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1a. IRS 25% witholding of poker winnings, are slots next
Date: Sat Sep 1, 2007 4:52 am ((PDT))Starting 4/08/08 the IRS will begin witholding 25% of poker
tournaments winnings totaling over $5000. This change in the IRS
code went through with very little fanfare. I think it will have a
huge impact on the amount of entrants in future tournaments after
4/08/08.
Of course, the winnings were always taxable. Casinos vary in their policy as to whether or not to issue a W2G for winnings over $1200, and some already withheld taxes when issuing a W2G. Sounds like next year, it will become consistent.
My experience has been no W2Gs at Las Vegas poker tournaments and W2Gs in Indiana at the riverboats. Unfortunately, no other W2G-testable winnings for me in other places.
The only winnings on which a poker tournament winner could easily "cheat" on taxes were those at casinos that don't issue the W2Gs.
The only rationale for NOT doing this is that most gamblers don't end up owing taxes on their winnings, since most gamblers lose more than they win.
It's the same rationale that allows one to instruct one's employer to withhold less taxes from salary if one anticipates a lot of deductions; wonder if there will be a way for gamblers to do the same, or if they will have to carry their funds in the IRS bank until they file.
If this happens for slots, I would think that for the "typical" gambler, this will be bad for casinos, since many of them proceed to pour their winnings back into the machines, often stepping up the denomination of their play to "parlay" their winnings, increasing their chances of returning their winnings. If the withhold ever applies to slots, they would only have 75% to return to the casino, with the other 25% "safe" in the hands of the IRS.
--BG
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