Question about tax on a casino jackpot.

This one is a little more complex than a simple slot machine win. I placed a \$400 bet on a hand of blackjack and got a perfect double down hand. The player next to me put up another \$400 of her own money to double down and we won \$1600. In the state of Delaware, anything over \$1200 gets a 1099 form for your tax filings. My beef is this: the wager was \$800, the take was \$1600, so I (we) actually only won \$800. Why do I receive tax papers on an \$800 win?

No, you won \$1600. Once you placed the money in the betting circle, it was no longer yours.

So if I placed a bet of \$1200 and pushed, I’d get a tax form?

That does raise an interesting question. I don’t know for sure, but I’d say in that case, probably not. Since a push is neither a win nor a loss, I would assume it wouldn’t trigger the required tax form law. In the first example, you’re winning the money in the circle, but in the second one, the bet is just being returned. But I don’t know for certain.

The money is just being returned in a win also. Calling getting back your money in a win a win, and anything less in a push doesn’t make sense. I’d be very surprised if you end up being correct about this. If I bet \$10,000 on a spin of the roulette wheel and win \$10,000, I’m almost certain I’m not taxed on \$20,000.

Was the person next to you a stranger? The casino expected you to pay the taxes on someone else’s win? I would have caused quite a stink.

Casinos only report gross winnings. They have no way to identify how much of that money on the table was your stake and how much was previously unreported winnings. For all they know, you came in with \$1 and doubled your way up to \$1600.

Use Sch A of your tax return to report gambling expenses. If you put in \$400 and had to pay half the winnings to your friend, then you’ll have \$1200 in expenses to report, leaving you paying tax on only \$400. If you had losses at other times during the year, you may be able to claim expenses up to the full amount of your winnings. Of course, you’ll need to have documentation for all of this in case the IRS audits you.

No, it isn’t. Once you put the money in the betting circle, it is no longer yours. You can’t decide to take it back if you don’t like the cards dealt to you. It’s not your money any more. If you win, you are not “getting your money back”, you are winning (in blackjack, on a standard non-natural win) at a 1:1 payoff. That is the amount you are winning. If you bet \$5 and win, you win \$10 by the rules of blackjack. You do not win \$5 plus your bet back. The fact that they are literally the same chips that you bet does not mean they are just returning your bet.

A push is a separate situation. It is, by the rules of the game, neither a win nor a loss, so in that case, you ARE just getting your bet back.

I know it isn’t; I never said otherwise. I don’t know why you’re saying the same thing in three sentences when it doesn’t pertain to anything I said.

Show me the rules that say you are winning \$10 and not \$5. 1:1 means for every \$1 bet, you win \$1.

But it’s no longer yours, remember? Look at your first three sentences again; that bet was in the betting circle. You can’t say you’re just getting your bet back in a push and not say the same for a win. In a win, you get back your original bet plus “winnings”.

And how do you suggest I do that? Take a picture of my empty wallet? I’ve had other people suggest this, but no ideas on how to document it.

I’m not sure I understand. Are you saying that each of you got their own DD hands and did the 400 + 400 bet on you own hand and the total win between the two of you, when adding up your own individual wins of 800 then equals 1600 and the two of you have to pay on the accumulative amount? Or did she bet 400/400 on you hand in addition to you.

Each state has its own peculiar rules that govern the casino. In a lot of ways any reasonable rule can be instituted. In Washington State, any win from \$1,500 up gets taxed.

What if you bought in for \$1600 and end up with \$1601? Are they going to give you a form 1099 for \$1600? Of course they have a way of knowing how much you won. (BTW, I don’t think think they make you fill out any tax forms for a bunch of small wins that equal a lot. At least that’a never happened to me.)

There was only one hand to double down on. The person next to the OP probably saw that he was just going to hit (maybe because he didn’t have enough to double on his own) and asked if he could place a double down bet on it. At this point the casino probably considered all of the money on that bet the OP’s, and all of the winnings, too.

To document gambling losses, the IRS will accept a “diary”.
So, right now, while it is fresh on your mind, write down everything you can remember about your session at the BJ table…original buy-in, how long you played, the bet augmented by the player next to you, how much you left the table with, etc.
If you gamble a lot, you should always keep on these for tax purposes.

http://www.wwwebtax.com/deductions_miscellaneous/gambling_losses.htm

The IRS distinguishes between “winnings” and “amount wagered” and has some complicated reporting requirements, which you can read here: http://www.irs.gov/pub/irs-pdf/iw2g.pdf

That is correct, the adjacent player put up the money for the double down. Before more confusion ensues, let me say that this was at an electronic blackjack game, google Shufflemaster Blackjack. No live tables in DE until Jan '10, although they did just legalize Sports Betting. 3 game parlay minimum.

I don’t really know the details from the casino’s end of things. A recent IRS revenue ruling changed some of the rules on netting wins/losses. Ironically, that revenue ruling just made it OK to do what casinos had already been doing for years. So actual practice has varied somewhat from the letter of the law. Casinos don’t want to fill out those forms any more than you want to get them.

But, as a general rule, the casino is supposed to report on the 1099 whatever you leave the table with. Its up to you to document how much it cost you to get that money.

I knew somebody who in order to deduct gambling losses equal to what he’d win, would collect losing lotto tickets (scratch tickets laying on the ground in the supermarket parking lot, mostly) up to that amount. He’d have piles and piles of them as proof that he’d lost \$x gambling.

According to this for Delaware:

According to this for the IRS:

So as far as I can see, you have to include your gross winnings in your income, but if you itemize your deductions you can deduct your losses up to the amount of your winnings, and so net it out.

Well, I’m pretty sure technically any winning period gets taxed. It’s only the \$1500 and up that get forms sent to the IRS documenting your winnings.