Let’s say you are playing craps and the “monster roll” finally arrives and you are in the middle of it. You started with a $10 pass line bet and two $10 come bets, all with maximum odds. You kept increasing your bets by one unit when you win. You planned to decrease your bets when you lost but that never happened!
The shooter kept rolling numbers, and finally after he made his eighth point, he sevened out, and then the next shooter did the same thing! Your red chips turned to green and your green chips to black. At the end of two hours, you counted your chips and found that you have $3500! You’re on the top of the world! Think of what you can do with the money! $3500, tax free! Or is it?
You are, of course, required to report any gambling wins as income to the IRS. Some casinos will report wins over $1200, and some won’t, depending on where they are located. All casinos, however, have a policy paper on taxes which is available free of charge at the casino cage. If they don’t report craps winning, and you don’t report them either, you may be breaking the law.
If you do opt to report your big win as income in exchange for not having to worry about it for the next seven years, there is a way to minimize your taxes but you have to start now to prepare for your big win. You have to keep accurate records of your loses.
If you played several times this year and lost, say $2500, you can deduct that from your previously mentioned $3500 win and only pay taxes on $1000. If you are in the 20% tax bracket, you would have paid $700 in taxes on your $3500 win. On $1000 you only have to pay $200 (20% of $1000 is $200). This means that by keeping accurate records you’ve saved at least $500 ($700 – $200) this one time alone.
The IRS does not even care if you lost more than you won during the year – if you have just one big win you have to pay taxes on it. To balance your wins with your loses, you need to keep an accurate diary. Your total losses on blackjack, slots and roulette can balance out one big win on craps. If you get audited, you need to have records to support your diary – markers, withdrawal receipts, bank statements, etc.
This might seem like a great deal of trouble but if you really expect to win a big MONSTER ROLL when you gamble, you should be prepared for it. Keep accurate records and you’ll also keep more of your winnings in your pocket – not in the MONSTER’S (The IRS)! So when that big roll finally does come along, be ready for it by keeping records now, so you can keep all of it for yourself! And, as always, good luck at the tables!