The Tax Man

[Nicholas ReedParticipant]

Hey just won my first handpay, $2080 on a high limit Lucky Buddha.

Tax question since I’m new to this (and I understand no one is probably a tax professional): I had the option to take money out now or pay the tax later. I opted to take the full handpay, figuring it would be better to keep the bankroll up and use it to make more money before year’s end. 

But, do we get a year end tax statement from all of our rewards cards? (Maybe it varies by casino?) I didn’t use one on this particular machine, but they asked for one and said that’s how they track winnings. She did give me a tax form for the hit, but if I show losses on the card by year’s end will I not end up having to pay tax on it?

How do you experienced people navigate this situation? TIA!

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[Ben RosenthalKeymaster]

I always opt for no taxes.

“Do we get a year-end tax statement from all of our rewards cards?” You won’t get anything mailed to you automatically, but you should be able to request this at even the smallest of casinos. Many formidable casinos will have a win/loss section on their site, where you can log in at any point and see what you’re up or down for the year (according to them).

That last cryptic wording is why I would never pay taxes on the spot: according to them. My wife, a bookkeeper/accountant, insists on being as transparent as possible come tax season, and there’s certainly merit in just paying what you owe according to whatever state you live in.

Do not take what I am saying below as sound gambling tax advice—it is not. I am just saying that if you happen to have a lot of hand pays at the end of the year, it’s not impossible to manufacture losses (or perhaps hide some wins). I touch on that a bit here:

Card Pulling and Card Abstinence

AI notes the following, and I’ll again warn that this is not coming from a tax professional:

Offsetting Losses: You can deduct your gambling losses, but only if you itemize your deductions on your tax return (Schedule A). If you take the standard deduction, you cannot use your losses to cancel out your hand pays.

Net Loss Result: If your total documented losses for the year are greater than your total wins, you technically owe $0 in federal income tax on those winnings.

What You Need to Do

• Keep Records: Save every losing receipt, ticket, or use your player’s card.

• Get a Win/Loss Statement: Request an annual win/loss statement from the casino to prove your overall deficit if you get audited.

• Beware the Standard Deduction: If your itemized deductions (including losses) don’t beat the standard deduction limit, those losses won’t help lower your tax bill.

***

Back from AI…I save all my receipts, get all my win/loss statements, and put everything on a desk for my wife come tax season. It’s a mess, but knock on wood, she’s able to legally cancel out whatever I’d normally owe federally. State taxes are always more annoying, and that’s going to depend on where you live.

I hope that rambling helps. If anyone has more experience, let us know.

[Ben RosenthalKeymaster]

My wife adds: The casino should have given you a Form W-2G with your hand pay. She is correct about that.

Save that info, as that is the only form you’re going to get.

She said, “What you [me] copied and pasted looks good.” Way to go, AI!

[RMunchkinParticipant]

You should listen to this episode of GWAE.

https://www.lasvegasadvisor.com/blog/gambling-with-an-edge-gary-kondler/

[Nicholas ReedParticipant]

Thanks to you both, and Ben’s wife! One more follow up (and sorry if this is addressed in the pod which I’ll listen to ASAP). I did receive a tax form from the casino at the time. But if they don’t automatically send a year end statement, I’m guessing they don’t report to the government the year end number.

So, if Uncle Sam is alerted to the hand pay, but not alerted to a year end loss, it’s just on me to report a loss with whatever receipts I can? Is that the gist?

[Ben RosenthalKeymaster]

Sam will be aware of your hand pay, but casinos don’t send win/loss totals anywhere (except to you, assuming you ask for it). It’s on you to prove losses to hopefully offset that hand pay.

I’m going to listen to that podcast too.

[King of HeartsParticipant]

There’s a book called Tax Help for Gamblers (4th Edition) sold by Huntington Press (Las Vegas Advisor). I would encourage you to purchase and read that book. While it is not a perfect substitute for the advice of a CPA who is experienced with gamblers, it is written by an accountant, if I’m not mistaken, and it has a wealth of good information.

Also, beginning with this tax year, you can only deduct 90% of your gambling losses on your federal return, not all of them anymore; this change was part of the One Big Beautiful Bill. Two of Nevada’s congressional representatives, Dina Titus and Steven Horsford, are trying to introduce legislation to change that back to the way it was before, but it seems unlikely that any such legislation will pass before the end of the year, and of course, there is a significant probability of a presidential veto even if it does eventually pass both houses of Congress.

[Ben RosenthalKeymaster]

It seems I have some watching/reading to do before this tax season.

It sure does help they increased the hand pay threshold to $2,000 from the original $1,200. That won’t help with your original example, unfortunately, but in general.

I spoke to a head of slots—there’s a more official name, but that’s essentially his title—and he said it was something like 85% of hand pays used to fall in the $1,200-$1,999 range at his casino.

I’ve certainly felt that over the past year or so, and I have way less paperwork as a result. So even if I can write off only 90% of those federally—assuming I can find enough gambling losses—that’s a net win overall.

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