50 cent wagers and taxes/W-2G confusion

[SansuiSC]

Playing 50 cent pick 4's and pick 5's are regular shots I take. Spreading around, my cost can be as high as $40 per wager and as low as a few dollars.

I have hit quite often and never a W-2G on what would be taxable on a $2 wager. I've collected about $200-$400 often.

All of a sudden I get 2 W-2G's for a pick 5 I hit and it paid $320 for 50 cents.
I had one ticket that cost $4.50 and another that I went deeper and cost $14.00

I realize that the $2 payout is taxable at $1280. Winnings from Identical wagers was not marked off on the forms. (I know if over $600 payout a W-2g is cut) This was clearly 2 separate transactions.

I have had situations like this before and never received any forms at the 50 cent level. The only time I have gotten W-2G's is if I hit supers or the pick 6 when I play and payouts were +$600.

It's confusing to say the least because many times I have hit where the winning wager was 300 times the amount but at the 50 cent level.

Why now? What's different? :confused:

[Stillriledup]

I'm pretty sure you have to cash for 600 bucks for it to trigger a "Signer". As far as an ADW "manufacturing" signers that aren't really signers, that's a question for someone who works for an ADW.

[dirty moose]

Someone posted recently that the ADW's group tickets on the same race together. So in effect you collected over the $600 limit. Let me see if I can find the thread.

[Stillriledup]

Playing 50 cent pick 4's and pick 5's are regular shots I take. Spreading around, my cost can be as high as $40 per wager and as low as a few dollars.

I have hit quite often and never a W-2G on what would be taxable on a $2 wager. I've collected about $200-$400 often.

All of a sudden I get 2 W-2G's for a pick 5 I hit and it paid $320 for 50 cents.
I had one ticket that cost $4.50 and another that I went deeper and cost $14.00

I realize that the $2 payout is taxable at $1280. Winnings from Identical wagers was not marked off on the forms. (I know if over $600 payout a W-2g is cut) This was clearly 2 separate transactions.

I have had situations like this before and never received any forms at the 50 cent level. The only time I have gotten W-2G's is if I hit supers or the pick 6 when I play and payouts were +$600.

It's confusing to say the least because many times I have hit where the winning wager was 300 times the amount but at the 50 cent level.

Why now? What's different? :confused:

Actually, if you have a 2 dollar pick 5 and it pays 600 for 2 bucks, its a signer becuase its on the same ticket. If you have them as split tickets, they're not signers unless the ADW decides they're a signer.

So, if they "Aggregate" the signers, they are tickets that didn't "register" as signers in their system, they're just doing it so THEY don't get tagged by big brother, they could care less about your tax liabilities but the question remains, if the govt doesn't have a "Record" of this signer, you could be doing your taxes wrong...its a tricky issue, especially if the ADW didn't catch all the aggregates.

[horses4courses]

There seems to be a lot of confusion in this thread.

I believe that it's pretty simple, although I don't work for an ADW.

Copied from the IRS W-2G form:

Horse Racing, Dog Racing, Jai Alai, and Other
Wagering Transactions Not Discussed Later
File Form W-2G for every person to whom you pay $600 or more
in gambling winnings if the winnings are at least 300 times the
amount of the wager. If the person presenting the ticket for
payment is the sole owner of the ticket, complete Form W-2G
showing the name, address, and TIN of the winner. If regular
gambling withholding is required, the winner must sign Form
W-2G, under penalties of perjury, stating that he or she is the
sole owner and that the information listed on the form is correct.
If more than one person shares in the winnings from a single
wager,

25% is going to be directly withheld if you cash for $5K,
or more, provided your payoff is at least 300-1.

That is straight forward, and there is no conspiracy against the bettor.

I can see where ADW's are obliged to report multiple bets of the same type
paying in excess of 300-1 by the same customer that,
when combined, would have brought him/her over the $600 threshold.
That is why I sometimes split wagers between different ADWs,
if I think I can avoid a signer by doing so.

They cannot aggregate different types of wagers on the same race,
and suddenly declare you tax liable because you won over $600,
or $5K, for that matter.

ADWs must operate under the same rules as racetracks and OTBs.
They can't make up the rules to suit themselves.

It amazes me how some people ever bother to bet,
when they have so little faith in, and knowledge of, what they're doing.

[taxicab]

All of a sudden I get 2 W-2G's for a pick 5 I hit and it paid $320 for 50 cents.
I had one ticket that cost $4.50 and another that I went deeper and cost $14.00


If your ADW sent you a signer for $320 that's their mistake(unless you live in a state with terrible laws for punters).
The size of the ticket ($4.50/$14.00) doesn't matter.

[OTM Al]

If your ADW sent you a signer for $320 that's their mistake(unless you live in a state with terrible laws for punters).
The size of the ticket ($4.50/$14.00) doesn't matter.

It is not a mistake. His ADW sent him this for a $1 bet that paid $640. He had 2 50 cent tickets which in total paid over $600. They are considered like bets and are grouped. If he had only one ticket, he would not have had to do a W-2G as the $600 threshold was not met. If he had 4 tickets that each paid over $150, he would have had to do a W2-G. This is what players need to understand about ADWs and small denomination bets.

[SansuiSC]

It is not a mistake. His ADW sent him this for a $1 bet that paid $640. He had 2 50 cent tickets which in total paid over $600. They are considered like bets and are grouped. If he had only one ticket, he would not have had to do a W-2G as the $600 threshold was not met. If he had 4 tickets that each paid over $150, he would have had to do a W2-G. This is what players need to understand about ADWs and small denomination bets.
It thought of that. In my OP I stated "Winnings from Identical wagers was not marked off," not that they have to mark it but I do understand that its a possibility what you say is correct.

I am not stupid, I have been at this game for over 40 years and have had plenty of signers throughout the years. I am current on all the laws. I keep books to the penny on my wagers with the two ADW's I deal with. I have signers every year.

It's just not consistent in how it triggers a W-2G on these 50 cent wagers and confusing to say the least. That's why I am asking the questions: Why now? What's different? If "Identical Wagers" box was marked, I would not pose the question understanding I was paid over $600 on the race.

This can happen to anyone, so perhaps the next guy that has this situation can search here and see an adequate answer.

[OTM Al]

It thought of that. In my OP I stated "Winnings from Identical wagers was not marked off," not that they have to mark it but I do understand that its a possibility what you say is correct.

I am not stupid, I have been at this game for over 40 years and have had plenty of signers throughout the years. I am current on all the laws. I keep books to the penny on my wagers with the two ADW's I deal with. I have signers every year.

It's just not consistent in how it triggers a W-2G on these 50 cent wagers and confusing to say the least. That's why I am asking the questions: Why now? What's different? If "Identical Wagers" box was marked, I would not pose the question understanding I was paid over $600 on the race.

This can happen to anyone, so perhaps the next guy that has this situation can search here and see an adequate answer.

When this first happened to me I was using NYRA Rewards and I knew the guy that was in charge of it so I asked him. I had 2 $1 P4 winners on "different" tickets, each that paid a little over $400. He explained to me for the purpose of payoffs the winning wagers were considered like wagers so the ADW was required to issue the W2-G as I had gotten over 300-1 and a greater than $600 payoff. He said all ADWs are required to do this and in fact tracks are supposed to do this as well with paper tickets.

I am also aware that not all ADWs have been following this law. Perhaps yours was not and got caught. I don't know. But if I were you, just count yourself lucky that you didn't have to pay in the past as you were supposed to.

And if you are still confused, just call your ADW. They should explain it to you.

[RunForTheRoses]

It is not a mistake. His ADW sent him this for a $1 bet that paid $640. He had 2 50 cent tickets which in total paid over $600. They are considered like bets and are grouped. If he had only one ticket, he would not have had to do a W-2G as the $600 threshold was not met. If he had 4 tickets that each paid over $150, he would have had to do a W2-G. This is what players need to understand about ADWs and small denomination bets.

This is the correct answer. The ADW has to group in such an obvious situation.

[horses4courses]

Here's an interesting parallel, though.

You're playing at your local track, or OTB.
You play a PK4 ticket for 50 cents and, when the ticket prints,
you decide to repeat the wager. Happens all the time.
50 cent horizontal wagers, 10 cent supers - you name it.

You hit your PK4, and each ticket is paying $302.50 for 50 cents.
Up you go to cash the ticket. Teller puts it in - pop - no signer.
You give teller the second ticket - same again.
Total payout $605, right? Nothing to sign, right?

That gives tracks and OTBs an unfair advantage, does it not?
ADWs are required to play by a different set of rules.
Not fair to the ADW player. :ThmbDown:

[OTM Al]

Here's an interesting parallel, though.

You're playing at your local track, or OTB.
You play a PK4 ticket for 50 cents and, when the ticket prints,
you decide to repeat the wager. Happens all the time.
50 cent horizontal wagers, 10 cent supers - you name it.

You hit your PK4, and each ticket is paying $302.50 for 50 cents.
Up you go to cash the ticket. Teller puts it in - pop - no signer.
You give teller the second ticket - same again.
Total payout $605, right? Nothing to sign, right?

That gives tracks and OTBs an unfair advantage, does it not?
ADWs are required to play by a different set of rules.
Not fair to the ADW player. :ThmbDown:

You missed what I said before. They are supposed to do this with paper tickets as well but best I can tell, almost never do. Of course that would likely change if people get all these software improvements they seem to want.

[RunForTheRoses]

Here's an interesting parallel, though.

You're playing at your local track, or OTB.
You play a PK4 ticket for 50 cents and, when the ticket prints,
you decide to repeat the wager. Happens all the time.
50 cent horizontal wagers, 10 cent supers - you name it.

You hit your PK4, and each ticket is paying $302.50 for 50 cents.
Up you go to cash the ticket. Teller puts it in - pop - no signer.
You give teller the second ticket - same again.
Total payout $605, right? Nothing to sign, right?

That gives tracks and OTBs an unfair advantage, does it not?
ADWs are required to play by a different set of rules.
Not fair to the ADW player. :ThmbDown:

Technically, the Teller is supposed to group, I doubt if many do. If I was in that situation I would cash one and wait and later cash with a different teller. I wonder what would happen if you put them in a self machine.
I think tracks and OTB/OTWs are getting stricter. I cashed a signer at Belmont about five years ago and at my local OTB within the last 2 years and was pretty much treated like a criminal. SS card was required, no exceptions. Years ago thT was not the case. At Belmont I had to stand at a DMV type line and get my picture taken.

[wisconsin]

Now, the OTB at the casino I play at has to go off in secret and enter my signer and info into a computer with a fancy dancy printout. Takes like 10 minutes.

On Derby day last year I had a signer and waited almost an hour for my money because they had to enter so many at the same time onto one computer. Not a fan of being apart from my SS card and DL at the same time...


Way faster to fill out the little slip they used to fill out.

[taxicab]

You guys have it rough.
It must be the State or ADW's call.
I wager in Calif. and never had two .50 tickets that paid between $300 & $600 added together (if you will) to push my wager into a W2G signer through my ADW's(and certainly not at the track).
The ADW's I use are TVG/Twin Spires.
Looking at the post H4C put up in message #5, the IRS makes it sound like there should be no signers/W2G unless one ticket cracks $602,no matter what amount the bet is......that's how TVG/TS has handled my "repeat buttons" 600-1 winners since .50 tickets have been in play.
I would think .10 tickets fall under the same umbrella.
Note: I've had two identical tickets pay over 5k combined and not had withholding removed on the spot at both TVG & Twin Spires,so that's consistent with how they handle the 50 cent tickets with smaller payoffs.
I'm thinking SRU has it right in the first part of message #4......it's all the ADW's call.

[affirmedny]

Playing 50 cent pick 4's and pick 5's are regular shots I take. Spreading around, my cost can be as high as $40 per wager and as low as a few dollars.

I have hit quite often and never a W-2G on what would be taxable on a $2 wager. I've collected about $200-$400 often.

All of a sudden I get 2 W-2G's for a pick 5 I hit and it paid $320 for 50 cents.
I had one ticket that cost $4.50 and another that I went deeper and cost $14.00

I realize that the $2 payout is taxable at $1280. Winnings from Identical wagers was not marked off on the forms. (I know if over $600 payout a W-2g is cut) This was clearly 2 separate transactions.

I have had situations like this before and never received any forms at the 50 cent level. The only time I have gotten W-2G's is if I hit supers or the pick 6 when I play and payouts were +$600.

It's confusing to say the least because many times I have hit where the winning wager was 300 times the amount but at the 50 cent level.

Why now? What's different? :confused:

NYRA Rewards is the only ADW that I've ever heard does this, is that who you use?

[OTM Al]

You guys have it rough.
It must be the State or ADW's call.
I wager in Calif. and never had two .50 tickets that paid between $300 & $600 added together (if you will) to push my wager into a W2G signer through my ADW's(and certainly not at the track).
The ADW's I use are TVG/Twin Spires.
Looking at the post H4C put up in message #5, the IRS makes it sound like there should be no signers/W2G unless one ticket cracks $602,no matter what amount the bet is......that's how TVG/TS has handled my "repeat buttons" 600-1 winners since .50 tickets have been in play.
I would think .10 tickets fall under the same umbrella.
Note: I've had two identical tickets pay over 5k combined and not had withholding removed on the spot at both TVG & Twin Spires,so that's consistent with how they handle the 50 cent tickets with smaller payoffs.
I'm thinking SRU has it right in the first part of message #4......it's all the ADW's call.

The ADW or OTB may be making the call, but it is federal law, not state law. They are making an interpretation, which may be wrong and you may end up paying for it.

[taxicab]

The ADW or OTB may be making the call, but it is federal law, not state law. They are making an interpretation, which may be wrong and you may end up paying for it.
You kind of spooked me here Al.
Here's what I did.
I checked the TVG website and it said $600 or more is the cutoff for a WG2.
Then I checked with my tax accountant and she said .50 bets(also .10/.20) aren't taxable if they pay under $600(which didn't surprise me).
She did say some states have "bundling" laws for identical tickets......could the "bundling" laws be the difference ?
I also noticed on the TVG website that Ariz/Illinois/Mass have slightly(less player friendly)tax laws.
And what's up with Mass ?.......what they do to the player looks criminal.

From the TVG website:

Will my winnings be taxed?

By federal law, any wager which results in proceeds of $600.00 or more must be reported to the Internal Revenue Service (IRS), if the amount of such proceeds is at least 300 times as large as the amount wagered. Any wager which results in proceeds of more than $5000.00 is subject to withholding, if the amount of such proceeds is at least 300 times as large as the amount wagered.

*Arizona Residents Only: By law, any wager, which results in proceeds of more than $5,000.00, is subject to state withholding tax of 5%, if the amount of such proceeds is at least 300 times as large as the amount wagered.

*Illinois Residents Only: By law, any wager, which results in proceeds of more than $5,000.00, is subject to state withholding tax of 3.75%, if the amount of such proceeds is at least 300 times as large as the amount wagered.

*Massachusetts Residents Only: By law, any wager that results in proceeds of $600.00 or more are subject to State Withholding Tax of 5%.

[1GCFAN]

I too received a grouping W2G using NYRA Rewards on track. I am almost positive I received a grouped W2G from Twin Spires. Also, if you use a player card in Vegas you may be subject to grouping. I don't get many W2G's, so I tend to remember.

[taxicab]

Express Bet Tax Requirements:

Tax Requirements
According to IRS requirements, Xpressbet must report all gambling winnings in the amount of $600 or more if such winnings are at least 300 times the amount of a single wager. Winnings of more than $5,000 from a wagering transaction are subject to federal income tax withholding and Xpressbet must withhold 25% of the payoff. These winnings are reported to the IRS electronically. There are no exceptions to these requirements.

[OTM Al]

You kind of spooked me here Al.
Here's what I did.
I checked the TVG website and it said $600 or more is the cutoff for a WG2.
Then I checked with my tax accountant and she said .50 bets(also .10/.20) aren't taxable if they pay under $600(which didn't surprise me).
She did say some states have "bundling" laws for identical tickets......could the "bundling" laws be the difference ?
I also noticed on the TVG website that Ariz/Illinois/Mass have slightly(less player friendly)tax laws.
And what's up with Mass ?.......what they do to the player looks criminal.

From the TVG website:

Will my winnings be taxed?

By federal law, any wager which results in proceeds of $600.00 or more must be reported to the Internal Revenue Service (IRS), if the amount of such proceeds is at least 300 times as large as the amount wagered. Any wager which results in proceeds of more than $5000.00 is subject to withholding, if the amount of such proceeds is at least 300 times as large as the amount wagered.

*Arizona Residents Only: By law, any wager, which results in proceeds of more than $5,000.00, is subject to state withholding tax of 5%, if the amount of such proceeds is at least 300 times as large as the amount wagered.

*Illinois Residents Only: By law, any wager, which results in proceeds of more than $5,000.00, is subject to state withholding tax of 3.75%, if the amount of such proceeds is at least 300 times as large as the amount wagered.

*Massachusetts Residents Only: By law, any wager that results in proceeds of $600.00 or more are subject to State Withholding Tax of 5%.

What you have here is correct but what isn't here is a definition for what constitutes a wager. Bundling, as it is called here, says a wager is the total amount bet on a specific outcome rather than an individual bet. In your case the full dollar rather than two individual bets. I do not believe though that bundling can be determined by a state for a W2-G as that is a federal tax document. Some states may cite it better than others though.

[taxicab]

Twin Spires :

TAX REPORTING AND WITHHOLDING

In keeping with all Federal Tax Laws set forth by the Internal Revenue Service (IRS), any wager that results in winnings of $600.00 will be reported to the IRS, if the amount of winnings is at least 300 times the original amount wagered. Any wager resulting in winnings over $5,000.00, is subject to reporting and withholding if the amount of winnings is at least 300 times the original amount wagered. When required, twinspires.com will report and withhold winnings. A Form W2-G will be sent to the account holder summarizing such activity.

[taxicab]

What you have here is correct but what isn't here is a definition for what constitutes a wager. Bundling, as it is called here, says a wager is the total amount bet on a specific outcome rather than an individual bet. In your case the full dollar rather than two individual bets. I do not believe though that bundling can be determined by a state for a W2-G as that is a federal tax document. Some states may cite it better than others though.

Thanks Al.
Appreciate the time. :ThmbUp:

[AndyC]

You kind of spooked me here Al.
Here's what I did.
I checked the TVG website and it said $600 or more is the cutoff for a WG2.
Then I checked with my tax accountant and she said .50 bets(also .10/.20) aren't taxable if they pay under $600(which didn't surprise me).
She did say some states have "bundling" laws for identical tickets......could the "bundling" laws be the difference ?
I also noticed on the TVG website that Ariz/Illinois/Mass have slightly(less player friendly)tax laws.
And what's up with Mass ?.......what they do to the player looks criminal.

From the TVG website:

Will my winnings be taxed?

By federal law, any wager which results in proceeds of $600.00 or more must be reported to the Internal Revenue Service (IRS), if the amount of such proceeds is at least 300 times as large as the amount wagered. Any wager which results in proceeds of more than $5000.00 is subject to withholding, if the amount of such proceeds is at least 300 times as large as the amount wagered.

*Arizona Residents Only: By law, any wager, which results in proceeds of more than $5,000.00, is subject to state withholding tax of 5%, if the amount of such proceeds is at least 300 times as large as the amount wagered.

*Illinois Residents Only: By law, any wager, which results in proceeds of more than $5,000.00, is subject to state withholding tax of 3.75%, if the amount of such proceeds is at least 300 times as large as the amount wagered.

*Massachusetts Residents Only: By law, any wager that results in proceeds of $600.00 or more are subject to State Withholding Tax of 5%.

Bundling laws are Federal laws, not state laws. Winnings under the $600 threshhold ARE taxable, just not reportable which for 99.9% of bettors means nontaxable. See IRC Section 3402(q) and regulations thereunder for rules and requirements.

What struck me reading through the regulations is that winnings for all other types of gambling except pari-mutuel wagering is calculated by taking the amount won less the amount bet. In pari-mutuel wagering the gross is considered your winnings. Makes no sense that there would be such an exception.