As of last Wednesday (March 5th) the tax law on Poker winnings is officially in effect. The IRS has forced casinos to report tournament winnings. This will make it easier for the IRS to check whether players actually report their own winnings, which they were already legally obliged to do.

Players that have won more than $5,000 are automatically reported to the IRS by the casinos. Players that have won amounts above this critical $5,000 must give their tax information to the casinos so their winnings can be subjected to a 25% tax-rate.  If players refuse to give the casinos their tax information, the casino is obliged by law to withhold 28% of the winnings for tax payment.

Players must also supply the tournament sponsors with their taxpayer identification number (usually their Social Security number). If a player fails to do so, again the tournament is required to withhold 28% of the winnings for taxes.

IRS does remind tournament winners that they are still, as they’ve been for years, required by law to report their winnings on their federal income tax returns.