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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