Poker Winnings Must Now Be Reported As Income

According to an IRS news release, casinos and other poker tournament sponsors will be required to report information on winnings to the IRS, starting March 4, 2008. The IRS hopes this rule clarifies the tax reporting rules that apply to poker tournaments and gain additional revenue from these popular gaming events. When the new rule takes effect, winnings exceeding $5,000.00 will require reporting to the IRS. The casinos will report the pay-out on an IRS Form W-2G. However, the IRS is reminding tournament winners that they must report all their winnings on federal income tax returns, regardless of the amount won. This rule has been in effect for years, and all tournament winners should currently be reporting all winnings. The IRS is hoping that with the new rules placed on tournament sponsors will help increase the number of winners who do report their winnings.

Poker Tournaments Must Withhold Taxes

According to Tax Foundation, the IRS has added a new regulation, 26 C.F.R. § 31.3402(q), requiring that sponsors of poker tournaments withhold for taxes 25% of a players' winnings above $5,000. The sponsors must then provide this information to the IRS so that they can properly determine the taxpayer’s income tax liability. The regulation is set to take effect on March 4th 2008. However online and offshore poker games are not subject to the regulation.