If you are an Illinois resident, and you favor the Indianariverboats, you will probably end up with some new tax filingheadaches. In early 2003, Indiana announced that gambling winnings ofnon-residents at Indiana based establishments are subject to Indianataxes. If you are an Illinois resident this means you will have anIndiana tax filing and a more complicated Illinois tax return. For yourIndiana winnings you will have to report the income on an Indianaincome tax return, and on your Illinois return you can claim a creditfor the Indiana taxes limited to the effective Illinois tax rates.While there are a number of forms and computations involved, the endresult is usually paying a 3.4% Indiana income tax and claiming acredit up to 3% on your Illinois return.
Not filing an Indiana income tax return on your Indiana gamblingwinnings is not a good alternative. Gambling winnings of $1,200 or moreare reported to the IRS, and this information is shared with thestates. The reporting threshold for racetrack winnings is only $600. Ifyou are caught by Indiana you will be subject to interest andpenalties. Also, by the time Indiana assesses you it may be too late tofile a refund claim in Illinois. For both Illinois and Indiana, thereis a three-year statute of limitations for refund claims. However,there is no statute of limitations on assessments if an Indiana taxreturn was never filed, and you may want to file Indiana returns forprior years now as the Indiana Department of Revenue is aggressivelygoing after non-filers from Illinois for prior years.
Indiana's new withholding rules complicate matters. Starting with July2002, Indiana requires withholding income taxes on Indiana gamblingwinnings exceeding $2,500. Unfortunately, you cannot claim the Indianaincome tax withholding on your Illinois tax return as there is noreciprocal agreement between Indiana and Illinois. You will have tofile an Indiana income tax return and then claim a credit for theIndiana taxes on your Illinois income tax return.
Not filing an Indiana income tax return on your Indiana gamblingwinnings is not a good alternative. Gambling winnings of $1,200 or moreare reported to the IRS, and this information is shared with thestates. The reporting threshold for racetrack winnings is only $600. Ifyou are caught by Indiana you will be subject to interest andpenalties. Also, by the time Indiana assesses you it may be too late tofile a refund claim in Illinois. For both Illinois and Indiana, thereis a three-year statute of limitations for refund claims. However,there is no statute of limitations on assessments if an Indiana taxreturn was never filed, and you may want to file Indiana returns forprior years now as the Indiana Department of Revenue is aggressivelygoing after non-filers from Illinois for prior years.
Indiana's new withholding rules complicate matters. Starting with July2002, Indiana requires withholding income taxes on Indiana gamblingwinnings exceeding $2,500. Unfortunately, you cannot claim the Indianaincome tax withholding on your Illinois tax return as there is noreciprocal agreement between Indiana and Illinois. You will have tofile an Indiana income tax return and then claim a credit for theIndiana taxes on your Illinois income tax return.
- Does Indiana Tax Gambling Winnings Due
- Does Indiana Tax Gambling Winnings Rules
- Indiana Taxes
- Indiana Tax Gambling Winnings
Does Indiana Tax Gambling Winnings Due
Does Indiana Tax Gambling Winnings Rules
Indiana Taxes
Indiana Tax Gambling Winnings
Do I have to pay state taxes on lottery winnings if I don’t live in the state where I bought the ticket? Most states don’t withhold taxes when the winner doesn’t reside there. In fact, of the 43 states that participate in multistate lotteries, only two withhold taxes from nonresidents. However, you can also apply the same tax withholding structure for your gambling winnings that you apply to other types of income. The income tax rate is 24% on all types of gambling profits, but there are certain sources of these winnings that are automatically subject to withholding tax. For federal taxes, lottery winnings are taxed according to the federal tax brackets. Federal tax brackets are progressive, so portions of the winnings are taxed at different rates, and could be as high as 37%. State income taxes vary by location. Some states do not have a state income tax, while others may withhold up to 8.82%. You have to file an Indiana return if your income from Indiana sources (including gambling winnings) is more than the amount of your Indiana exemptions. You can find out the amount of your Indiana. Your gambling winnings are generally subject to a flat 24% tax. However, for the following sources listed below, gambling winnings over $5,000 will be subject to income tax withholding: Any sweepstakes, lottery, or wagering pool (this can include payments made to the winner (s) of poker tournaments).