Luckyland slots gives you the much-appreciated chance to win Coins prizes by playing for free, and this is undoubtedly the dream scenario for most players. But in practice, what if you actually redeem a big amount? Are Luckyland slots taxes due on winnings?
Where there is money there are taxes, and this also goes for sweepstakes winnings, which are considered taxable income in many states. However, if your main concern is taxes on your last big jackpot, the situation is not so bad after all. Keep reading, we’ll dive into the most overlooked and least exciting aspect of winnings: taxes!
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Real Prize Highlights
- Free Sweeps Coins: 100,000 Gold Coins and 2 free Sweeps Coins
- Ongoing promotions
- Wide variety of game categories
Let’s debunk a myth
It is a common misconception that, since they are obtained “for free”, sweepstakes winning are exempt by taxes, but this is by no means the case.
In our
Luckyland slots review
we cover the topic more in depth, but to avoid possible confusions, we must briefly remind ourselves the difference between the two kinds of virtual currencies used by Luckyland Slots and other Social casinos:
- Gold Sweeps Coins: this kind of token holds no monetary value, therefore it is not redeemable for Coins and cannot generate any taxable income.
- Sweep Coins: this virtual currency is potentially redeemable, thus Sweep Coins winnings can count as taxable income, once redeemed for Coins prizes.
As long as you play with Gold Coins, you are playing for fun, and your winnings have no monetary value. But if you use Sweep Coins, taxes might be due on your Luckyland slots winning once you redeem it. In fact, Coins prizes count as taxable income for both federal and state tax purposes, even though there might be exceptions, depending on the state in which you are a resident.
Does the amount matter?
If your redeemed Coins prize meets or exceeds $600, the sweepstake operator needs to notify you and the IRS by reporting the amount on a Form 1099-MISC. If, on the other hand, you are in a position to redeem Sweep Coins for a value of $5000 or more, the operator is required to withhold 25% of the value for federal taxes. An additional amount may also be required to pay state taxes, but this depends on the specific law in each state.
Keep track of winnings
So far we have only talked about numbers three digits and up, but that does not mean you are exempt from paying taxes on small winnings. Regardless of the amount, any winnings must be reported to the IRS, adding them up with your overall income. The easiest way to do this is to regularly keep track of winnings, so that you have the information ready for when tax time comes. Remember to note all the relevant details about your winnings, such as the:
- Amount you won
- Operator
- Date of winning
- Type of winning (Coins prize, gift card, etc.)
In fact, not only you are obliged to declare your winnings regardless of the amount, but also regardless of the kind of prize you receive: whether it is in form of Coins prize, gift card or merchandise, the IRS wants to know about it.
How will my winning impact my tax bill?
All the
Luckyland slots winners
should be aware that sweepstakes prizes are taxed as ordinary income, simply adding them to your regular income, but how much taxes you will pay on that depends on many factors.
Regarding federal taxes, the percentage due depends on the federal tax brackets you fall in. Since the brackets are progressive, you will pay different tax rates on the different portions of your winning. This also means that the tax rates you will need to pay on your prize will depend on your original income, too.
On the other hand, as far as state taxes are concerned, it all depends on which state you are a resident, because laws vary from state to state, and some states do not require you to pay any tax on your sweepstakes winnings. However, since Luckyland slots is not responsible for any taxes or fees associated with a prize redemption, the best course of action is always to contact a tax advisor, to find out which taxes apply to your specific situation.
To conclude
If you’ve won some prizes, don’t let the thrill of victory make you overlook your tax obligations: regardless of the amount, undeclared winnings risk running you into hefty sanctions. While your winnings will certainly increase your tax bill, this inconvenience is not worth the risk of a fine.
Anyway, you know the saying: be careful what you wish for, because you just might get it. So, if you hit a big jackpot, be prepared to pay your dues with the government.
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Luckyland Slot taxes FAQ:
💰 Do you pay taxes on Luckyland slots?
There are two kinds of winnings in the Luckyland slots platform. You can either win playing with Gold Coins, or with Sweep Coins. In this article we will explore the differences between these two virtual currencies that determine if your Luckyland slots winnings are taxable or not.
🚨 Does Luckyland slots report to the IRS?
For any win of 600$ or more any sweepstake operator is required to fill in the amount in a Form 1099-MISC, while for wins of $5000 or more, the operator must withhold 25% of the value for federal taxes. To find out more check out our guides.
🎁 Do I need to pay taxes on gift cards?
Contrary to what you might think, not only big winnings in Coins prizes need to be declared to the IRS. Check out our guides to discover the details about gift card taxes.
