Winning big and paying taxes

12 January 2017

By John Grochowski

QUESTION: A while back you wrote the IRS had proposed requiring tax forms on jackpots of $600 instead of $1,200. Have they made a decision, or is that still up in the air?

ANSWER: I’ve received a number of e-mails asking this over the last several months, but I answered the writer directly and held off from bringing the issue here until a decision was reached.

That happened in the last week of December when the IRS decided to leave the jackpot level at which a tax form W-2G is required at $1,200. The casino industry’s lobbying arm, the American Gaming Association, had argued against the proposed change to $600. It pointed out that machines were taken out of action to have players sign tax forms and that the extra downtime could cost a casino $300,000 to $600,000 a year.

Under the new regulations, players also can opt to have aggregate winnings for a gaming day or for a calendar day combined on a single W-2G. However, the IRS also decided not to require casinos to use player tracking systems to report players’ aggregate winnings for tax purposes. That proposal had been vehemently opposed by the AGA, which argued the change would require costly systems upgrades.

Among the problems noted by the AGA is that players frequently lose cards, open multiple accounts and share cards with families and friends.


QUESTION: I go back and forth between $5 single-hand video poker and $1 Triple Play Poker. My casino has 9-6 Double Double Bonus Poker on both.

There are pluses and minuses. I’ve had more royals on the Triple Play, and my money goes farther on the Triple Play, too. I like that if I have a low pair, I have three chances to make a paying hand. Even if I lose on the first two, I might draw the three of a kind on the third to pay for my bet. That seems give me more hands to try to win the big one.

On the other hand, royals on the $5 game are really something. A $4,000 payoff for a royal on one line on the Triple Play is nice, but when I drew a royal for $20,000 on the $5 game I was walking on air for a week. I could barely contain the butterflies in my stomach.

Can you think of other reasons to go with either $5 single hand or $1 Triple Play?

ANSWER: The obvious difference is that the max bet on a $5 single-hand video poker game is $25, and on $1 Triple Play it’s $15. Differences in game play aside, you’re more likely to get extended play when your bet is $10 less than on the other game.

That aside, a big factor is the payoffs on four of a kinds and straight flushes. Typically, a straight flush or four 5s through kings will pay 250 coins for a max bet.

On the $1 Triple Play machine, that’s $250. It’s just added to your credit meter and you play on. But on a $5 game, that’s $1,250 and exceeds the IRS reporting threshold. The casino is required to have you sign an IRS form W-2G before it can pay you.

The deal is similar with the 400-coin payoffs on four 2s through 4s, 800 on four 2s through 4s with an ace, 2, 3 or 4 kicker or 800 on four aces, no kicker. Payoffs are below the IRS threshold on $1 games and above it on $5 games.

The potential for tax paperwork is something to consider before choosing a $5 video poker machine.