only ones being taxed. People like you and I who might go to Twin River (in Rhode Island) Mohegan Sun (in Connecticut), or one of the new casinos that might come to Massachusetts soon, HAVE to pay taxes on our winnings. What if you don’t go to casinos but love beating the spread on Patriots games or the BCS Bowl (hopefully you didn’t choose Notre Dame…). The state and federal government get a piece of all gambling. Technically, you should even be paying taxes on your winnings from taking your friends to the cleaners every month during your poker nights.
But don’t worry, I’m going teach you everything you need to know about what to do when you win it big on the slots and how you can keep as much as possible from Uncle Sam’s pockets and put it towards more rewarding things like…F5Accounting! I’m just kidding; we want you to keep your money for better things like your child’s education, a new car, or a nice vacation (far, away from your boring accountants!).
The Nitty Gritty on Gambling:
- No gambling losses may be deducted unless gambling winnings are reported as well.
- Gambling winnings are claimed as income on the W-2G (yeah the “G” is for Gambling J )
- You will be issued a W-2G when you win $600 and the payout is 30 times the amount of what you paid to play. (example: You win $1000 and only paid $50 or less to play)
- You won $1200 or more from bingo or slots (Gandma, put that bingo stamp down!)
- You win $1500 or more from keno
- Win $5000 or more from any other type of gambling.
Winnings and losses include, but are not limited to lotteries, raffles, bets on athletic contests, bingo, bets on horses or dog racing and all casino wagering. Good news! Office pools and similar personal wagering (like fantasy football) are not included.
So there it is; the low down on hi lo, the truth on Texas hold’em, the winning on losing in gambling!