The first rule is that you must report all winnings, whether the place that you gambled reports them to the government or not. For example, if you hit the trifecta on Derby Day, you must report the winnings as income.
The second rule is that you can't subtract the cost of gambling from your winnings. For example, if you win $620 from a horse race but it cost you $20 to bet, your taxable winnings are $620, not $600 after subtracting your $20 wager.
The general rule is that some States will require you to claim the gambling winnings in the state where they were won. Most states tax all income earned in their state, regardless of your residency. In addition, your resident state will require you to report the winnings but will offer a credit or deduction for the taxes already paid to a non-resident state.
If you received a W-2G for your winnings, a copy was also sent to the state in which the money was won, so they will be expecting you to file a non-resident state return if you meet their minimum requirement for filing.
In the Personal Info section of Turbo Tax, you will indicate you made money in a state other than your resident state. Later, when you enter state information from the W-2G (or winnings, if no W-2G was received), it will generate a non-resident state return, if one is required.
Below are additional rules on Form W-2G
Form W-2G
Both cash and the value of prizes are considered “other income” on your Form 1040. If you score big, you might even receive a Form W-2G reporting your winnings. The tax code requires institutions that offer gambling to issue Forms W-2G if you win:
- $600 or more on a horse race (if the win pays at least 300 times the wager amount);
- $1,200 or more at bingo or on a slot machine;
- $1,500 or more at keno;
- $5,000 or more in a poker tournament.
This doesn’t mean you don’t have to claim the income and pay taxes on it if your winnings aren’t enough to warrant the tax form. It just means that the institution won’t send a Form W-2G.
@billmcse
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