Slot Machines & Income Taxes
Question: Do I owe income taxes on slot machine winnings?
Answer: Yes.
You owe income taxes anytime you collect income, which includes gambling winnings. The good news is that you can also deduct the money you spent gambling. But you can only deduct your spending up to the amount of your winnings.
Federal income tax laws require casinos to withhold income taxes anytime you hit a jackpot amounting to over $1,199.00. The casino will send you a 1099 form to report with your filing.
This withholding only applies per jackpot, and not cumulative winnings across multiple games.
Because most people don’t keep track of how much money they put into a slot machine, you need to get yourself a player’s card for the casino you’re playing at. The player’s card will keep track of how much money you spent, and earned. You can simply call up the casino, give them the number on your player’s card, and they’ll send you a paper report of what you spent and earned.
The paper report, of course, will also show the winnings that amounted to less than $1,199, meaning the IRS will tax you on every penny you won. But at least you can offset that with the money you spent.
If anything, it’s good idea to play with a player’s card just in case you hit a big jackpot.
[Source: http://www.slotmachineblog.com/]