Casinos and the IRS

[Dyepaintball12]

I was at a baseball game with an accountant friend of mine (a very new, young tax accountant) and he was asking me about Gambling.

He told me that casinos are required to issue their gamblers tax papers (I forget the form) because the IRS makes them. I was also telling him about Win/Loss statements and he said he would imagine if a casino noticed you were a Large winner over an extended period, they would start wondering why they don't have your SS# and things like that.

I told him I thought casinos are in the business to make money and cater to big players and wouldn't bother looking into the tax-payments of their players.

So what exactly are casinos required to do when it comes to player's taxes? Anything? Do they send win/loss statements to the IRS?


- Dye

 

[pit15]

Win/Loss statements aren't valid for tax purposes.

If they were no professional gambler would ever pay a dime in taxes. (If they had half a brain)

 

[mjbballar23]

Win/Loss statements aren't valid for tax purposes.

If they were no professional gambler would ever pay a dime in taxes. (If they had half a brain)

^This. I would guess he was referring to the W2-G forms for machine winnings over $1200.

 

[KingHenry]

casinos are only required to issue W-2G's on total cash amounts of 1,200 or more (so if you put 1000 into a slot and win 250 bucks that'll generate a w-2g). This is the only item that will get reported by the casino to the IRS. The CTRs that are generated for total chip or cash out amounts over 10,000 is for Fed purposes moreso for money laundering and just having tabs on large cash transactions (and is not reported to the IRS with no tax consequences).

The win/loss statements that casinos prepare, only for electronic games though, are for the convenience of the patron. While the casino does not report these to the IRS, the patron may use these win/loss statements as documentation to support the wins/losses on your tax return (although these win/loss statements will not be sent in with the tax return - only shown as documentation when and if the IRS sends you a notice). Keep good records.

 

[Machinist]

King, you are absolutely wrong on 2 points.....1000 in a machine and win 250 will generate a w2g,,, is false. You have to hit a jackpot of 1200$ or more.
And win loss statements from the casino are not recognized for tax purposes by the IRS. Your own daily records are accepted.
Where the heck could you get this misinformation?

Machinist

 

[Machinist]

I was at a baseball game with an accountant friend of mine (a very new, young tax accountant) and he was asking me about Gambling.

He told me that casinos are required to issue their gamblers tax papers (I forget the form) because the IRS makes them. I was also telling him about Win/Loss statements and he said he would imagine if a casino noticed you were a Large winner over an extended period, they would start wondering why they don't have your SS# and things like that.

I told him I thought casinos are in the business to make money and cater to big players and wouldn't bother looking into the tax-payments of their players.

So what exactly are casinos required to do when it comes to player's taxes? Anything? Do they send win/loss statements to the IRS?


- Dye

Dye, if your starting to worry about such issues, my suggestion is to start keeping a daily casino gaming log. Keep all receipts, hotels comped not comped, gas receipts, anything having to do with your gaming activities.

Mac

 

[KingHenry]

King, you are absolutely wrong on 2 points.....1000 in a machine and win 250 will generate a w2g,,, is false. You have to hit a jackpot of 1200$ or more.
And win loss statements from the casino are not recognized for tax purposes by the IRS. Your own daily records are accepted.
Where the heck could you get this misinformation?

Machinist

you're right about the w2-g's sorry for the misinformation there. as far as the win/loss statements, they're absolutely not formal tax documents. they're helpful as support but you will need to keep accurate records yourself. the rulings aren't cut and dry from the irs, so you're better off keeping as much documentation as possible incase of receiving an IRS notice and a win/loss statement would certainly help if it matches up to your records. here's from the irs website:

"Your diary should contain at least the following information.

The date and type of your specific wager or wagering activity.

The name and address or location of the gambling establishment.

The names of other persons present with you at the gambling establishment.

The amount(s) you won or lost.


Proof of winnings and losses. In addition to your diary, you should also have other documentation. You can generally prove your winnings and losses through Form W-2G, Certain Gambling Winnings, Form 5754, Statement by Person(s) Receiving Gambling Winnings, wagering tickets, canceled checks, substitute checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided to you by the gambling establishment. "

it depends on your situation as well.. you may be able to get by with less documentation, but its better to have more for tax purposes! one of my old managers told me that the irs once rejected someone's losses as they tried offsetting all their gambling wins with losing horse betting tickets but the horse betting tickets had footprints all over them

 

[Machinist]

you're right about the w2-g's sorry for the misinformation there. as far as the win/loss statements, they're absolutely not formal tax documents. they're helpful as support but you will need to keep accurate records yourself. the rulings aren't cut and dry from the irs, so you're better off keeping as much documentation as possible incase of receiving an IRS notice and a win/loss statement would certainly help if it matches up to your records. here's from the irs website:

"Your diary should contain at least the following information.

The date and type of your specific wager or wagering activity.

The name and address or location of the gambling establishment.

The names of other persons present with you at the gambling establishment.

The amount(s) you won or lost.


Proof of winnings and losses. In addition to your diary, you should also have other documentation. You can generally prove your winnings and losses through Form W-2G, Certain Gambling Winnings, Form 5754, Statement by Person(s) Receiving Gambling Winnings, wagering tickets, canceled checks, substitute checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided to you by the gambling establishment. "

it depends on your situation as well.. you may be able to get by with less documentation, but its better to have more for tax purposes! one of my old managers told me that the irs once rejected someone's losses as they tried offsetting all their gambling wins with losing horse betting tickets but the horse betting tickets had footprints all over them

No sweat king...
Absolutely best to have as much paperwork as you can get. Anything and everything, and if you do get a notice from the the dreaded ones, spend a few bucks for a good attorney. Let them handle it, then you won't get strong armed by the 2bit jerks. Now if it is just a small amount of money we r talking about, just pay them.

Machinist

 

[Dyepaintball12]

So basically the casinos report nothing to the IRS? What if the IRS comes asking questions about you?

 

[Richard Munchkin]

So basically the casinos report nothing to the IRS? What if the IRS comes asking questions about you?

The casino sends W2Gs to the IRS, they send CTRs and STRs to the Justice Department.

You can bet that if the FEDs ask for any paperwork from a casino they will turn it over in a hot second. I have heard of cases where people who were audited found the IRS to have all their win/loss statements from casinos they were playing. But this is mainly for people that the IRS or the Justice Department are looking to go after for some reason or another. I have never heard of this happening to a some random gambler they decided to go after on a fishing expedition.

 

[Dyepaintball12]

The casino sends W2Gs to the IRS, they send CTRs and STRs to the Justice Department.

You can bet that if the FEDs ask for any paperwork from a casino they will turn it over in a hot second. I have heard of cases where people who were audited found the IRS to have all their win/loss statements from casinos they were playing. But this is mainly for people that the IRS or the Justice Department are looking to go after for some reason or another. I have never heard of this happening to a some random gambler they decided to go after on a fishing expedition.

Well I would think a win/loss would be just as unacceptable if the IRS has it as it is if you send it to them as proof of your gambling. Win/losses can be wildly inaccurate.

The only thing that I would think would hold up is CTRs because you are physically agreeing that you are cashing in so many chips.

 

[pit15]

Well I would think a win/loss would be just as unacceptable if the IRS has it as it is if you send it to them as proof of your gambling. Win/losses can be wildly inaccurate.

The only thing that I would think would hold up is CTRs because you are physically agreeing that you are cashing in so many chips.

Not to mention the win/loss statements only include play for that player's card, and it's regardless of who actually played under that card.

 

[Richard Munchkin]

Well I would think a win/loss would be just as unacceptable if the IRS has it as it is if you send it to them as proof of your gambling. Win/losses can be wildly inaccurate.

The only thing that I would think would hold up is CTRs because you are physically agreeing that you are cashing in so many chips.

As Mechanic pointed out it is imperative to keep a gambling journal. I'm told that if there are discrepancies between your win/loss statement and your journal, the journal carries more weight.

Something else that is important to point out - you have to be able to justify your standard of living. If you spend 100k per year on your mortgage, cars, insurance, etc etc, you can't then claim that you made zero dollars.

 

[Machinist]

As Mechanic pointed out it is imperative to keep a gambling journal. I'm told that if there are discrepancies between your win/loss statement and your journal, the journal carries more weight.

Something else that is important to point out - you have to be able to justify your standard of living. If you spend 100k per year on your mortgage, cars, insurance, etc etc, you can't then claim that you made zero dollars.

X2

Machinist

 

[Dyepaintball12]

This doesn't add up to me. Anyone could write anything they wanted in their journal... Why does this have ANY weight at all?

The IRS runs on the honor system?

 

[paddywhack]

This doesn't add up to me. Anyone could write anything they wanted in their journal... Why does this have ANY weight at all?

The IRS runs on the honor system?

I believe in this instance that's all you've got to go on.

 

[Automatic Monkey]

This doesn't add up to me. Anyone could write anything they wanted in their journal... Why does this have ANY weight at all?

The IRS runs on the honor system?

Because any documentation is better than no documentation. You tell the IRS "I keep my records in this journal of my activities. Do you have a journal of my activities?" and of course the answer is "No," so you have the preponderance of evidence. The IRS has ways of inspecting papers and journals to see if they are legit. For example, if you pick up lottery and OTB tickets off the floor and submit them as proof of loss, they will look at them under Wood's light to see if there are footprints on them.

If you want to keep a fake journal, write it exactly like you would a real journal- write in it every day, using whatever pen you have around, walk around with it in your pocket, etc. Only the numbers are fake. For practice, keep a real journal along with the fake one, treat each one exactly the same except for the numbers you write in them. One fun trick is to just reverse wins and losses, so the numbers in the fake journal will have the same kind of randomness of reality; random numbers created by humans look different than those created by randomness.

(Hypothetical information only: do not commit a crime.)

 

[paddywhack]

If you want to keep a fake journal, write it exactly like you would a real journal- write in it every day, using whatever pen you have around, walk around with it in your pocket, etc. Only the numbers are fake. For practice, keep a real journal along with the fake one, treat each one exactly the same except for the numbers you write in them. One fun trick is to just reverse wins and losses, so the numbers in the fake journal will have the same kind of randomness of reality; random numbers created by humans look different than those created by randomness.

(Hypothetical information only: do not commit a crime.)

Sounds well thought out for a hypothetical situation