Most people don’t think about the IRS and taxes when they play games at a casino. It’s probably because playing casino games is fun and thinking about taxes is the opposite of that. Still, some people worry about what they need to do when they win money.
The important thing to remember is that you have to report it. If you live in the United States, the IRS requires you to report all sources of income, including that $20 your neighbor gave you to wash his car. Now, few people are going to report anything that small, but when it comes to bigger gains like at a casino, you better report it to be on the safe side. The federal prisons are full of people who assumed the IRS would never notice the income they failed to disclose.
If you play the slot machines, it can be easy. If you hit a jackpot over $1,200, representatives from the casino will approach you on the floor and give you IRS forms to sign. They will submit one copy and you will keep another for your records. If you make a smaller amount, though, it’s up to you to make sure you report it. The same goes for playing blackjack, no matter what amount you win. You can win $5,000 playing blackjack and the casino won’t come and give you a 1099 to fill out. That is because the federal tax law only requires that action for slots. Why? Who knows? It’s the government; don’t look for logic.
The one exception to that rule regards the exchange of funds over $10,000. If you purchase $10,000 or more in chips or convert that amount in chips to $10,000 or more in cash, you will be required to fill out paperwork. You will be given a Currency Transaction Report. That form is not a tax form and you need one for any cash transaction of that value, whether it’s at a car dealership, a bank or wherever. That paperwork is done to track large amounts of money to prevent laundering and fraud.
If it all sounds confusing, here’s how you simplify it: If you win money playing blackjack or any other game at a casino, report it on your taxes. The good news is that you can usually report your losses as well, which can help you get a rebate.