Tuesday, June 2, was the deadline to submit comments to the IRS about its proposal to lower the W-2G threshold on slot jackpots to $600. The following is the comment I submitted.
I am writing to express my objections to the proposal to lower the W-2G threshold on Electronic Gaming Devices (EGD) to $600.
The current system is inherently unfair to EGD players. First, we are treated like second class citizens as compared with table game players. Table game players are trusted to keep their own records. EGD players, on the other hand, are subjected to a "trust but verify" situation with the W-2G. Moreover, if a table games player wins $1200 on a bet, why shouldn't he also get a W-2G?
Second, the way results are reported on a tax return is unfair. On Schedules C, D and E, net income is copied to Form 1040. Gambling results, conversely, are reported in a two-step process. Winning sessions are reported on Form 1040 and losing sessions are reported as a miscellaneous deduction on Schedule A. I know of no other activity that is subject to this bifurcation.
The amount reported on Form 1040 is included in the filer's AGI, possibly affecting the player's Social Security, Medicare and health insurance premiums, and eligibility for certain deductions. I'm all in favor of people who earn more money paying more, but the gambler affected by an increase in AGI may actually have had a loss overall from gambling.
Many players would rather just pay the taxes on their W-2G winnings than keep records in order to be able to deduct losses. Lowering the threshold would subject more filers to a false increase in AGI.
In summary, I object to the proposal to decrease the W-2G threshold because of the unequal treatment given to slot players vis-a-vis table games players and because of the misleading way that gambling wins and losses are reported.
I enjoy your informative articles and pass them along to friends. I'd like to share a story with you and your readers.
Ten or more years ago my wife and I were driving from Las Vegas to visit friends in Los Angeles and, as often the custom, we stopped at Whiskey Pete's Casino-Hotel for food and to use the restroom. When we were getting up to leave, my wife, who has some orthopedic issues, explained she needed a cane or something to make it to the car.
When we came in I had noticed a large number of canes, crutches and walkers up high on a wall behind the security guard. I asked the security guard if they were for sale.
He said, "No, they were left by customers. Did you lose one (wink, wink)?"
I responded, "Yes," and we decided which one it was. I tipped him for his kindness and off we went with a nice-looking cane.
The point of this story is that we all know that a casino is a place where you forget everything that may be bothering you and focus on the game at hand. That, I think, is one of the main attractions.
I submit, however, that a visit to a casino can be as curing as a trip to the Shrine at Lourdes. Think of all those canes, crutches and walkers abandoned at Whisky Pete's. I suspect the same is true for many casinos.
Keep in mind that in clinical trials, placebos have cured many people.
I can't help wondering if someone eventually returned to the casino looking for the cane that you took. I hope the guard would not let you take a recently found cane. After a certain period of time, lost-and-founds either sell, donate or throw out found items. At least the cane you took went to someone who needed it.
A few years ago I used a cane to help me get around after twisting my knee falling down the stairs in an accident involving a Costco pepperoni pizza and three large baking potatoes. After a while, I only brought the cane when I was going to walk great distances -- like at the airport -- and then only used it if my leg got tired. A few times I almost left the cane at the security checkpoint or on the plane. I can see leaving a cane behind at the casino if one only used it intermittently as I did. It seems like crutches and walkers are constantly needed for mobility and it's hard to believe someone could leave them behind.
Nothing beats the curative powers of the New York City subway. In addition to wallets, handbags, coats, glasses, cellphones and (of course) umbrellas, people have left behind a car bumper, a tuba, a prosthetic leg (You'd think someone would have immediately noticed that was missing!) and -- almost every week -- a set of false teeth.