W2 Tax Form for Maasdam Casino Win?

[jacank]

We sailed on Maasdam last March (our first cruise) and my hubby got very lucky and hit the jackpot on video poker for $8,000. We were asked to sign a W2 form. The casino did not use any card for identification so that we could record any losses against our win. Also, I was surprised that a Dutch Ship sailing in international waters would come under our tax structure. We didn't hear any more about it til just this week when we received the W2 form in the mail. Any accountants or lawyers out there know how this works? I'd appreciate any feedback.

[dbullsfn]

Hey. Let me preface this by saing that I am not giving legal advice and also I do not practice in either of the areas you are talkign about (Tax, Admiralty or Gambling). However I can tell you that at least in domestic relations matters, the registry of the ship is not controlling. Sometimes, the home port is the controlling factoer. Also I would suspect that in this situation, its not the ship that is important but the corporation. Most likely, HAL is incorporated in both Deleware and Washington, and licensed to do buisness in the port states. I know in NOrth Carolina for a foreign corporation (i.e. anything not incorporated in NC) has to obtain a license from the Secretary of State's office. The fact that HAL is an american corporation is probably the reason you received a W2. But as I said, i dont practice in those areas so I cant be sure. Hope this helps

[Quendryth]

What? I am not at all understanding this. We too won over $1,000.00 & signed a 1099 form not a W2 & have waited to receive an official notice. To date - none.
We are dealing with foreign parties here so who knows what?

[tomc]

What are the internet rates in jail?

[dakrewser]

What? I am not at all understanding this. We too won over $1,000.00 & signed a 1099 form not a W2 & have waited to receive an official notice. To date - none.
We are dealing with foreign parties here so who knows what?

No, you're dealing with an American corporation.

[CDRMark]

IRS taxes on any and all income worldwide, subject to treaty. Even If you were not issued a W2 or 1099, you are required to report the win. eg If you won a bundle in Monaco, same thing. The reference to offsetting losses is correct; you are able, if itemizing, to take any gambling losses in the same year against the win.
Cheers
MarkB
ps Congratulations!

[spongerob]

If you go to Las Vegas Advisor (http://www.lasvegasadvisor.com)and read some of Jean Scott's articles in the Frugal Fridays section, you can get some more information about gambling wins and taxes.

[cruise freak]

I went on a Celebrity cruise in December and was told it doesn't matter how much you win they don't give you a slip. This came from a pit boss. Also Faith regarding a $1,000 win, casinos in US don't give you any kind of slip unless you win $1200 or more.

[CDRMark]

Before Walt moves this thread; the tax code places a great emphasis on voluntary compliance. IRS requires all income to be reported, not all income under a certain amount. The pit boss' advice comes under the heading of "they'll probably never find out, so fuggedaboutit?". Consult your tax professional.
Cheers
MarkB

[jacank]

Sorry, I mean they gave us a 1099. We just got the W2 in the mail this Friday. Thanks for all the replies. And yes, I know we can deduct any losses.. when we go to AC Casinos, we use a card in the slot machines and they keep track to prove our wins or losses. The Maasdam, however, had no way to show what our losses were, other than our own estimate, which I doubt would fly with Uncle Sam. We were there for ten days, and had losses besides that lucky win. Also, I never realized HAL was an American Corporation..always thought it was a Dutch Ship. It was flying under a Dutch flag I believe. We may be taking another cruise on the 27th. Though I doubt we'd ever have such a lucky win again.. how do we prove our losses?
PS.. I have just discovered these boards and you folks are terrific.

[cruise freak]

Host Walt is an accountant so hopefully he can get you tax advice. Hopefully JAcnak you will have enough losses on your land based casinos that you can offset your winning on the ship. You also can use lottery tickets or horse racing bets. You don't have to prove anything to the IRS unless you get audited. The actual form that you should have gotten is W-2G. It is certain gambling winnings

[CDRMark]

Take a look at www.irs.gov (http://www.irs.gov/) and search for "Topic 419".

Cheers

MarkB

[jacank]

Thank you for the information. I have read the IRS website. Unfortunately, (or I should say fortunately) hubby had a very lucky year and we knew we'd have to pay taxes, but didn't expect the Maasdam win to be included. The site states we need tickets, receipts, or "other records" to prove any losses. I'm not sure if a gambling diary for that trip comes under "other records". We've decided to call IRS directly and just ask the question. Your response has been wonderful. (Too bad the ships don't use cards to track gambling the way most casinos do.) I appreciate the explanation about HAL being an American Corporation. The gambling wins were very exciting and I'm not complaining about paying Uncle Sam his portion. It just bothers me that the ship doesn't keep a record of our losses but is quick to hand out forms for a win.

[Pete Jackson]

The question came to mind mind of whether the cruise fare is also deductible from your winnings. I think the answer is not in your case since the cruise was a vacation and you didn't cruise for the sole purpose of gambling.

However, if gambling is your way of making a living, and if you spent most of your time, 9-5, on the cruise gambling, then I suspect that the cruise fare and other expenses would be legitimate deductible costs of doing business! But don't quote me, check with your tax professional.

I think the whole business of paying taxes on recreational gambling is equivalent to the tax collectors (cf the Bible) who would simply grab money from people any way they could. After all, it goes against the spirit of most of the tax code which taxes income from labor or investment. Gambling just redistributes money in a way that no value, such as labor, is added to it. After all, if you have a net loss, you can't deduct it. But until the courts throw it out, US residents are stuck with paying it taxes on gambling winnings! Canadian and British citizens, who are also non-US residents, can laugh. There is no income tax on gambling for them!

The $1200 limit on the casino reporting winnings is probably a practical item for the IRS. Small winnings are more likely to have offset losses to deduct and so are not worth going after. Also, casinos make a lot of money for the IRS, so they and the IRS don't want to unduly hassle the majority of their customers, i.e. the losers.

[Silverfox]

About 3 years ago we won, through a Casino raffle, a cruise for 2 in the Penthouse Suite and we knew we'd have to pay taxes on the value of the cruise.

The cruise company was fair and issued the tax form based on what that category would have sold for on the date we picked to cruise.

However, in the long run, we could have paid for the cruise ourselves at a category we desired, and the cost would have been less than what we paid in taxes.

But we knew that ahead of time. Would I do it again? No -- I would just let the certificate expire and not use it.

[CDRMark]

Silverfox:
If you are lucky enough to win again, consider donating it to your favorite charity.
Cheers
MarkB

[dbullsfn]

Just a quick reply to Pete. I think your statement on the purpose of the IRS Code is too general. The purpose of the code is to tax ANY income, whether you work for it or not. Its very interesting that the issue of gambling has arisen. In any students general survey on tax law you are forced to read a famous case about a croupier at a craps table in Las Vegas. The tiips he received are income, although no other element supporting the legal definition of income is present. As for the question regarding the nationality of ships, you have to remnemebr you are dealing with two different forms of law, admiralty and corporation. The registry of a ship in no way affects or distinquishes the owner of the vessel.

[jacank]

We put in the call to IRS and explained the situation. They said just to list our winnings and losses and hold onto receipts of losses in case we get audited. In the past, we have always attached our statements from Casinos about wins and losses to save an audit. We asked if keeping a gambling diary was considered legal proof of losses. We were told.. maybe they'd accept it, maybe not. Much would depend upon the overall picture of our gambling habits. Guess we just hold onto our personal notes and hope for the best. Thanks again to all for the helpful information.

[Silverfox]

Re the poster who said "donate to a favorite charity".

Would have been glad to do it, but it was non-transferrable -- not even to a family member. The winner, my husband, had to use it or lose it!

[Giorgi-one]

About 3 years ago we won, through a Casino raffle, a cruise for 2 in the Penthouse Suite and we knew we'd have to pay taxes on the value of the cruise.

The cruise company was fair and issued the tax form based on what that category would have sold for on the date we picked to cruise.

However, in the long run, we could have paid for the cruise ourselves at a category we desired, and the cost would have been less than what we paid in taxes.

But we knew that ahead of time. Would I do it again? No -- I would just let the certificate expire and not use it.

Since the maximum income tax rate is about 35%, you essentially stayed in a Penthouse suite for the price of an oceanview cabin. Not a bad deal. Can I do that on every cruise I every take?

[Allis154]

I wonder what the policy is for those of us who are Amercian citizens? Here is Canada we don't have to claim gambling wins as income, just the interest that we earn off it (we store it in the mattresses! lol)

[tlmlb]

After all, it goes against the spirit of most of the tax code which taxes income from labor or investment. Gambling just redistributes money in a way that no value, such as labor, is added to it. After all, if you have a net loss, you can't deduct it.

This is a false argument...the tax code is written in an exceptional manner...stating "all income is income, unless excepted by statute....

[cruzincurt]

If you get a W-2G it may be totally up to you to report it as "other income". We have gotten some at local race tracks and never heard from them again at tax time. We just reported it as income in case Uncle Sam's big computer in the sky checks.

As I understand it, the winnings go against normal income, losses can only be deducted up to the level of winnings, BUT the losses can only be reported on Schedule A and ONLY if you itemize and file a Schedule A. In other words you can't just say "well I won $1200 but lost $1300" so I won't report it.

And most gambling books recommend to properly document your losses you must keep a journal containing where, when, how, what kind of bets, which slot machines, and so on. The threshold to generate a W-2G varies and may also depend on the ratio of the bet to the win. That's why some race track gamblers will buy two $5 tickets rather than a single $10 ticket.

If I'm lucky enough to earn a W-2G, I don't mind paying the taxes. If you win on a cruise and they just hand you the cash it's up to you to decide if you want to share some with Uncle Sam. My DW works the IRS window at a race track so I know a little bit about this.

Please, some tax expert correct me if I'm wrong.

[cruzincurt]

An update to my previous post. Per my DW, single ticket race track winning bets $600 and up generate a W-2G with withholding at the track. This is based on a 300 to 1 win/bet ratio.

Notice that some jackpots on Vegas slot machines are $1199, to avoid the generation of a W-2G. However, if you already had some credits on the machine and you cash out above $1200, bang, you get a hand pay and a lovely W-2G from the casino folks.

My DW and I have both hit slot machines on cruise ships for $1000 and they took no names, just handed over the cash.

[Ryndam2002]

No, you're dealing with an American corporation.

I won $1250 on the Maasdam last year and I just received my 1099 form. My tax advisor says I will have to report it and pay taxes on it as it was issued by a US corporation and I am a US citizen.

The kicker is that my mom was with me on the same cruise and had to visit the ship's doctor for a foot injury. Medicare denied the claim saying that we were not on US territory at the time!

[dakrewser]

I won $1250 on the Maasdam last year and I just received my 1099 form. My tax advisor says I will have to report it and pay taxes on it as it was issued by a US corporation and I am a US citizen.

The kicker is that my mom was with me on the same cruise and had to visit the ship's doctor for a foot injury. Medicare denied the claim saying that we were not on US territory at the time!

And they were both correct.

[West Coast]

I wonder what the policy is for those of us who are Amercian citizens? Here is Canada we don't have to claim gambling wins as income, just the interest that we earn off it (we store it in the mattresses! lol)

This only applies to US citizen's/legal residents. There are signs up in the casino, usually at the cash cage, explaining the 'act' and who the cruise line is required to issue the forms to.

I won a $1600 jackpot on a Carnival cruise last week (CCL owns HAL). When they went to give me the form, I said, "No, I Canadian." No problem, I just showed my passport when picking up the cash from the cashier who wrote: "Canadian Citizen" across the top.

[snownyet]

We too won a cruise for 2 a few yrs ago, taxes were never mentioned and till reading this thread we never even thought about it.. Never paid a tax, and never heard a word.. It turned out to be one of the very best vacations we've taken.

[TedC]

We too won a cruise for 2 a few yrs ago, taxes were never mentioned and till reading this thread we never even thought about it.. Never paid a tax, and never heard a word.. It turned out to be one of the very best vacations we've taken.

And you can trust us not to turn you in --- unless, of course, there's a big reward.

[trvlcrzy]

First of all, I don't gamble. I don't understand enough to be anything but dangerous...
Here's my question...
If you are gambling with "your card" (do you mean your key card/account?), would your shipboard account reflect the amount you spent in the casino as separate entries from other charges (like bar tabs or gift shop purchases)? I'm just wondering if saving the printout of your total account at the end of the cruise would serve as proof of losses vs. winnings.

[NHCruisr]

Two years ago we won over $4000 on the final night of snowball bingo on the Zuiderdam. We collected a check and a 1099 before leaving the ship. We gave it to our accountant at tax time and we were required to pay taxes on it. Our accountant told us that the IRS would have known if we had not claimed this as income because of the reporting of the 1099 by the cruise company.

[dmklx582]

I am a senior who also won more than $1200 at the casino. I have records of the losses on the frequent player card as well as the losses. IRS says I must itemize to offset the one bigger win with the more than $1200 losses. I can't itemize or use the long form cause I don't have enough deductions so I'm stuck with paying the taxes on the one win since they gave me a 1099. Can't win!

[FoxyTerrier]

About 3 years ago we won, through a Casino raffle, a cruise for 2 in the Penthouse Suite and we knew we'd have to pay taxes on the value of the cruise.

The cruise company was fair and issued the tax form based on what that category would have sold for on the date we picked to cruise.

However, in the long run, we could have paid for the cruise ourselves at a category we desired, and the cost would have been less than what we paid in taxes.

But we knew that ahead of time. Would I do it again? No -- I would just let the certificate expire and not use it.

My son won a "Win a cruise lottery" last summer while we were on the Noordam. I thought we or he would be expected to pay taxes on this win.

After the win I went with him as he was only 18 years old at the time. He was never asked for his SSN. We recently turned in the voucher to HAL and will be cruising in just 2 weeks. HAL did not ask for this SSN when we booked either.

In his case he did not make enough money (less than $500) to even file a 1040 last year so maybe we just got lucky.

We did have to pay the normal gov't taxes and port fees so the cruise was not completely free but very very cheap considering.

[babyher]

This thread has me wondering.

A few years ago a guy in my office won like $3000 on our state lottery. As has been said here, his accountant told him if he had proof of looseing that much in the same year he could offset the winnings on his taxes.

He plays everyday as well as a lot of us in the office, so from that point on for the rest of the year he and all of us in the office saved our loser lottery tickets. At the end of the year we all managed to get him enough losing tickets to give to his accountant.

I was wondering (because I have never been lucky enough to win any amount that big) . Does the IRS consider all gambling debts the same and if you hit a jackpot on a cruise ship , could proof of loses in another venue count?

As Isaid, I've never been lucky enough to have such worries :) so I honestly don't know.

[cruzincurt]

Yes IMO, gambling losses from cards, poker, slots, lotto, football pools, etc., lost elsewhere would offset winnings won elsewhere. However, as has been pointed out, winnings go on the front of the tax form as income, losses can only be claimed if you itemize. If audited, you will need the records of losses and winnings.

If you win a cruise, and the cruise line gives you a 1099, they will probably value it at "full brochure price", then you get to pay taxes on the "full brochure price" rather than what you could probably purchase the cruise for yourself.

So, depending on your tax rate, your taxes on the "free" cruise could actually be larger than if you just purchased the "free" cruise in the first place.

[AWED23]

I went on a Celebrity cruise in December and was told it doesn't matter how much you win they don't give you a slip. This came from a pit boss. Also Faith regarding a $1,000 win, casinos in US don't give you any kind of slip unless you win $1200 or more.
You can, of course deduct your losses if you have a "reasonable" method of proof. I have been fortunate enough to have had to report 5 large wins from $5400 way up into the 6 figures. That is why I ALWAYS play from markers. The markers are accepted by the IRS I was told by my accounting firm and I have been turning them in annually even if I do not have a qualifyng win. You just need to establish credit before going to Atlantic City or Vegas. Hope this helps a little.