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Best of Mark Pilarski
Deal Me In: Plan on a long dry spell between top-line jackpots14 November 2014
By past, Sandra, I am assuming that your slot play consisted of the “old style” reel machines. Those machines had physical limitations as to the number of reels and stops per reel, which created a limited number of possible outcomes. That total number, often referred to as a slot cycle, can be in the tens of thousands on a three-reel machine. Today’s multi-line slot machines have no physical limitations, creating slot cycles in the tens of millions.
So, Sandra, what this means is that when playing multi-line games, there is less volatility, which equates to additional smaller jackpots, but the chances of hitting a top-line jackpot are greatly decreased.
Dear Mark: On the video poker game Triple Bonus Plus, four Aces, when $5 are played, is worth $1,200. Since this is the threshold for IRS purposes, wouldn't it make much more sense to reduce it by a dollar and make it $1,199? The people I have talked to about this stand in agreement with me. The game would have fewer delays, and gamblers would have fewer W-2G statements each year. Bobby F.
I stand with you, Bobby. The $1,200 threshold needs to be adjusted, considerably upwards.
For decades now, it sits pat at $1,200. Dollar players usually have that much invested in a slot machine before they hit anything sizable, and then they have to pay taxes on top of that, which ends up creating a loss on those four Aces you mentioned.
Yes, making those jackpot wins at $1,199 would stop those mandatory W-2G tax forms required by IRS regulations. Better yet, Bobby, based on the value of today’s dollar versus yesteryear, $5,000 or $10,000 would be a more applicable figure to initiate IRS paperwork. Will the IRS make my suggested change to alleviate work for the casino and give the grinding player a break? Don’t bet on it!
As for you stating “gamblers having fewer W2-Gs,” unfortunately, this does not mean they are off the hook from paying taxes on a $1,199 win. Taxes are due on all wins regardless of whether you are issued a W2-G or not. The set point of $1,200 only ensures that at least some gamblers are forced to declare some of their winnings.
Mentioning the difference between tax avoidance and tax evasion might be appropriate here. Tax avoidance is the legal use of tax laws to reduce one's tax burden. In the eyes of the IRS, failure to report a $1,199 jackpot is escaping payment by illegal means, or better stated, tax evasion. Just sayin’.
Your tax liability is between you and the IRS. This columnist is not going to offer up a cavalier, “oh, fuggedaboudit; you won’t get caught” recommendation. Instead, Bobby, I suggest you should keep an accurate diary of your gambling winnings and losses for income tax reporting purposes.
Revenue Procedures 77-29 require that the taxpayer maintain an accurate diary that supports evidence of both wins and losses. Make sure your diary includes the type of gambling activity, the location and a statement of the amount won and lost. As well, Bobby, with slot machine play, be sure to keep the time, date and a slot machine number.
Gambling Wisdom of the Week: “At gambling, the deadly sin is to mistake bad play for bad luck.” – Ian Fleming, Casino Royale (1953)
Best of Mark Pilarski