Originally Posted by moneyman925
How come when you go to a casino they only tax you when you win a certain amount that is high enough?
First of all, a casino doesn't "tax" you. They might, in some cases where the amount is high enough or state/local regulations require, collect the tax on your behalf and send it to the state/IRS. That has nothing to do with whether the payment is taxable or not.
Also, when another party pays you over $600 in value -- whether it be for gambling winnings, contract work, gifts, or whatever -- and intends to write it off their own taxes as a business expense, they must issue you and the IRS a 1099 for the payment. They can opt to collect the tax themselves on your behalf, but in most cases they will simply report the payment to the IRS on a 1099 and leave it to you to file and pay the tax yourself. If you do get issued a 1099 and don't
report it, you've just raised a red flag on your return that will almost guarantee a follow-up by the IRS if not a full blown audit, because they will already know you were paid from the 1099 issued.
That reporting threshold, however, has absolutely nothing to do with your requirement to report any amount of income.