My Name Was Drawn

[case]

I just returned from Vegas after a nine day visit. While at Sams Town I had my name drawn for a game called take it or trade it.

There were five of us who had their name drawn. You had envelopes to choose from. If you choose right you could win up to 5,000 dollars.

The problem was they did not tell us how many envelopes contained 5,000 dollars or how much the other envelopes contained. I mean we had no idea what what the lowest amount was or what other amounts the envelopes contained. We just knew that they all contained money.

So I was last to choose. The four people ahead of me took the cash offer of 800 dollars. They then just for fun choose an envelope. Their envelopes contained 200, 400, 400, 200....so each one made the correct choice.

I was last and the decision was easy as the 800 was more than enough for me. So I took the money. I then had to take an envelope for fun. My envelope contained 1,500 so I was the only one that lost on the deal. But I was more than satisfied with the money and had no complaints until.......

Since I am a Canadian you must pay tax on any promotional win over 500. It is 1200 on machine wins but 500 on promotions. That would mean my 800 would have 240 dollars removed. Hmmmm.....So I asked if I could take it as slot dollars and not have any tax dollars removed. They were more than happy with this as it saved them the paperwork. I first made sure I could play video poker and they said no problem.

I then proceeded to play 8-5 bonus poker at low stakes and gradually moving up as needed to keep my return as even as possible. I would even call it a martingale clone so to speak. It worked really well and after putting the 800 dollars through the machines I cashed out 775.25.

So instead of paying 240 dollars in tax it cost me 24.75. I was a happy boy!

Early this year I had a video poker tournament win of 5,000 dollars and had to pay 1,500 in tax. I will try and recover that tax but I am ahead quite a bit at Sams Town so will probably not have any casino loss to put against the tax that was removed. Sams has treated me well this year!

[case]

I forgot to add. There were 40 total envelopes and after we were done they showed the audience there were two 5,000 dollar envelopes.

[onemoretry]

Excellent, well thought out suggestion, and you were appropriately rewarded.

FWIW, I have always been successful in obtaining a full refund of all gambling related US tax withholdings. I have never been asked to substantiate reported losses.

[alpax]

Outstanding story and thanks for sharing another one case! I am not sure if you follow Mr. Dancer's columns on a regular basis, but one advice is to try to ask for free play instead of a cash prize. For USA residents they have to pay a different tax 1099 instead of wager based W2G. Less paperwork and it might be harder to write off 1099 taxes without knowing the laws. You did very well, do not regret the $1500 envelope, this is a better move.

[billryan]

Congrats on a lucky win, and a smart play to collect it.
I don't know how it works in Canada but US residents can use losses anywhere to write off the taxes. It's not limited to the same casino as the winnings.

[onemoretry]

I don't know how it works in Canada .....
Gambling wins in Canada are not considered to be taxable income.

[alpax]

Downside for USA players is the adjusted gross income which may make recreational players ineligible for certain tax breaks despite being able to write off losses is some states.

I learned not too long ago about the high limit slot pool that certain groups of people engage in. The person whose card is used is from the UK where there is no tax period when they hit $1200 or more. Perhaps high rollers can benefit from knowing a person from the UK and have them sign a waiver that whatever they played belongs to the right player.

[FloridaPhil]

[quote=case]Since I am a Canadian you must pay tax on any promotional win over 500.[/quote]Even in another country?   I did not know this.  Kind of eliminates the possibility of gaining an edge.  Great choice taking your winnings in free play.   Congrats!

[billryan]

Downside for USA players is the adjusted gross income which may make recreational players ineligible for certain tax breaks despite being able to write off losses is some states.

I learned not too long ago about the high limit slot pool that certain groups of people engage in. The person whose card is used is from the UK where there is no tax period when they hit $1200 or more. Perhaps high rollers can benefit from knowing a person from the UK and have them sign a waiver that whatever they played belongs to the right player.

Avoiding taxes is your right. Evading them is a felony.
Your suggestion is pretty close to the line.

[case]

[quote=case]Since I am a Canadian you must pay tax on any promotional win over 500.Even in another country?   I did not know this.  Kind of eliminates the possibility of gaining an edge.  Great choice taking your winnings in free play.   Congrats![/QUOTE]


Yes to be Canadian we can never be an advantage player in the USA. If I am playing single quarters and see a progressive for say 1350. It is worthless to me as the with holding tax would bring my pay out to 945 dollars. So a normal royal without a progressive is 1000 and no tax. I have had people ask me why I am playing for a normal royal when the bank of machines beside me has a higher progressive. That is the reason.

However we can try to get the tax back but IF we are successful it can take years. I try and keep my wins under the tax threshold but will also gladly take huge win. *L*