Redeeming a gambling chip for cash (movie Skyfall)

[thelurkinghorror]

@zoid

Isn’t there some limit at which the casino is required to record the transaction for tax purposes?
I’m sure they’d rather not go through the hassle but I seem to recall that any payout over a certain amount required an ID so the IRS could track it - am I imagining this?

$1200. But you are legally supposed to report any winnings even if they are below that threshold (few do). You get a W-2G form. It looks like it’s $1500 for Keno or $5000 for poker tournaments instead.

@longhair75

On my first trip to Las Vegas in the fall of 1978 I discovered I still had a handful of 1 and 5 dollar chips as we were driving out of town. I stopped at gas station and filled the tank, paying for the gas with a few of the chips. I don’t know if this was technically legal, but the guy at the gas station was fine with the chips instead of cash.

Taxicabs will take them often, and anyone is free to take them if they wish.

[vomit_comet]

@Keeve

Agreed. Let’s distinguish between two things:

(a) The US gov’t has certain laws about cash transactions, simply because they are watching out for money laundering. For example, If I take cash out of my own pocket, and deposit it into my own bank account, then over a certain cutoff, there will be forms to fill out, but no taxes to be paid. I would imagine that the same would apply for buying or cashing chips.

(b) Gambling winnings are taxable. But only if they are winnings. And over a certain amount, those taxes will be withheld. Cashing a chip that I bought last week is NOT a winning. For this reason, my guess is that the gov’t takes their withholding at the gaming table when I won the game, NOT when I cash my chips. On the other hand, what happens if I win a jackpot, and taxes are withheld, and then I lose the rest of the jackpot over the course of the evening? The losses offset the winnings, and I’m entitled to get my withholding back. But I think that my refund will have to wait until I file my return, and I’m going to have to document the loss. Can someone confirm or deny this?

What if gambling is your profession, you would have to take net losses into account as well.

In Canada, gambling and lottery winnings are not taxed unless gambling or heaven forbid, lottery winnings is your main or only source of income, in which case you would be able to use losses to offset your earnings.

Also in Canada, personal transactions at banks and possibly other institutions that are $10,000.00 or more arescrutinized

[busterpickle]

Loosely, if you were to win money via gambling and then loose money via gambling of the same amount, you have not earned an income. So, no income tax. If you goto that aforementioned site, look at the PDF’s, you have to report your winnings and then do separate line item deductions for your losses. These losses are not subject to the 2% limit. My assumption for this is that in certain localities, being a gambler (aka professional poker player) is in fact a legit profession. The pub in question has some guidelines to follow.

Please refer to the IRS 2014 Publication 529 for more information prior to asking questions that can be answered by referring to the pub.

As an FYI for those who are about to ask, page 31 of 2013 Publication 525:

Lotteries and raffles. Winnings from lotteries
and raffles are gambling winnings. In addition
to cash winnings, you must include in
your income the fair market value of bonds,
cars, houses, and other noncash prizes. However,
the difference between the fair market
value and the cost of an oil and gas lease obtained
from the government through a lottery is
not includible in income.

So, at least as far as the IRS is concerned, one could be a “pro lottery player” and deduct losses. Sweet. Time to start.

[thelurkinghorror]

@vomit_comet

Also in Canada, personal transactions at banks and possibly other institutions that are $10,000.00 or more arescrutinized

$10,000 CASH, which is the same amount as in the US ($3000 if the transaction involves purchase of monetary instruments like cashier’s checks with cash).

@electronbee

Loosely, if you were to win money via gambling and then loose money via gambling of the same amount, you have not earned an income. So, no income tax. If you goto that aforementioned site, look at the PDF’s, you have to report your winnings and then do separate line item deductions for your losses. These losses are not subject to the 2% limit. My assumption for this is that in certain localities, being a gambler (aka professional poker player) is in fact a legit profession. The pub in question has some guidelines to follow.

You have to itemize, though. So casual gamblers might not be able to take advantage if they take the standard deduction.
Being a gambler is a profession and the time commitment/fun level (IMHO) makes it a big drudgery like a real job.

[dzeiger]

@Honey

Right, and you don’t get that back just because you’ve blown the rest of the money.

I think there’s some confusion here (and it may well be me).

You go into a casino with $100K in cash. You exchange it out for chips. After a night of gambling, you’re down to $50K.

You then decide to convert that remaining $50K back into cash. What winnings would you be taxed on?

And the casino may not necessarily know if the guy getting $50K is one that came in earlier with $100K and had a bad day, or one that came in with $10K and had a good day.

[thelurkinghorror]

You are responsible for maintaining records. The casino is not a government agency and is concerned with you not ripping them off and obeying government rules but they aren’t your babysitter. There aren’t any winnings in this case, nor are there losses as you cannot deduct losses in excess of winnings.

Pretty much every casino offers a free player’s card that can give you a rundown of wins/losses as well as account for comps. Slots automatically do this, while table games are monitored by the pit boss (or an underling?) and given estimates of the money exchanged.

[Habeed]

I suppose it goes without saying that if Her Majesty’s intelligence agency bankrolls you to do some casino gambling undercover, the Queen wants all your winnings and not just the original investment back, right?

[iamthewalrus_3]

@Keeve

On the other hand, what happens if I win a jackpot, and taxes are withheld, and then I lose the rest of the jackpot over the course of the evening? The losses offset the winnings, and I’m entitled to get my withholding back. But I think that my refund will have to wait until I file my return, and I’m going to have to document the loss. Can someone confirm or deny this?

The casino makes a note of your winnings when you leave the table, and brings over paperwork for you to sign, which gets filed with the IRS. They do not withhold any of your winnings for taxes.

It’s up to you to track and document any losses that would offset those winnings (and, theoretically, any winnings that are too small to trigger the reporting requirement, although I bet that doesn’t get a ton of use), and pay any taxes due at the appropriate time.

Cite: My friend Matt’s bachelor party, craps table at Binion’s, around 3:45am.

[Loach]

@iamthewalrus_3

The casino makes a note of your winnings when you leave the table, and brings over paperwork for you to sign, which gets filed with the IRS. They do not withhold any of your winnings for taxes.

It’s up to you to track and document any losses that would offset those winnings (and, theoretically, any winnings that are too small to trigger the reporting requirement, although I bet that doesn’t get a ton of use), and pay any taxes due at the appropriate time.

Cite: My friend Matt’s bachelor party, craps table at Binion’s, around 3:45am.

Confirmed. Cite: a nice trifecta win at the New York New York race book.

[Keeve]

@iamthewalrus_3

The casino makes a note of your winnings when you leave the table, and brings over paperwork for you to sign, which gets filed with the IRS. They do not withhold any of your winnings for taxes.

Interesting. I did not know that, but it makes sense:

If I got it right, then even though the lottery has a $600 limit, such that if you win more than that, then you can’t claim you winnings at the convenience store; you have to contact the lottery people, who will withhold a certain portion. But the casino lets you take it all home, secure in the knowledge that the government has the documentation with which to make you pay up eventually.

[thelurkinghorror]

@Keeve

Interesting. I did not know that, but it makes sense:

If I got it right, then even though the lottery has a $600 limit, such that if you win more than that, then you can’t claim you winnings at the convenience store; you have to contact the lottery people, who will withhold a certain portion. But the casino lets you take it all home, secure in the knowledge that the government has the documentation with which to make you pay up eventually.

There is 25% withholding under certain types of winnings >$5000. Casino winnings normally aren’t these types. It says lotteries have withholding but not state-conducted lotteries. I’m not sure where multi-state ones fall.

There is 28% withholding if you can’t verify some info, like tax ID (SSN or ITIN).

[bengangmo]

@dzeiger

I think there’s some confusion here (and it may well be me).

You go into a casino with $100K in cash. You exchange it out for chips. After a night of gambling, you’re down to $50K.

You then decide to convert that remaining $50K back into cash. What winnings would you be taxed on?

And the casino may not necessarily know if the guy getting $50K is one that came in earlier with $100K and had a bad day, or one that came in with $10K and had a good day.

Where I worked -

For these amounts of money, the casino would sure as hell have been tracking the gambler - even if they didn’t have his ID, they’d have a record of him in their surveillance system and the pit bosses would be watching him.

I can recall dealing with 10k chips and 25k chips a few times