Are Gambling Winnings Taxable In Connecticut

• Are Gambling Winnings Taxable In Connecticut Income Tax
• Are Gambling Winnings Taxable In Connecticut State
• Are Gambling Winnings Taxable In Connecticut Unemployment

This information is not current and is being provided for reference purposes only

IP 2008(13)

Whether gambling winnings are subject to Connecticut income tax depends on whether or not the winner is a Connecticut resident. If the winner is a resident of Connecticut and meets the gross income test, all gambling winnings are subject to Connecticut income tax to the extent includable in the winner’s federal adjusted gross income.

Connecticut Income Tax Treatment of Gambling Winnings Other Than State Lottery Winnings

1. Casino winnings are not taxable in Connecticut if you are a nonresident. No matter what, you report all of your income to your home state of Massachusetts. When allocating income to your Connecticut nonresident return, the gambling may not be allocated to that State. Also, you cannot allocate any ga.
2. I'm having an issue with my 2016 taxes. Originally turbo tax calculated that I owed Ohio approximately $8,000 because of my gambling winnings in Indiana. At the time I was unable to pay for a second state and open a Indiana return. After updating my software yesterday and going to amend my taxes now TurboTax says they don't think I need to file a Indiana return and that I owe Ohio 6000.
3. If the winner is a part-year resident of Connecticut (part-year resident) and meets the gross income test, gambling winnings are subject to Connecticut income tax to the extent includable in the winner s federal adjusted gross income and to the extent received during the residency portion of the winner s taxable year.

This publication has been superseded byIP 2009(36)

Purpose: This Informational Publication answers frequently-asked questions about the Connecticut income tax treatment of gambling winnings other than lottery winnings from state-conducted lotteries (state lottery winnings). Frequently-asked questions about state lottery winnings are answered in Informational Publication 2005(16), Connecticut Income Tax Treatment of State Lottery Winnings Received by Residents and Nonresidents of Connecticut.

Effective Date: Upon issuance.

Statutory Authority: Conn. Gen. Stat. §§12-700 to 12-746.

Definitions

DRS means the Department of Revenue Services.

Are Gambling Winnings Taxable In Connecticut Income Tax

IRS means the Internal Revenue Service.

Gambling winnings means and includes proceeds from a wager placed in a sweepstakes; wagering pool or lottery (other than state-conducted lottery); payments made to winners of poker tournaments on or after March 4, 2008; or proceeds from a wagering transaction (including a wagering transaction in a parimutuel pool with respect to horse races, dog races, or jai alai). Gambling winnings also include door prizes, contest prizes, and prizes from raffles or similar drawings. Gambling winnings do not include state lottery winnings.

1. Are gambling winnings subject to Connecticut income tax?

Whether gambling winnings are subject to Connecticut income tax depends on whether or not the winner is a Connecticut resident.

If the winner is a resident of Connecticut and meets the gross income test, all gambling winnings are subject to Connecticut income tax to the extent includable in the winner’s federal adjusted gross income.

If the winner is a part-year resident of Connecticut and meets the gross income test, gambling winnings are subject to Connecticut income tax to the extent includable in the winner’s federal adjusted gross income and to the extent received during the residency portion of the winner’s taxable year.

If the winner is a nonresident of Connecticut, gambling winnings, whether from gambling in Connecticut or from gambling outside Connecticut, are not subject to Connecticut income tax.

For information on whether an individual is a resident, nonresident, or part-year resident, see the instructions to the Connecticut income tax return for residents (Form CT-1040, Form CT-1040EZ, or Connecticut Telefile Tax Return) or the Connecticut income tax return for nonresidents or part-year residents (Form CT-1040NR/PY).

A winner must file a Connecticut income tax return and report his or her gambling winnings if the winner’s gross income for the 2009 taxable year exceeds:

• $13,500* and the winner is filing single;
• $19,000 and the winner is filing head of household; or
• $24,000 and the winner is filing jointly or qualifying widow(er) with dependent child.

*This amount will be $14,000 for the 2010 taxable year; $14,500 for the 2011 taxable year; and $15,000 for the 2012 and subsequent taxable years.

A winner’s gross income includes all income received in the form of money, goods, property, and services not exempt from federal income tax and any additions required to be reported on Form CT-1040, Schedule 1. Gross income includes but is not limited to compensation for services including wages, fees, commissions, taxable fringe benefits, and similar items; gross income from a business; capital gains; interest and dividends; gross rental income; gambling winnings; alimony; taxable pensions and annuities; prizes and awards; income from partnerships, S corporations, estates, and trusts; individual retirement account distributions; unemployment compensation; and federally taxable Social Security benefits.

If a winner’s gross income does not exceed the applicable gross income threshold and Connecticut income tax has been withheld from his or her gambling winnings, the Connecticut income tax will not be refunded to the winner unless he or she files a Connecticut income tax return.

Are Gambling Winnings Taxable In Connecticut State

2. Are gambling losses deductible?

Gambling losses are not deductible for Connecticut income tax purposes even though, in certain circumstances, they are deductible for federal income tax purposes. Connecticut income tax applies to all gambling winnings included in federal adjusted gross income.

3. May a resident or part-year resident claim a credit against his or her Connecticut income tax for income tax paid to another state on gambling winnings?

No. Neither a resident nor part-year resident is eligible to claim a credit against his or her Connecticut income tax for income tax paid to another state on gambling winnings.

4. Will Connecticut income tax be withheld from gambling winnings?

Connecticut income tax will be withheld from a payment of gambling winnings if all of the following conditions are met:

• The payer maintains an office or transacts business in Connecticut;
• The payment is subject to federal income tax withholding; and
• The payment is made to a resident or to someone receiving the payment on behalf of a resident.

For example, a dog track located within Connecticut must withhold Connecticut income tax from a payment of winnings only if the payment is subject to federal income tax withholding and the payment is made to a resident or to someone receiving the payment on behalf of a resident. Also, if a payer of gambling winnings is a nonprofit organization maintaining an office or carrying on activities in Connecticut, the nonprofit organization must withhold Connecticut income tax from a payment of gambling winnings if it is required to withhold federal income tax from the payment and the payment is made to a resident or to someone receiving the payment on behalf of a resident.

The fact that federal or Connecticut income tax may have been withheld from a winner’s winnings does not excuse the winner from filing a federal income tax return or a Connecticut income tax return.

Are Gambling Winnings Taxable In Connecticut Unemployment

Connecticut income tax will not be withheld from gambling winnings if the payer does not maintain an office or transact business in Connecticut, if the payment is not subject to federal income tax withholding, or if the payment is not made to a resident or someone receiving the payment on behalf of a resident.

5. Is a winner required to provide his or her name, address, and Social Security Number (SSN) to the payer?

Yes. A winner is required by federal law to complete federal Form W-2G, Certain Gambling Winnings, by providing his or her name, address, and SSN, and by signing the declaration of the form, under penalties of perjury, that the information provided is correct.

6. How is a winner’s residency status determined?

A payer of gambling winnings determines the residency status of a winner based upon the address furnished and the identification provided by the winner at the time federal Form W-2G is completed. The payer must additionally require two forms of identification from the winner including but not limited to a Social Security card or a driver’s license.

7. What if there is more than one winner?

If more than one person is entitled to a share of the winnings, one federal Form 5754, Statement by Person(s) Receiving Gambling Winnings, must be completed identifying each of the persons entitled to a share. Federal Form 5754 is also used when the recipient is not a person entitled to a share. This form will list the name, address, and taxpayer identification number of all persons entitled to any payment of the winnings. The form must be signed, under penalties of perjury, by the person or persons receiving the winnings. The payer uses the information on federal Form 5754 to prepare federal Form W-2G for each of the winners. A copy of federal Form 5754 must be retained by the payer. A copy of federal Form 5754 need not be submitted to DRS, but must be made available upon request. If the person receiving the winnings is unable to properly identify any of the persons entitled to a share of the winnings or their state of residence, the amount of the winnings applicable to the other person is considered to have been won by a resident of Connecticut and Connecticut income tax must be deducted and withheld from the winnings.

8. Will payments of gambling winnings be reported to DRS?

If a payer of gambling winnings maintains an office or transacts business in Connecticut, the payer is required to report payments of gambling winnings to DRS if the payer is required to report the payment to the IRS and the payment is made to a resident or to someone receiving the payment on behalf of a resident.

The fact that a payer may not have been required to report a payment of gambling winnings to the IRS does not excuse the winner from reporting those winnings for federal and Connecticut income tax purposes.

While payers of gambling winnings not maintaining an office or transacting business in Connecticut are not required to report payments to DRS, the IRS provides information about gambling winnings of Connecticut residents to DRS.

Effect on Other Documents: Informational Publication 2005(15), Connecticut Income Tax Treatment of Gambling Winnings Other Than State Lottery Winnings, is modified and superseded and may not be relied upon on or after the date of issuance of this Informational Publication.

Effect of This Document: An Informational Publication issued by DRS addresses frequently-asked questions about a current position, policy, or practice, usually in a less technical question and answer format.

For More Information: Call DRS during business hours, Monday through Friday:

• 1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only); or

Select Option 6 to speak to a representative.

TTY, TDD, and Text Telephone users only may transmit inquiries anytime by calling 860-297-4911.

Forms and Publications: Forms and publications are available anytime by:

• Internet: Visit the DRS website to download and print Connecticut tax forms; or
• Telephone: Call 1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only) and select Option 2 or call 860-297-4753 (from anywhere).

Paperless Filing/Payment Methods (fast, easy, free, and confidential):

Business and individual taxpayers can use the Taxpayer Service Center (TSC) to file a variety of tax returns and extensions, as well as to pay taxes or bills over the Internet. Visit the DRS website and select an option from the list.

IP 2008(13)
Income Tax
Gambling Winnings
Issued: 02/05/2009

It’s been a while since I’ve listed out the bad states for gamblers. Here’s an updated list. Make sure you read the notes because while all of these states have tax systems that are problematic for gamblers, some impact amateurs while others impact professionals. Note that I do not cover the laws that impact gambling here (such as Washington State’s law that makes online gambling a Class C felony).

Connecticut [1]
Hawaii [2]
Illinois [1]
Indiana [1]
Massachusetts [1]
Michigan [1]
Minnesota [3]
Mississippi [4]
New York [5]
Ohio [6]
Washington [7]
West Virginia [1]
Wisconsin [1]

NOTES:

1. CT, IL, IN, MA, MI, WV, and WI do not allow gambling losses as an itemized deduction. These states’ income taxes are written so that taxpayers pay based (generally) on their federal Adjusted Gross Income (AGI). AGI includes gambling winnings but does not include gambling losses. Thus, a taxpayer who has (say) $100,000 of gambling winnings and $100,000 of gambling losses will owe state income tax on the phantom gambling winnings. (Michigan does exempt the first $300 of gambling winnings from state income tax.)

2. Hawaii has an excise tax (the General Excise and Use Tax) that’s thought of as a sales tax. It is, but it is also a tax on various professions. A professional gambler is subject to this 4% tax (an amateur gambler is not).

3. Minnesota’s state Alternative Minimum Tax (AMT) negatively impacts amateur gamblers. Because of the design of the Minnesota AMT, amateur gamblers with significant losses effectively cannot deduct those losses.

4. Mississippi only allows Mississippi gambling losses as an itemized deduction.

5. New York has a limitation on itemized deductions. If your AGI is over $500,000, you lose 50% of your itemized deductions (including gambling losses). You begin to lose itemized deductions at an AGI of $100,000.

6. Ohio currently does not allow gambling losses as an itemized deduction. However, effective January 1, 2013, gambling losses will be allowed as a deduction on state income tax returns. Unfortunately, those gambling losses will not be deductible on city or school district income tax returns, so Ohio will remain a bad state for amateur gamblers.

7. Washington state has no state income tax. However, the state does have a Business & Occupations Tax (B&O Tax). The B&O Tax has not been applied toward professional gamblers, but my reading of the law says that it could be at any time.