“Don’t tax you, don’t tax me, tax the guy behind the tree” Anonymous
Ah, January, still beautiful and aromatic in Arizona, but it’s time to pay the piper. You should be receiving all relevant IRS documents by the last day of this month so you can start submitting your tax returns from now until April 15. Of course if you file late without asking for an extension, then be prepared for a penalty.
If you’re an Arizona casino player, however, there’s some good news. It’s one of the states that allow you to fade your winnings against your losses. That means if you file itemized deductions, then you only pay taxes on your actual gambling profits after the aggregate year-long losses are subtracted from that figure. Always follow the advice of your tax accountant but be aware that they’re probably not experts regarding gaming legislation. Here are some tips.
W-2G:This is also know as “Certain Gambling Winnings”, and will be issued by the casino anytime a single jackpot is at or over $1200. The IRS will also receive a copy (states base their data on the federal information) and the form must be signed by the winner. I do not have them remove money from my winnings unless I am ahead for that calendar year. You will have to show staff a social security card as well as an ID, like a driver’s license, if you don’t want cash removed from your prize. Make sure the amount you claim for winnings (federal/state tax returns) is at least as much as the aggregate amount on you W-2G’s, even though you may have sustained a loss for the year.
Diaries: You’ve probably seen people filling in data at the end of their gambling session, especially if you spend a lot of time in Vegas. They’re creating what’s known as a “diary” or a written record of their session results. The exact information varies from person-to-person, but typical headings are date, location, machine played and amount won or lost. Sometimes a casino provides a free diary so ask at the slot club desk.
Win/Loss Statements: Most Arizona casinos will provide you with a record of your winnings and losses for the year at no charge. Be aware that you must be using your player’s card for them to have that data.
Technology: There was a booth at the latest G2E (Global Gaming Expo) that keeps track of all data associated with your play. This means that casinos with this program are capable of handing you the information, if requested, so there’s no need to keep a diary. This is an especially good thing if you’re gambling on a vacation, say a cruise ship, and unlikely to return.
Audits: I’ve received notice of what’s called a CP2000 or paper gaming audit more than once. First, you might feel temporary anxiety (I did), but don’t panic. Simply start the process of gathering supporting documents as soon as possible and write an explanatory letter as well. I contacted my CPA and he offered assistance; however, I chose to submit the paperwork and letter on my own. The more data you are able to send the better your odds of settling the issue without owing money to either the state or federal government.
Agent Coin Toss:Although I have had federal tax audits requiring I meet with an IRS agent, my gambling audits were CP2000’s and handled by mail. I have read numerous accounts of gaming audits written by others and I’m struck by inconsistencies. The more supporting documents you have the better you will do and you shouldn’t expect an audit if your winnings/losses are relatively low.
Split Jackpots:If you and others are splitting a reportable amount you should ask for the form that allows you to claim the divided jackpot. That way one individual won’t unfairly be stuck with the tax liability.
Final Thoughts:Getting a notice of a gambling or any other audit from your state or federal tax organization is never a reason to celebrate. However, it’s still a gray area as far as definitive laws and there are few experts outside of Nevada. The more documentation you can provide the better your odds of not owing anything more than you’ve already paid, often that’s zero. It’s never a good idea to pay more than you owe out of fear. If you want to donate then it’s perfectly legal to send Uncle Sam a check anytime the spirit moves you or, better yet, just give to your favorite charity.
Linda Boyd – a long-time table game player before turning to video poker, also writes for Southern Gaming & Midwest Gaming and Travel, her book, “The Video Poker Edge” includes free removable pay schedules and free strategy cards for the most popular games. Look for her story in the 2012 Edition of “American Casino Guide” (ACG) and her You Tube video, also with ACG. The 2010 Second Edition of her book is available in both paperback and kindle.
Available at amazon.com, bookstores or Square One Publishers www.squareonepublishers.com Toll free: 877-900-BOOK