IRS Changes Tournament Tax Proposal

It may be surprising to hear “IRS” and “poker” in the same sentence and have it be good news, but that’s what we got this week and the IRS has backed off an August proposal which would have had casinos taking 25 percent of a tournament player’s winnings for tax purposes if the prize was $5,000 or more.

After talking with the American Gaming Association, the IRS decided that it didn’t make sense for casinos to play tax collector.  So, in an effort to still get poker players to pay taxes on winnings, the IRS is requiring casinos to make players who win at least $5,000 in a poker tournament fill out form W2-G when receiving their prize money.  This way, the winnings are reported, although it is still up to the player to actually pay the taxes when they are due.

Many casinos had already required players to fill out the tax form, but it was never part of tax law.  It was simply something the casinos did by their own accord.