I know you’re supposed to pay taxes when you win big at Las Vegas or one of the Indian reservation casinos, but what system does the IRS use to keep you honest? Say you win $10,000 at the roulette table. Does the casino take a cut for the tax boys when you cash in your chips? Or do you have to provide ID so they can fill out forms and send them to the tax boys so the IRS will know about the income? Or do they just leave it up to you to report gambling winnings on your 1040 and hope you’ll tell the truth?
The casino will force you to fill out a form that they give to the IRS before they pay out on your winnings. IIRC you can pay estimated taxes on the spot but you don’t have to and can walk with all of you winnings. If you pay taxes on the spot the casino will forward that portion of your taxes to the government on your behalf and give you what’s left over of your winnings. At tax time you figure out what your real taxes are for the year and either pay the difference or get a refund.
If you’re not good about saving your money paying on the spot might be a good way to go. If you win, say, $100,000 and spend all of it you’ll be screwed when the $20,000-30,000+ tax bill arrives.
I’m actually curious as to whether the casinos really send in the money right away when you choose to pay it ‘on the spot’. Seems to me it would be worth their while to hold on to it and earn interest, while at the same time, claiming they ‘lost’ $100,000 via your winning it which goes down as a liability on their income statement.
Yarster
I have no idea what they really do but I’m sure they do whatever behooves them the most within the law. If they can hang on to your ‘taxes’ and earn interest for a few months legally then I’m sure that’s what they do. This is why keeping all of the money yourself is the smart thing to do. That way you get to collect interest (which you also have to pay taxes on). However, if your one of those people who has money in their bank account and feel compelled to spend it then it might be worth the money you lose on interest to make sure you don’t end up in jail for non-payment of taxes.
If the winnings are greater than a certain amount, a percentage is withheld (I seem to recall 30%) when your winnings are paid out. In horse racing, the odds also made a difference: if you bet $10,000 to win at 2:1, nothing is withheld, but if you bet a $2 triple and won $10,000, the IRS keeps its cut.
You can, BTW, deduct your losses at gambling, but only against your winnings. In other words, if you win $1 million at the slots, and can prove you lost $500,000 on other forms of gambling (and you’d better have damn good records), you only need to pay taxes on the remaining $500,000. If you don’t have any winnings, though, you can’t deduct any of your losses, and the most you can deduct the the total you lost.
At a certain poit, the casino must have you give them your SSN, so they can send out a 1099. At another point, they withold 20%. The 20% is part of their PAYROLL taxes, which are filed quarterly, and have no deductions or such things (as you folks understand them). So, yes, they might get to earn interest on a couple months on your witheld taxes.
At the racetracks here the threshhold for withholding tax, at a rate of 20%, on winnings is $600 - the same as that for issuing a 1099. Payroll tax deposits are made at required intervals that become smaller the bigger the payroll. I don’t know, but I wouldn’t be surprised to find out the casinos make weekly deposits.