Do You Pay Taxes On Casino Winnings In Florida
Gambling and the Law®: By Professor I Nelson Rose
The Internal Revenue Code is unkind to winners -- and it doesn't much like losers, either. The federal government taxes gambling winnings at the highest rates allowed. So do the manystates and even cities that impose income taxes on their residents. If you make enough money, in a high-tax state like California or New York, the top tax bracket is about 50 percent. Out ofevery additional dollar you take in, through work or play, governments take 50 cents.
Of course, the tax-collector first has to find out that you have won. Congress and the Internal Revenue Service know gambling is an all-cash business and few winners indeed wouldvoluntarily report their good luck. So, statutes and regulations turn the gambling businesses, casinos, state lotteries, race tracks and even bingo halls, into agents for the IRS.
Big winners are reported to the IRS on a special Form W-2G. If winnings are to be split, as with a lottery pool, winners are reported on a Form 5754.
Pooling money to buy lottery tickets is common among employees and friends. But whether there are two or 200 in the pool, there is going to be only one winning ticket, and somebody has toturn it in. If you are that someone, make sure you fill out a Form 5754. If your share of a $5 million prize is $1 million, you do not want to be stuck with paying income tax on the entire $5million.
- If they do, the casino is required to automatically withhold taxes on the win. Brick and mortar players should also be aware that a casino is obligated to create a Currency Transaction Report any time a player crosses more than $10,000 through the casino cage in a 24 hour period.
- “Taxpayers can deduct gambling losses only up to the amount of their gambling winnings,” says Leddy, “and only if they itemize their deductions.” For example, if your gambling winnings totaled $5,000 in the tax year, but you lost $6,000, you can only deduct $5,000 of those losses. Keep in mind, itemizing your deductions may not afford.
Gambling has become such big business that the IRS receives nearly four million Forms W-2G and 5754 each year. This tells the tax-collectors that nearly four million big winners are outthere, waiting to be taxed.
Yes, you are required to pay your state or local taxes on your gambling winnings. In case you travel to another state, and snag some huge winning combo there, that other state would want to tax your winnings too. You must withhold federal income tax from the winnings if the winnings minus the wager exceed $5,000 and the winnings are at least 300 times the wager. Withhold 24% of the proceeds (the winnings minus the wager). This is regular gambling withholding. You will have to pay state income tax on your winnings in 39 states. If you live in one of the 11 states that don’t tax sweepstakes prizes, you may be spared state income taxes.
But the IRS does not always wait. The government wants to make sure it gets paid. What good does a W-2G do if the winner is a foreigner who is going to be in his own foreign country whenApril 15th rolls around?
So, the IRS not only wants reports filed, but often requires that a part of the winnings be withheld. As anyone who has a salary knows, withholding also allows the government to usetaxpayers' money for many months, without having to pay interest.
The withholding rate for nonresident aliens is 30%. Not coincidentally, the tax rate for nonresident aliens is also 30%. So, if a citizen of a foreign country wins $1 million cash at aslot machine in Las Vegas, he will find he is only paid $700,000. The remaining $300,000 is sent to the IRS. The foreign citizen is unlikely to ever file an income tax return, but the IRS getspaid in full anyway.
Citizens of foreign countries are also, of course, usually taxed by their own governments. So some countries have treaties with the U.S., which protects those foreigners from having topay the 30% withholding to the IRS.
U.S. citizens and resident aliens have it both better and worse than nonresident aliens. The withholding rate for gamblers living in American is only 28% (it was 20%, up to1992). Having the IRS take $28,000 out of a jackpot of $100,000 is painful. But, it can hurt even more when tax forms are filled out. There is no 30% maximum tax for people living in the U.S.,and really big winners often end up paying a lot more than 28% or 30%.
The one good news is Nevada casinos were also able to convince the IRS that they could not keep track of players at table games. They said that when a player cashes out for $7,000,they do not know whether he started with $25 or $25,000. So it is actually written into the law that there is no withholding or even reporting of big winnings to the IRS for blackjack,baccarat, craps, roulette or the big-6 wheel.
There is another general IRS rule that says anyone paying anyone else $600 in one year is supposed to file a report. The IRS has been going after casinos and cardrooms that runtournaments, forcing them to file tax reporting forms on grand prize winners. Here the IRS has the very good argument that the operator knows exactly how much a player has paid to enter thetournament and how much the finalists are given.
Is there anything a winning player can do to lower the bite of the income tax? And what about those who gamble and lose? Which is everybody, occasionally. The law does allow players totake gambling losses off their taxes, but only up to the amounts of their winnings.
Of course, if you win, say $135,000, you can take off all gambling losses, up to that amount. If you gambled away, say $65,000, you would only have to pay taxes on the remaining, let'ssee: $135,000 minus $65,000 equals $70,000. The tax on $70,000 is a lot less than the tax on $135,000.
Of course, you have the small problem of proving that you actually lost $65,000. Large winnings may be required to be reported to the IRS; large losses are not.
One former IRS Revenue Officer, who quit government to open his own small tax preparation firm, thought he found the answer. One of his clients won a share in a state lottery: $2.7million, paid out over 20 years in installments of about $135,000, before taxes. The winnings were reported, but the tax return claimed gambling losses of $65,000. The IRS decided that $65,000was a lot to lose, and it sent an agent to conduct an audit.
The tax preparer found a man with an extremely large collection of losing lottery tickets and made a deal: he would borrow 200,000 losing tickets for a month for $500. The losing ticketswere bound in stacks of 100 and shown to the IRS auditor: 45,000 instant scratch tickets, 5,000 other Massachusetts lottery tickets, and 16,000 losing tickets from racetracks throughout NewEngland. So many losing tickets, that it would have been physically impossible for one man to have made these bets. The New York Times called it, 'one of the more visibly inept efforts at taxfraud.' They pleaded guilty eight days after being indicted.
By the way, the man who rented the tickets was not charged. It's not a crime to collect losing lottery tickets, only to use them to try and cheat the IRS.
Each year, around 23.5 million Canadians visit the United States and assist the U.S. economy by adding more than $22.0 billion in tourism. One of the most popular destinations in the U.S. for Canadian tourists is Florida.1
The number of Canadians visiting Florida continues to grow annually—from 1.6 million in 2002 to a record 4.0 million in 2014. To put that into perspective, that’s more than one in every 10 Canadians. That record will likely be broken in 2016.2
In the wintertime, the number of Canadians visiting Florida swells as snowbirds from Montreal, Quebec and the Greater Toronto Area head south to enjoy the warm, sunny, weather. A popular attraction for snowbirds from Quebec and eastern Canada includes casinos and poker rooms. Florida is home to a number of commercial and Indian casinos. Seven of the Indian casinos are owned and operated by the Seminole Tribe of Florida while another is owned and operated by the Miccosukee Tribe of Indians of Florida.3
For Snowbirds who like to gamble when they’re vacationing in Florida, they need to understand that their winnings are subject to a 30% withholding tax. That’s because casino and poker winnings are considered income in the U.S., and the IRS wants its share. Fortunately, there is a way for Snowbirds from Quebec, Ontario, and the rest of the country to get a portion or all of those taxed winnings back.
Nine Best Florida Casinos for Canadians
Of its numerous casinos, there are a few that stand out more than others as hot spots for Canadians.
Big M Casino
Big M Casino is a 400-passenger casino ship that sails from Fort Myers Beach’s Moss Marina. The casino cruise departs at 10:30 a.m. and returns at 4:30 p.m. and leaves again at 6:00pm to return at 11:30pm every Wednesday through Sunday. The casino has over 200 slots, and table games include Blackjack, Craps, Roulette, 3-Card Poker, and Let It Ride.4
Calder Casino
Located in Miami Gardens, the Calder Casino has a 100,000-square foot gaming floor where you’ll find around 1,100 slots, and e-table games like Blackjack, Roulette, and the Lucky Big Wheel.5
Do You Pay Taxes On Casino Winnings In Florida Gulf Coast
The Casino at Dania Beach
The Casino at Dania Beach in South Florida has 900 Vegas-style slot machines and e-table games like Blackjack, Roulette, and Craps. It is also home to 24 table games, including No-Limit Texas Hold’em. You can also take in a live Jai Alai match.6
Casino Miami
Just five kilometers from the Miami International Airport, Casino Miami is one of the city’s newest casinos. On the 40,000-square foot casino floor you’ll find 1,000 slot machines reminiscent of Las Vegas, a wide variety of electronic table games, and a Live Poker Room with 22 tables and dominos. You can also enjoy live Jai-Alai matches and simulcast betting.7
The Hialeah Park Race Track and Casino
The Hialeah Park Race Track and Casino is in Hialeah, just a short drive west of Miami. The casino is equipped with 850 slots and electronic games, including Blackjack and Roulette. In the private VIP Poker Room you’ll find 33 tables where you can play Texas Hold’em, 7 Card Stud, and Omaha Hi-Lo.8
Seminole Casino Immokalee
Just 35 minutes from Naples or Fort Myers and 90 minutes from Miami and Fort Lauderdale, the Seminole Casino Immokalee covers 75,000 square feet. You’ll discover over 1,000 slot machines and 38 live table games, including Blackjack, Mini Baccarat, Three Card Poker, Spanish 21 and Mississippi Stud. A new six-table poker room was added in 2015.9
Miccosukee Resort and Gaming
Miccosukee Resort & Gaming in Miami is located just 25 minutes from downtown Miami, on the edge of the Florida Everglades and. The casino has roughly 70,000 square feet of gaming space where you’ll find 1, 900 gaming machines, 32 poker tables, and bingo. The casino also just launched its High Limit Gaming Area with 90 gaming machines that start from as low as $5 up to a maximum of $400.10
Seminole Hard Rock Hotel & Casino Hollywood
The Seminole Hard Rock Hotel & Casino in Hollywood is north of Miami and south of Fort Lauderdale. The 130,000-square foot casino has over 2,000 slots, over 100 table games, high-limit table rooms, high-limit slot rooms, VIP Plum Lounge, and over 40 tables of high-stakes poker.11
Seminole Hard Rock Hotel & Casino Tampa
The Seminole Hard Rock Hotel & Casino Tampa is the biggest casino in Florida. On the 190,000 square foot casino floor you can play on over 4,100 gaming machines and 154 table games. There is a 13,000 square foot high-limit slot room with over 200 games and a 50-table poker room.12
Non-U.S. Residents Subject to 30% Withholding Tax
If you are a non-U.S. resident and you win a significant amount of money at any of the casinos in Florida or anywhere else in the U.S, your winnings could be subject to a 30% withholding tax. But, if you live in a country like Canada, which has signed a U.S. tax treaty, you may be eligible for a refund.
Some of the countries that do not have a U.S. tax treaty, but may still be eligible for a refund include: Australia, Bahrain, Barbados, Brazil, China, India, Indonesia, Israel, Kuwait, Mexico, Malaysia, Monaco, New Zealand, Norway, Saudi Arabia, Singapore, South Korea, Switzerland, Taiwan, Thailand, and the U.A.E. However, based on a recent court case, winners from these countries may qualify for a refund if they meet certain criteria.
If you win a substantial amount gambling (typically over $1,200), your winnings are subject to a 30% withholding tax by the IRS. If you win $2,000 playing the slots, the casino will pay you $1,400. The IRS keeps the rest.
RMS is the Easiest, Fastest Way to Get Your Money Back
If you’ve been to the U.S. and had 30% of your winnings held back by the IRS, Refund Management Services (RMS) can help you reclaim a portion or all of your taxable winnings.
Founded by a Canadian Chartered Accountant in 1998, RMS is the most reliable and experienced gaming and casino tax refund provider for non-U.S. residents. Only RMS has the One Simple Step<sup>TM</sup> process. Our customer service agents take care of the rest.
Once you provide us with complete documentation, your claim will be processed and we will submit it to the IRS. We’ve never been refused for an eligible refund.
Contact us today by calling our toll-free number at 1-888-272-5559 or by emailing us at [email protected].
Sources:
Do You Pay Taxes On Casino Winnings In Florida Keys
1.“A Flock of Snowbirds and a Falling Loonie,” Observation by TD Economics, last accessed February 1, 2016; https://www.td.com/document/PDF/economics/special/Snowbirds.pdf.
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