"Eric" Wrote:
since I'm asking questions (might have asked this one before), shouldn't the
taxes that will have to be declared due to the issuance of W2-Gs be taken
into account when developing strategy?<<
Excellent point. If you want to be technical, then this can get complicated. The best game and denomination will depend on whether you're ahead or behind for the year, since you can write off your winnings to the extent of your losses on your federal return. People will argue that you're supposed to report every dime won even though you're entitled to fade winnings with losses. In spite of this, the IRS is unclear about what constitutes a session and other issues. The intent of the law is that you pay on your aggregate winnings after you deduct losses. The reality, for me, is that I would just as soon have fewer W-2Gs given the same end of the year results.
It gets even more complex when you consider state-imposed taxes, which vary from state-to-state.
Some states, like Mississippi, have a 3% "gambling tax" triggered whenever you hit a $1200 or more jackpot. (Legislatures that consider it an "income tax" give you a shot at recovering some or all at year's end--depends on whether you're a resident and whether the state allows you to write off losses against winnings like the federal return. To me, "gambling tax" is just a euphemism for "sin tax"--wonder why they even allow it if it's such a "sin", but that's another issue...) If a non-refundable state tax is imposed at the $1200 threshold, then you should choose your game denomination wisely. You might be better off, for example, choosing DDB (double double bonus) in a lower denomination, assuming a decent pay table, than higher denomination JOB. Even though DDB is more volatile(bankroll destroyer on a bad day), you can have a high aggregate total when things are going your way without getting a fistful of W-2G's.
I agree with you, Eric, W-2Gs should be taken into account --both when selecting a game/denomination and possible game strategy adjustments. You'd need to analyze applicable federal/state regulations, consider your win/loss position for the current year and game/denomination choices before you made strategy adjustments.
I'm on my way to mom's house--wishing everybody a wonderful Mother's Day!
Linda Boyd
Author: "The Video Poker Edge"
www.squareonepublishers.com
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