All gambling winnings by U.S. citizens, regardless of where they take place, are considered taxable income and legally must be reported as such to the Internal Revenue Service. In some instances of gambling winnings, a casino, cruise ship or gambling hall will request to see your identification, including your Social Security number, and issue you paperwork that you are to submit to the IRS. In other instances, such as winnings from cruise ship table games that do not exceed a certain level, no paperwork will be issued, and it is considered the citizen's responsibility to report his winnings as income on his federal tax return.
Jackpots and Form W-2G
If an individual wins in excess of $1,200 in a single payout or wins a table game payout with odds of 300-to-1 or more, a legally operated gaming facility is required to issue that person IRS Form W-2G. The winner will be asked to provide details for the form including his name, Social Security number, address, age and photo identification. One copy of the completed form will be sent to the IRS and another copy will be given to the winner. The winner is required to use the form to report gambling winnings on his taxes using Form 1040.
Reporting Gambling Winnings on Form 1040
All money won on a cruise ship, even winnings that are less than $1,200 and do not require issuing a Form W-2G, must still be reported by the individual taxpayer using IRS Form 1040. This includes money won from table games such as blackjack, baccarat, roulette, craps and poker, as well as bingo and keno wins, race and sports betting and slot machine winnings.
Cruise Casino Reporting Exceptions
Cruise casinos are not legally required to issue a Form W-2G on gambling wins that result from jackpots of less than $1,200 or on bingo or keno wins of less than $600. Casinos rarely report table game wins because the amount of money wagered, won or lost is difficult to track when players move from table to table. Casinos are required to comply with anti-money laundering efforts by making IRS reports on cash transactions of more than $10,000 made in a single day by a single individual.
Some cruise casinos will give you the opportunity to have taxes deducted from your winnings on the spot, while others give you the option of taking your full winnings and paying your own taxes later. Income tax on gambling winnings is 25 percent if you provide the payer with your Social Security number, or 28 percent if you do not provide Social Security information and later claim the winnings on your own.
Deducting Gambling Losses
You may be able to offset taxes owed on gambling wins on cruise ships by deducting gambling losses. Gambling losses must be documented and itemized to be considered valid, and the amount of losses claimed cannot exceed the dollar amount of reported gambling wins. Gambling losses can be deducted using IRS Form 1040, Schedule A, as a miscellaneous itemized deduction.