Generally, any interaction with the Internal Revenue Service means that something bad has happened.
The agency never sends you a letter saying “thank you for paying your taxes,” and rarely does an IRS agent visit a business owner to see how their vacation was.
More often than not, when a letter from the IRS shows up in your mailbox, it's a heart-stopping moment. Dealing with the agency is a hassle at best. Filing your taxes takes some effort and the IRS has infinite power to question your deductions, income, and anything else.
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Casino players, however, have a special problem with the IRS. Gambling winnings are treated as income. However, in practice, most people don't keep track of their small wins and losses.
Players who use loyalty cards to track their play can get a profit/loss statement at the end of the year and can deduct their losses from any winnings.
The biggest complaint, however, arises as a result of what players call a manual payout, a win of $1,200 or more on a slot machine.
What happens with manual casino payment?
When that happens, the machine you're playing on freezes and you have to wait for an assistant. This can often be time-consuming, as casinos (whether you are on the Las Vegas Strip, a regional casino, or on a cruise ship leaving from a US port) do not seem to have staff roaming the floor in search of light. that continues.
It's a frustrating process: You have to sit at your machine waiting for an attendant to pick up your driver's license and then bring you a W-2G, the IRS form that tells the agency about your earnings and requires you to report them.
If you're lucky enough to get several manual payouts on the same day (or on the same cruise), the process goes a little faster the second time, but it makes getting a big win frustrating.
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Many casino players, both on land and at sea, complain about the process specifically because the $1,200 limit has been in place since 1977. That's 46 years without increases, leaving that figure far out of step with inflation.
IRS moves closer to raising tax form limit
Casinos don't like this rule because they have to put in the work to fill out the forms. Players don't like it because they have to stay at their machines but can't play, hoping to catch the attention of a casino worker.
All land-based casinos follow the rules, while almost all cruise lines leaving US ports do. MSC Cruises, a growing rival to Royal Caribbean and Carnival, is not opting to participate in the program. In theory, any casino winnings on an MSC ship are still taxable, but in practice it seems unlikely that anyone would report their winnings without filing a W2G.
The IRS Advisory Council, however, has recommended that the W2G threshold increase to $5,800. IRS Commissioner Danny Werfel appeared to endorse such a move during a recent appearance on Congress.
“I think it's very valuable to get feedback from the taxpayer community and our Advisory Board on when thresholds may be out of date,” Werfel said, according to Casino.org. “The determination of something like this is of a regulatory nature and therefore the decision falls on the Ministry of Finance.”
The change has been championed by U.S. Reps. Dina Titus (D-Nev.) and Guy Reschenthaler (R-Pa.). They observe that the purchasing power of $1,200 today is equivalent to $6,200.
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“Because the threshold has not kept pace with inflation, it has resulted in a drastic increase in reportable jackpots, resulting in tax burdens for winners and compliance burdens for casinos,” Reschenthaler explained.
“Increasing the threshold will eliminate this burdensome bureaucracy, ensuring that the gaming industry can continue to support good-paying jobs and foster economic growth in Pennsylvania and across the country.”
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