How Do Casinos Pay Out Large Sums Of Money?

If you win more than $25,000, the way you receive your payment is dependent upon what casino you are playing at. You will either be paid in installments or all at once. Lucky winners will have 90 days to decide which way they'd like to be paid out the money. Most casinos pay the entire amount up front, but it's important to note that isn't always the case. There are different terms, depending on the game you play, and the sum you win. For example, if you win from poker tournaments or slot machines, all of these games are taxable at a federal level. There are even some special cases where it's taxable at a state level, which will change the rules and regulations of the payout. Casinos will withhold up to 25% of a player's winnings in taxes before you are paid out.

How Casinos Pay Out

Whether you'll be paid all at once or in installments is dependent upon what game you played, and most games disclose their terms and conditions for payouts. Often, if you are paid all at once, you'll need to pay taxes on your winnings. You don't have to pay any taxes on winnings of $600 or less, however, you are required to pay for anything above that. However, if you win over $600 you'll usually be able to withdraw the full amount without the casino removing the tax percentages for you. Cash games pay players in full, so you're required to file taxes on those sums yourself. During tournaments, the casino will withhold the taxes for you. They might even keep the entire winning amount until you fill out a form listening to your tax information. This applies to players who win $5,000+ in a regular tournament or $600+ in a freeroll tournament.

Deductions and Other Technicalities

Regardless of whether they withhold the tax money for you or if you are required to record and file them yourself, you have to pay taxes on all winnings. You will receive a W-2G form from the IRS for gambling-based winnings. What's great is you can deduct money spent trying to achieve that jackpot sum! Usually, you'll have to collect your winnings, and no one else can do it for you. If you are in a circumstance where you need to send a trusted party to collect your wins, you'll need the power of attorney and will have to fill out a 1099 form for this. The casino will usually provide these forms.

The tax percentage you pay on your sum is stagnant and will not exceed 25% of your total win, regardless of how much you win. If you win from a big slot jackpot, the casino itself will hold 25% of the winnings when you collect your prize. You'll also need to keep the W2-G form they give you so you can report your win to the IRS. When you report your winnings, you'll need to report it as "other income" on the front page of your 1040 form. If you are a professional gambler, you can write off the cost of meals, hotels, and any other job-related expenses! You are required to pay taxes because casinos report all of your winnings to the IRS.