If I win big playing slots, do I have to pay taxes?

The IRS requires all wins over $1,200 on slots and a few other gambling games to be reported by the casino so if you win $1,200 or a greater amount the casino will provide you with a W-2G form, it requires your name, social security number and address. It is not required by the IRS that the casino should withhold tax on any jackpots or winnings under $5,000 if the winner supplies the casino with his/her social security number and in most cases, casinos do withhold 28% on jackpots.

Should you be the lucky winner you can select for an indicated amount to be withheld for tax, taken out of the jackpot prize you win. Many players prefer it done this way to avoid a big payment in tax in April when it is time to file their income tax returns. Other players keep a log book and therefore the additional withholding is not necessary. By law, winners can deduct gambling losses, but only up to the amount of your winnings. This is only deductible should the player have documentation of all losses and the only way to do it is by keeping a log book or diary.

The best way to prepare for taxes is to plan-ahead even before you start spinning the reels on your favourite slot. So, waiting for that big jackpot win to spin in, is something you should get excited about and take into consideration that part of it will go to taxes. The tax payable is something that might influence the way you decide to take your winnings, a lump sum or yearly payments.