The IRS And Your Jackpot

 The IRS And Your Jackpot

The Internal Revenue Service has proposed changes to federal tax requirements on that could triple the amount of paperwork when we win big on slots, video poker and other electronic casino games. In one proposal, you’d still have to sign form W-2G on any jackpot of $1,200 or more, but also would require casinos to use their player tracking systems to trigger tax forms on cumulative winnings of $1,200 or more above losses in one day.

Another proposal would lower the jackpot threshold from $1,200 to $600. The proposals are open for public comment and debate. Casinos and their lobbying arm, the American Gaming Association, have raised strenuous objections.

The impact of a $600 threshold is enormous. To use video poker as an example, the $1,000 jackpot for a royal flush with five quarters wagered doesn’t trigger a tax form now, but it would with a $600 limit. On dollar games such as Double Bonus Poker, where four-Ace hands bring $800, hands that occur a lot more frequently than royal flushes would bring W-2Gs.

As for cumulative winnings, I checked with a few acquaintances and colleagues for tales of $1,200 days that didn’t include a W-2G jackpot.

Stephen: I was sitting near the showroom, playing quarter video poker, and had a royal flush. It was $1,000, so it was going to be a good night no matter what. After 20 minutes or so, a friend stopped by. He and his wife were going to the show. We probably talked for 10 minutes. No sooner was he gone than I drew another royal. Boom! A $2,000 profit for the night.

 Peggy: I was playing Super Aces on a Five Play Poker quarter machine, where you get give hands at once. I drew the Aces once – they’re $500 on a quarter game. I got the Aces again, then I got a royal for $1,000. Then I was dealt three Aces, and on two of the hands I got the fourth Ace. The total was $3,000 on the big hands, and I was ahead by $2,800-plus for the day.

Their stories tell us that yes, some players have cumulative winnings over $1,200 without a qualifying jackpot. Still, by far the bigger impact would come by lowering the threshold to $600.

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