I live within 15 miles of 4 casinos. On top of that, I have clients who gamble other places so I see a lot of W-2Gs and 1099MISCs from casinos. I’m sure I don’t hear about all the winnings however. Too many taxpayers think if they don’t get a form from the casino, they don’t have to report it. Wrong! So you can imagine how irritated some clients are when they receive a 1099MISC when all the small prizes they’ve won total more than $600 at that casino.
At most casinos, you can win prizes besides gambling winnings. They can be from drawings or tournament play. They can be cash or a physical prize. If the prize is over the $600, you will be issued a 1099MISC at that time. But if over the course of the year, you win one or more prizes which total over the $600 you will be sent a 1099MISC at the end of the year for the smaller amounts. Surprise!
One thing you want to do is make sure that it’s correct. Many times the 1099MISC comes with a list of the prizes which are included. I would want to make sure that if I received a 1099MISC at the time of a win that it’s not duplicated. If the 1099MISC is correct, it will go on line 21 of Form 1040 with any other prizes or gambling winnings you have. Don’t be tempted to leave it off your return because the IRS will catch it when they run their matching program. By that time the additional tax from the 1099MISC will be increased by interest and penalties.
The 1099MISC may cost you some tax but it was income you were supposed to be reporting in the first place. Look at it this way, the casino is helping you to more accurately fulfill your tax obligations by reminding you of the smaller reportable prizes.