The Slot Expert's Guide to Winning at Slots: Tax Tips for Slot and Video Poker Players

You can hear me give my slot and video poker tips live on The Good Times Show, hosted by Rudi Schiffer with Frank Scoblete, which is broadcast live from Memphis on WHBQ over the air on 560AM and over the Internet on Yahoo! Broadcast on Saturday morning from 8-10 CT.

This Week's Tip

Tax Tips For Slot And Video Poker Players

This is the time of year when you receive your W-2 and 1099 forms, so it's a good time to talk about taxes for slot and video poker players. If you won a jackpot of $1200 or more or last year, you were given a tax form along with your cash and you have to report your winnings as income on your income tax return. Did you know that you can claim your gambling losses as a miscellaneous deduction on Schedule A? And did you know that your slot clubs can help you calculate any losses you may have?

First, a suggestion: Always keep your own records of wins and losses. Slot club systems aren't perfect and they sometimes miss some of your play. I carry a small notebook with me. I write down the date, the casino, the name of the machine, the serial number of the machine (if I can read it), the amount of money I put into the machine (my session amount), and the amount of money I took away from the machine. The difference between between what I had at the end and what I put in is my net win or loss at the machine.

To get your win/loss record from your slot clubs, call them up and request it. Some clubs may ask you to send a letter requesting the statement. The club will send you a statement recapping your play for the year. The statement will usually have three totals on it: coin-in, coin-out, and net win/loss. There is much confusion about what these terms mean, so let's look at their definitions.

coin-in

This number tells the total amount of money you wagered in the machines.

coin-out

This number tells amount of money the machines paid you.

net win/loss

This number is the difference between coin-out and coin-in. If it is negative, you lost money overall. If it's positive, you made money at that casino.

Here are a few examples:

Let's say you put a twenty-dollar bill in a dollar machine. You play five spins at $2 per spin and don't hit anything. You cash out the $10. Your coin-in on this machine is $10 and your coin-out is $0. Your net is -$10.

You take the $10 and play another dollar machine at $2 per spin. On the second spin you win $50. Your credit meter is now $56. You play eight more spins and don't hit anything. You decide to cash out the $50 left on your credit meter. You played ten spins on this machine, so your coin-in is $20. Your coin-out is $50. Your net is $30.

Your slot club will report to you that your total coin-in was $30, your total coin-out $50, and for a net win of $20.

If you were keeping your own records, you would write down that you put $20 in the first machine and took $10 away from it, for a net loss of $10. On the second machine, your records would show that you put $10 in it and took $40 away from it, for a net win of $30. And if you counted the money in your wallet, you'd see that you had $20 more in it now than when you started.

The slub calculated the same net numbers as you did, but they used different numbers to get there. The slot club doesn't care about what you put into the bill acceptor; it only cares about what you wager in the machine. And it doesn't care about what you cash out of the machine; it will track every payout you get instead.

Keep in mind that the net win/loss figure the club reports to you includes the W-2G winnings you have to report on another line. Subtract the winnings you had to report on another line from the net number the club gives you. Add up all of the net numbers from all of your clubs. If you have a loss, you can use it to offset some or all of the winnings you had to declare on another line. If you have a net win, it's up to you and your conscience whether you report the extra winnings. If you decide not to report it, I'll never tell.

Tax rules change frequently, so check with your preparer or read the instructions in the booklet carefully to make sure you take the deduction properly.

Send your slot and video poker questions to John Robison, Slot Expert, at slotexpert@home.com.

For more information about slots and video poker, we recommend: