Having a big night at the casino often comes with a choice: receive all the money as a lump sum, or place the winnings into a long-term payment plan, otherwise known as an annuity. There are significant differences between both options, making it a decision that requires careful thought and attention.
How Can I Receive Payment For My Casino Winnings?
Depending on the amount of your winnings and the casino’s policies, you have two ways to receive your casino winnings:
- Lump Sum - Take the entirety of your casino winnings immediately in one lump sum payout. Deciding on the lump sum means the entire amount is taxable according to income tax law for that calendar year. Casinos may withhold an additional portion of your winnings for processing and other fees, so be sure to talk it over with the casino.
- Annuity - Place the money into an annuity to be distributed to you throughout regular, scheduled payments over an extended period of time. The money is taxed only when it is disbursed, allowing the entire annuity to generate interest over time and to help subsidize tax requirements.
Do All Casinos Offer Annuities?
An exceptionally successful trip to the casino could mean your winnings are subject to various forms of payout per individual casino policies. In some cases, you will have more control over the payout method than others.
● Almost all games allow for a lump sum payout.
● Large sums of cash won from certain games often require an annuity.
● Whether or not you have a choice between a lump sum and an annuity for your payout largely depends on the casino, the games won, and the amount of the winnings.
Check with the casino to verify your options if a significant amount of money has been won by playing a particular game.
Are My Casino Winnings Taxable?
Casino winnings are taxable like any other form of income. Depending on the amount of the winnings and the particular games played, you will need to take note of the following regulatory standards:
● If a lump sum payout exceeds $5,000, it becomes subject to income tax and may move winners into a higher tax bracket. Individual state taxes could also apply. It is important to check with your state for regulations and policies regarding the taxation of casino winnings.
● The IRS withholds additional taxes for gambling winnings. A W2-G tax form is required when filing your taxes for the year if your winnings surpass these minimum thresholds:
○ $5,000 in poker tournament winnings
○ $1,500 in Keno winnings.
○ $1,200 in slot machine or bingo winnings.
○ $600 at a horse track, if your winnings are 300 times your bet or more.
Casinos typically withhold up to 25% of winnings if the amount exceeds these thresholds
Important: You should consult with a professional tax advisor for tax advice or information related to your specific circumstances.
Lump Sums vs. Annuities for Casino Winnings
Taking a lump sum payout or placing your casino winnings into a structured annuity both result in a payout of the amount you won, but there are significant differences in how the money is dispersed.
● Choosing an annuity allows you to receive the entire amount in the form of parceled payments while it generates interest over the life of the annuity.
● Annuity recipients are taxed on each scheduled payment based on income tax policies at the time of disbursement.
● Choosing a lump sum payout means the entire amount of your payout will be taxed once, and only once, at the time of disbursement.
Can I Sell My Annuity Payments From Casino Winnings?
If certain criteria are met, annuity payments from casino winnings can be sold. If you intend to sell your annuity payments, you must follow these steps:
- Reach out to a Peachtree Financial Solutions Representative
- Request a Quote for Your Annuity Payment Sale
- Accept and Agree to the Lump Sum Offer for Your Annuity Payments
- Get Court Approval for the Transaction (depending on your state)
- Receive a Lump Sum in the Amount Agreed Upon.
Get a Quote
If you intend to sell annuity payments from your casino winnings, or you want to learn about other payment purchasing options offered by Peachtree Financial Solutions, such as selling lottery payments and other forms of structured settlements, please contact us today. We offer a free, no-obligation quote for selling annuity payments of any kind.