The IRS requires you to report winnings on slot machines over $1,200. If your winnings are over this amount, casinos will issue a W-2G to both you and the IRS, which states your social security number, name, address, and te amount of your winnings. You are then required to declare the winnings on the tax return that you file. It should be noted that all gambling winnings (and all income for that matter) is considered taxable income, but the IRS will only report winnings over $1,200 to the IRS.
The casino requires proper identification before paying out a jackpot and can hold your winnings until you show a proper ID. For this reason, you should always bring a photo ID with you when you play in a casino. They may also withhold taxes from your winnings if you don't provide your social security number.
The IRS allows you to use gambling losses to offset your reported winnings. You can only do this if your losses are documented. There are a few ways you can do this:
Inexperienced players may not bother thinking about these issues because they may plan on not reporting the winnings on their taxes. But if you are planning on playing slot machines often, you should make a plan to track your profits and losses in case you win a jackpot. You should start doing it as soon as you can because, in my opinion, it will look more legitimate when you have reported all of your sessions before hitting a jackpot. Only recording your sessions after hitting a jackpot may look like you are just trying to cover up a win.
Keeping track of your gambling results gives you objective feedback about how much money you are actually winning or losing. Many gamblers delude themselves about how well they do and it may be enlightening to see irrefutable evidence about their results.
HPG ADMIN on February 27, 2013