A CP 2000 is a letter from the IRS notifying you in the case where their figure of your income doesn’t match your reported income on your return. This can be for any number of reasons, as we break down clearly for you in our post on the IRS CP 2000. In this post, we will go over how to deal with a CP 2000 when gambling winnings factors into the equation.
In the likely scenario of receiving a gambling-related CP 2000, you had a gambling win which the casino was required to report. This can be anything over:
- $500 – poker
- $1200 – slot machines, bingo
- $1500 – Keno
- $5000 – sweepstakes, wagering pools, and lotteries
- a significant non-cash prize (car, vacation, condo, etc.)
Check with the attendant at whichever gambling venue applies, and with the IRS article on gambling winnings. Certain table games, such as Blackjack, Craps, and Roulette, are classified as games of skill rather than chance, so the casino isn’t required to figure the withholding on those.
What to do if you get a CP 2000:
The key here is to always use a player’s card for machine gaming at a casino. Remember that your taxes are figured by the year. So it doesn’t matter if you won $999,000, if you can also prove that you lost $999,001, no taxes are due. Any amount that you have won, if you can prove that your total losses for the year are that much (or more), you’re good to go!
This counts across all gambling activity too. Horse races, poker games, slots at different casinos, even the nickel you dropped into a Stars ‘n’ Bars machine at the laundromat.
Then get (or have a professional file for you) an amended return with your profits and losses. Write “CP 2000” across the top of the amended return and file it. As long as they believe you and process it, your taxes from gambling wins are zero.
Naturally, if you hit the big one and won far more than you spent and stopped there for the year, you do still have tax liability on the balance. See the IRS details for tracking your activity with a gambling diary.
Need help? Speak to an expert tax attorney or check out our help guide
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