New Tax Law on Poker Winnings Implemented

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congress.jpgA new tax law has gone into effect that requires casinos to report all tournament winnings of more than $5,000 to the IRS. This will make it easier for the IRS to collect the appropriate taxes from individuals who have won poker tournaments and will also put more responsibility on the shoulders of the casinos.

Poker players will be required to give their tax information to casinos and pay 25% of their winnings in taxes. If a player doesn’t give their tax information to the casino then the casino must withhold 28% of the winnings for taxes. Casinos who adhere to these rules will not have to withhold tournament winnings for tax purposes; however, if a casino does not report winnings to the IRS they will be required to pay the taxes that would normally have been withheld.

Players must provide casinos with their taxpayer identification number, which is typically their social security number. If players do not provide the casinos with their taxpayer information than the casino must withhold 28% of the winnings, so it makes more sense from the player’s perspective to give their tax information and save themselves 3% of their winnings.

Casinos do not need to report any winnings that occurred before March 4, 2008, but the players who earned tournament winnings before March 4th are still required to pay income taxes as they always have been.

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