Gaming Loyalty Programs - Calling Tax Experts

So I had a very profitable Saturday night at the Lumiere in downtown St Louis, coming home with a couple of w2-g's (slot hit and VP hit).

Missouri withheld 4% of the winnings. Can I get this money back? I'm assuming that my home state will think this income is theirs as well.

Anyone run into this before? Nevada wins are so much simpler! :)

What is your home state?

As ORDflyer is saying, it really depends on your state of residence. As a general rule, you should file a tax return with Missouri as a non-resident and fix your Missouri income tax liability. (With personal exemptions and/or other allowable deductions, you may get all tax refunded by filing Missouri non-resident tax return.) And then, if you still have to pay tax or not all tax were refunded, you file your home state tax return. Generally speaking, most states allows you to take tax credit against your home state income tax liability for the amount of income tax you end up paying to Missouri. Most states allows this type of credit although some state may not allow this. If you are using CPAs preparing tax returns, they should know how. If not, throughly read instructions for state tax returns for Missouri and your home state.

What is your home state?

Indiana. Thanks for the replies so far! ^

Not an expert, but I think you also need to start rounding up your gambling loss statements from anywhere you played this year. Isn't that the only legitimate way to "offset" gambling winnings on your tax return?

Also, congrats on the wins!

Unless i am misreading, the 4% Missouri tax is non-refundable. Filing a non-resident return won't help you. Indiana will give you a credit up to the Indiana tax on the same income. Indiana will not allow a deduction for gambling losses. This is because the Indiana tax is based on your federal adjusted gross income.

For Federal purposes you may deduct gambling losses on Schedule A as an itemized deduction. This may or may not be of help to you depending on your income level and the amount of other deductions you have.

Unless i am misreading, the 4% Missouri tax is non-refundable. Filing a non-resident return won't help you. Indiana will give you a credit up to the Indiana tax on the same income. Indiana will not allow a deduction for gambling losses. This is because the Indiana tax is based on your federal adjusted gross income.

For Federal purposes you may deduct gambling losses on Schedule A as an itemized deduction. This may or may not be of help to you depending on your income level and the amount of other deductions you have.

That's what I figured. I've got the losses for schedule "A" down, just wasn't sure what to do with the MO tax. Thanks!

Unless i am misreading, the 4% Missouri tax is non-refundable. Filing a non-resident return won't help you. Indiana will give you a credit up to the Indiana tax on the same income. Indiana will not allow a deduction for gambling losses. This is because the Indiana tax is based on your federal adjusted gross income.

the 4% Missouri withholding tax can be refundable. The only reason the State of Missouri withhold tax is to enforce a person with Missouri source income to properly file tax return with the State of Missouri. See the Missouri state income tax return yourself.

http://dor.mo.gov/tax/personal/individual/forms/2008/m1040f.pdf
http://dor.mo.gov/tax/personal/individual/forms/2008/monri.pdf

Non-residents of Missouri are only taxed on Missouri source income (i.e., gamble winnings), and he is entitled to an income exemption of $2,100 if single, or $4,200 if married. On top of that, he is entitled to deduct standard deduction of $5,450 if single, or $10,900 if married. In other words, if his gamble winnings is less than $7,550 ($2,100+$5,450) if single, or $15,100 ($4,200+$10,900), then his taxable income in Missouri is $0, and, thus his tax to be reported on Line 31 of the tax return form should also be $0.

His 4% withholding tax can be reported on Line 32 (Missouri tax withheld). Since the tax withheld at 4% was more than $0 tax, the excess can be reported on Line 46 as overpayment subject to refund.

I hope you understand the concept.

Gambling losses do seem to be deductible in MO so I bow to tsuruke.
However, if the IN rate is 4% or more the credit for MO tax comes out in the same place as filing and getting a refund in MO. It is unlikely that IN would question the credit, but they could I suppose. In IN the gambling withholding on w2g's is non-refundable to non-residents.

The point is not the deductibility of gambling losses against gambling winnings. The point is that, by filing non-resident tax return, you can "fix" the amount of tax liability in that state. You said, "In IN, the gambling withholding on w2g is non refundable to non residents," but, looking at Indiana's non-resident form IT-40PNR, non-resident's gambling winning is generally taxed on the following formula assuming he/she has no other income in Indiana:

(Gambling Winnings $xxxx less Exemption ($1,000 x # of family member)) x 3.4%

If he/she has a family of three, his gambling winnings in Indiana will be taxed against only a portion in excess of $3,000. If his gambling winning was $5,000, only $2,000 will be taxed at the rate of 3.4% ($68). If his gambling winning was less than $3,000, there will be no tax. And, the difference between tax withheld and the tax calculated on the tax return can be refunded by filing these pieces of paper with Indiana Department of Revenue.

Although this discussion is irrevant to skofarrell because he is a resident of Indiana, I thought it is good academic exercise. :)

I appreciate your help guys. Going to work it through turbotax in the spring and will let you know.

I haven't done the gambling loss vs. win tax thing (since I haven't had enough winnings for it to matter yet).

...but I was reading a tax book for gambling which compared
a) Non-professional gambling: Losses on Schedule A (where you have to compare with standard deduction)
b) Professional gambling: Schedule C, where you pay Social security taxes, but you can subtract more expenses.

Can any more-experienced people here comment?

Thanks everyone!

The website bj21.com will give you the info you need if you look at the archives and the Law & Taxes forum. Your question is a bit too big to answer here.