Taxes On Table Game Winnings

Winning the lottery is something many people dream of, but few are prepared for when it actually happens. IRS does assess taxes on lottery winnings, and how much you pay depends upon the tax brackets for the amount of income you've earned, including the lottery winnings. Not all gambling winnings in the amounts above are subject to IRS Form W2-G. W2-G forms are not required for winnings from table games such as blackjack, craps, baccarat, and roulette, regardless of the amount. Note that this does not mean you are exempt from paying taxes or reporting the winnings on your taxes.

Slot machines: A record of the machine number and all winnings by date and time the machine was played; Table games (blackjack, craps, poker, baccarat, roulette, or wheel of fortune): The number of the table. Being on a game show and winning those fantastic prizes is exciting, but what may not be so exciting is finding out the following spring that you now have a very large tax bill. Although you are probably going to have to pay taxes on game show winnings, the specific details of how the prize gets taxed can differ depending on the prize, amount. When you complete the tax form, often the venue will withhold of 25% on site for taxes. Keep in mind that the IRS doesn't require taxpayers to complete a W2-G for certain table games. However, you will still need to report the winnings and pay taxes on them, so it's important to keep good records.

Gambling In America

If you've ever won a jackpot in Las Vegas, you probably know that your excitement diminishes at least a little when the casino throws a W-2G tax form in your face. In fact, if you don’t provide your social security number, the casino will automatically withhold up to 30% of your winnings. The same goes for lottery and horse racing wins above $1200. Yet when playing online, paying taxes isn’t always so black and white.

Americans who play at US-based online casinos will usually have to deal with withholding taxes just like in Las Vegas. Yet that only represents a small fraction of your entertainment options. When playing at licensed offshore online casinos or poker rooms, American players usually won’t hear the words taxes mentioned at all.

Sadly, it is never safe to assume that your winnings are ultimately tax-free. It is true that Americans who play at internet gambling sites outside of the USA won’t be subject to withholding taxes when withdrawing their winnings. Yet you may be required to report these gains when you file your taxes in April. The greatest determinant is the number, size, and frequency of your wins. The actual threshold varies from state to state and whether or not you are an amateur or professional. For more information on reportable gambling winnings visit the IRS guide: https://www.irs.gov/instructions/iw2g/ar02.html

Professional Gamblers

Whether or not you qualify as a professional gambler doesn’t solely depend on your performance at the tables. The main litmus test is the expectation and probability of profit in the eyes of the Internal Revenue Service. Your success and whether or not you have a regular job on top of gambling may also be factors.

With even amateur gamblers having to deal with taxes, professional gambling does have benefits. You can actually deduct your wins from your losses when your treat your gameplay as a business. No matter what your current status is and how often you play, it's best to keep tabs on your performance to develop strategies, stick to a budget, and simply know where you stand. You can find this tip sheet courtesy of the IRS: https://www.irs.gov/taxtopics/tc419.html

Whether or not the IRS can actually track your winnings is another matter entirely. Yet you should be aware of your obligations. With a huge budget deficit and ballooning debt, the federal government is looking to fill their financial holes any way they can. Between the NSA and modern forensic accounting practices, covering your digital tracks is more difficult than it used to be.

Tax Obligations Outside Of The USA

The United States is a bit of an outlier when it comes to taxing gambling winnings. In the United Kingdom, the government taxes the gross profits of casino operators rather than players. Canadians can play the lottery, live casinos, poker and online games without paying taxes unless they are a professional. Likewise, Australians and New Zealanders can also gamble tax-free. To put things in perspective, Americans do pay some of the lowest personal income taxes in the first world. Things tend to even out in the end.

Like anything else, interpreting the rules is always a matter of debate. Here's an interesting tax perspective for Canadians: http://business.financialpost.com/personal-finance/tax-expert-a-gamble-over-poker-winnings

Things To Consider

Keep in mind that Americans have to deal with both Federal and State taxes on most forms of income. Always keep basic records no matter how often you play or win. This will make things easier during tax season.

Taxes on winning a house

Accountants Have The Answers

No matter where you live, it's always best to discuss your personal situation with a licensed tax professional in your area. You can usually get a short consultation for free with complete confidentiality. It's the best way to play by the rules while minimizing your tax burden.

Taxes On Prize Winnings

Although the winnings from a game show can change a lucky winner’s life instantly, their after-winning-life might not be as splendid and impressive as most of us think.

I always had the dream of making an appearance on game shows such as The Price is Right, Wheel of Fortune, and Let’s Make a Deal. The truth is, game show winnings are always a two-sided coin and often a suckers bet in my opinion.

While you’ll have magnificent on-air memories to perhaps cherish for years, you’ll also be taken to the terrible secrets of game show winnings: The burden of having to pay taxes on your winnings.

It’s something that you’ll never hear a game show’s host mention on TV, but you can always count on, that the IRS will always come for their share!

For this reason, let’s look at some issues revolving around paying taxes on game show winnings, whether it’s a new car, thousands of dollars in cash, or a fully-paid vacation to the Bahamas (which reminds me, I need a vacation.)

Are Game Show Winnings Taxed?

Yes, In the United States, winners have to pay game show prize taxes. This is basically because the government views game show winnings as taxable income. It doesn’t matter whether the prize is in liquid cash or non-monetary, the winners are required to pay taxes on prizes won.

Most viewers often assume that the winner is often given their money or prizes right away after the show. If only it were that easy!

I laugh at how deceptive this actually is

Check out this article about Andrea Schwartz who won big prizes on one of my all time favorite game-shows The Price Is Right. Winning ‘The Price Is Right’ Is Great, Until You Get The Tax Bill

Here’s a quick summary of the article:After winning any game show or contest, you’ll sign some paperwork and agree that you’re going to pay taxes on the prizes. When it’s all said and done, the winner will most definitely get a 1099-MISC tax form from the show’s organizers, who are also obligated to send a copy to the IRS. And even if they do not provide you with the 1099 tax form, you still have to report the value of the winnings. Failure to do so can result in huge penalties!

How Much Will You Be Taxed?

The amount of tax you’ll pay on game show winnings depends on where you live and how much you win. You’ll have to pay federal taxes, as well as state taxes. If you, however, live in states that do not have income taxes such as Washington, Nevada, Texas, Alaska, Florida, South Dakota, and Wyoming, you may not have to pay state taxes on your game show winnings.

You’ll still owe Uncle Sam though (The U.S. Federal Government.)

Just like in lottery winnings, depending on your tax bracket, the IRS often expects you to pay a top rate tax of 37% on the gross value of the prize won, and this is on Federal tax alone! So suppose you won $10 million on a game show in the state of California where I live, you’ll have to pay a state income tax of about 12.3% plus the federal income tax of 37%.

YOU COULD END UP PAYING NEARLY HALF OF YOUR WINNINGS IN TAXES!

Can You Avoid Paying Game Show Prize Taxes?

There are a few occasions when you can avoid paying game show prize taxes. For instance, game show winnings and other 1099 based income that are worth below $600 are not taxed by the IRS.

Another way to avoid paying game show prize taxes is by offering the winnings as gifts to friends and family members. Even though this means that you won’t keep the winnings for yourself, it’s a way to avoid the tax burden.

Either way, you need to speak with a Financial Advisor to understand how much and how to properly report on that year’s tax return!

Better To Win Cash Than A Car Or Vacation

Recently I had a conversation my CPA about whether someone is better winning cash or an actual prize. What I learned was, it depends. But most of the time, you’re probably better off taking the cash. If you win cash, you can simply set aside a portion of your winnings to cover the tax.

If you win a non-cash prize it can be quite a burden since you’ll have to pay taxes based on the value of your winnings. And the value can be highly subjective. For example, you could win a car and they say it’s worth 40,000 dollars, but, you could buy the same car on a weekend close-out sale from your local dealer for 35k.

Wheel of Fortune is famous for giving cash prizes and vacation trips. The value of those trips will be counted as income for you, I recently read an article on MarketWatch which tells exactly what can happen.

Matt McMahan who won cash and prizes worth $16,400 and two vacation trips valued at $15,300.

The IRS not only taxed his cash and prizes winnings, but he had to pay tax on the two vacations. Fortunately, most shows do offer cash prizes in place of the trips, so you should consider going for the cash. Especially if you have to raise cash to pay for the taxes on the actual prize. Is it really free then? I’d take the cash and book my own vacation with as many discount deals as possible.

Taxes On Table Game Winnings Prizes

If You Do Ever Get Lucky And Win Remember…

Sc Lottery Taxes On Winnings

  • Consider paying the applicable or estimated taxes on any prize as soon as you win.
  • Always know the exact value of your winnings. Show organizers may inflate the value to entice more participants or to reduce their tax obligations.
  • Always consider going for cash instead of non-cash prizes such as a vacation.
  • Do not be afraid to turn down any winnings if they may become a tax burden.

Taxes On Table Game Winnings 2019

Remember, to cover yourself, always seek out professional help for your tax planning etc.

Have you won any game show prizes before? If so, I hope these tips can help you out.