For individuals who have transformed their passion for video poker into a consistent supplemental income, acquiring a comprehensive understanding of the federal tax code is virtually equivalent in significance to studying fundamental strategy tables.
One significant distinction between video poker machines and other table games, including blackjack and baccarat, is the implementation of formal tax reporting.
When a successful double down in blackjack results in a substantial accumulation of chips, no one from the cashier’s cage approaches to provide tax forms. Regardless of whether you withdraw $10,000, $1,000, or more in a single hand, the Internal Revenue Service does not require any documentation for table games.
Obviously, you will still be required to report your winnings yourself, but no documentation or signatures are required at the casino.
However, everything changes for us devotees of video poker.
Due to the fact that video poker is categorized similarly to slot machines and bingo games for tax purposes, players who cash in substantial jackpots are required to fill out a specific tax form that pertains to wagering winnings. This form, formally referred to as the W-2G, will inevitably be encountered by successful video poker players; therefore, it is advisable to be fully prepared with an appropriate response in case it does occur.
The subsequent page was compiled to offer video poker players a practical overview of the tax regulations and processes that pertain to substantial winnings. However, we must state unequivocally that we lack expertise in tax matters and do not possess the necessary credentials to provide legal counsel. This document serves as an introductory guide to the process of taxation on video poker winnings, drawing from our personal anecdotal experience and a thorough examination of publicly available IRS data.
We recommend that you conduct additional investigation in order to supplement the information presented here. For further information regarding wagering winnings, consult the IRS website’s dedicated section or visit TurboTax.
Following the inclusion of all required disclaimers, we shall now discuss the procedure for remitting taxes on winnings from video poker.
The Legal Propositions
Prior to engaging with a federal agency such as the IRS, it is critical that you familiarize yourself with the applicable regulations and statutes.
Flying uninformed when confronted with a decision involving a near rendering is not recommended, correct? Thus, it is not advisable to pursue enormous rewards without first determining how those winnings will be taxed.
We began our personal refresher course on video poker taxes in the 1980s, when we first began playing this fantastic game seriously, by consulting the tax code. We recognize that sifting through complex legalese and tax regulations can be a burdensome process (believe us, this was one), but fortunately, we can condense everything into its essential components in this article.
In accordance with Revenue Procedure 77-29, Section 3, which was introduced into the tax code in 1977, any video poker winnings amounting to $1,200 or greater are required to be reported using the W-2G form.
“Effective May 1, 1977, temporary regulations section 7.6041-1 (T.D. 7492, 1977-2 C.B. 463) mandates that all persons engaged in a trade or business who pay out winnings amounting to $1,200 or more from bingo, slot machines, or keno, or $1,500 or more from keno, must assemble Form W-2G, Statement for Certain Gambling Winnings, for each individual to whom the winnings are disbursed.”
This W-2G form, which is alternatively referred to as the Statement for Certain Gambling Winnings, will undoubtedly be a recurring component of your video poker experience, as previously stated. It is important to note that in order to receive any hand pay of $1,200 or more, you must immediately complete a W-2G on the casino floor.
It is extremely uncommon for readers who are just starting out to ascend the video poker ladder to earn $1,200 or more while playing $0.50 machines and lower. Approximately one in every 40,000 hands is the probability of achieving a royal flush at those stakes, according to the legendary video poker expert Bob Dancer.