For the uninitiated, a jackpot handpay is a win of at least $1,200 in the U.S. on slot machines or other electronic machines on a single wager, regardless of how much that wager was. These wins must be reported to the IRS, and therefore triggers a reporting process that requires taking documentation from you to know who to report won the handpay.
As a general rule, casinos will ask U.S. players whether they wish to have taxes taken out before they pay out a handpay. This means as a player you can make the decision to have them taken out upfront, in which you will file that with your information come tax time, or opt against it, and be responsible for making any payments at tax time if you owe.
The exception can be states that have a mandatory deduction, or prizes large enough to fall into a different bucket of rules.
As such, taxes are often your choice, but it can depend on the size of the win and where you’re playing at the time of the win.
The one situation where we weren’t asked if we wanted taxes taken out when winning a handpay was on a cruise ship. Yes, cruise ship wins are reported too, as we’ve experienced on Carnival Cruise Line® when winning a handpay. But in that case we were not asked if we wanted taxes removed – we were just given the paperwork, and the entirety of the cash, and that was that.
Every experience in a physical casino, we were asked if we wanted taxes deducted, and if so how much. Because it’s considered income, you’ll need to decide if you do have taxes taken out how much you wish to have deducted, and that will depend on your personal situation as federal taxes on income increase as a percentage as you get into higher tax brackets.
So given that, it’s always our advice to ask an accountant what makes sense for your personal situation, as everyone will have their own unique considerations. And enjoy your handpay – it’s always nice to win at the casino!
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Coming from Canada, isn’t there a treaty between our two countries that means we don’t get taxed on a win. Used to be that way. Is it still like that. Never had a good win on any of our trips to Vegas.
Hi Judi – we’ve spoken to Canadians who say an automatic 30 percent are removed from their jackpots, and then they have to file with the IRS to get refunded. So in that way it’s ultimately not taxed, but there’s work to be done to get the money back.
We plan on doing a more formal write-up with some help from those in the know but to our knowledge, Canada is not a country where the taxes are automatically exempt at the time of a jackpot.
We, Canadians do still get taxed on wins over $1200, just like the Americans. The difference is we can claim the taxes back. But it does cost a pretty penny to fill out the forms for the first time doing it.
Thanks Philip for that – we’ve clarified the article to note U.S. players in U.S. casinos to be a bit more specific, since the article was written for that scenario. We will be doing some articles on out of country players in the future to cover other scenarios too!
If you’re on social security and don’t file taxes do you have to pay taxes or report a hand pay?
When you get a jackpot handpay in the casino, it is reported to the IRS. You do not have to have taxes taken out at the time of the win, but whether you owe will depend on your personal circumstances. We advise discussing with an accountant familiar with gambling tax laws if this scenario happens to you!
my wife oes not pay any tax on her s.s check at all if she wins a taxable jackpot will she be liable for the 20 pecent here in jersey just asking,,,
Hi jacs – this is a great question for an accountant. Every person’s situation will differ, including when they’ll be liable for taxes. The U.S. sees gambling wins as income, so likely similar to other income rules around Social Security it’s possible taxes would be owed, but it would depend on the situation.
Here in New Hampshire, it is a little different. If you win 300 times your bet, and it is $600 or more, this is a hand pay. Tax withholding is optional up to $4999.99. Above that 24% is automatically deducted for federal income tax. There is no state income tax here. So a $600 win on a $2 bet is a hand pay and reported to the IRS. $2000 on a $10 bet is not a hand pay and is not reported.
Hey Eric – in New Hampshire they aren’t slots but Historic Horse Racing machines. They work under a different set of rules, so that makes sense as to what you’re outlining, and is in line with table game rules as well!