- Tax On Casino Winnings In New York State Tax
- Tax On Casino Winnings In New York State 2020
Gambling In America
If you've ever won a jackpot in Las Vegas, you probably know that your excitement diminishes at least a little when the casino throws a W-2G tax form in your face. In fact, if you don’t provide your social security number, the casino will automatically withhold up to 30% of your winnings. The same goes for lottery and horse racing wins above $1200. Yet when playing online, paying taxes isn’t always so black and white.
Gambling Winnings Tax. Is provided by ITC Financial Licenses, Inc. ITC Financial Licenses, Inc. Is licensed as a Money Transmitter by the New York State. Welcome to FindLaw’s New York Gambling & Lottery Laws Center. New York laws on gambling and lotteries regulate (and in some cases prohibit) activities such as casino gaming, horse racing, and dog racing. These laws also dictate the manner in which state lottery revenues are distributed. When a resident of New York State, New York City or Yonkers receives any payment of $600 or more of gambling winnings during a calendar year, Form IT-2102-G is used to report these winnings to New York State. Amounts to be reported on Form IT-2102-G are the same as those reported on federal Form W-2G. A computer survey of 16 selected states with both state income taxes and casino or pari-mutuel gambling found that 15 impose state income taxes on nonresidents ' winnings in those states. Of the states surveyed, only New York follows Connecticut ' s example in excluding nonresident casino and pari-mutuel winnings from its state income tax.
Americans who play at US-based online casinos will usually have to deal with withholding taxes just like in Las Vegas. Yet that only represents a small fraction of your entertainment options. When playing at licensed offshore online casinos or poker rooms, American players usually won’t hear the words taxes mentioned at all.
Sadly, it is never safe to assume that your winnings are ultimately tax-free. It is true that Americans who play at internet gambling sites outside of the USA won’t be subject to withholding taxes when withdrawing their winnings. Yet you may be required to report these gains when you file your taxes in April. The greatest determinant is the number, size, and frequency of your wins. The actual threshold varies from state to state and whether or not you are an amateur or professional. For more information on reportable gambling winnings visit the IRS guide: https://www.irs.gov/instructions/iw2g/ar02.html
Professional Gamblers
Whether or not you qualify as a professional gambler doesn’t solely depend on your performance at the tables. The main litmus test is the expectation and probability of profit in the eyes of the Internal Revenue Service. Your success and whether or not you have a regular job on top of gambling may also be factors.
With even amateur gamblers having to deal with taxes, professional gambling does have benefits. You can actually deduct your wins from your losses when your treat your gameplay as a business. No matter what your current status is and how often you play, it's best to keep tabs on your performance to develop strategies, stick to a budget, and simply know where you stand. You can find this tip sheet courtesy of the IRS: https://www.irs.gov/taxtopics/tc419.html
Whether or not the IRS can actually track your winnings is another matter entirely. Yet you should be aware of your obligations. With a huge budget deficit and ballooning debt, the federal government is looking to fill their financial holes any way they can. Between the NSA and modern forensic accounting practices, covering your digital tracks is more difficult than it used to be.
Tax Obligations Outside Of The USA
The United States is a bit of an outlier when it comes to taxing gambling winnings. In the United Kingdom, the government taxes the gross profits of casino operators rather than players. Canadians can play the lottery, live casinos, poker and online games without paying taxes unless they are a professional. Likewise, Australians and New Zealanders can also gamble tax-free. To put things in perspective, Americans do pay some of the lowest personal income taxes in the first world. Things tend to even out in the end.
Like anything else, interpreting the rules is always a matter of debate. Here's an interesting tax perspective for Canadians: http://business.financialpost.com/personal-finance/tax-expert-a-gamble-over-poker-winnings
Things To Consider
Keep in mind that Americans have to deal with both Federal and State taxes on most forms of income. Always keep basic records no matter how often you play or win. This will make things easier during tax season.
Accountants Have The Answers
No matter where you live, it's always best to discuss your personal situation with a licensed tax professional in your area. You can usually get a short consultation for free with complete confidentiality. It's the best way to play by the rules while minimizing your tax burden.
OFFICIAL COMPILATION OF CODES, RULES AND REGULATIONS OF THE STATE OF NEW YORK
SUBCHAPTER A. NEW YORK STATE PERSONAL INCOME TAX UNDER ARTICLE 22 OF THE TAX LAW
ARTICLE 5. WITHHOLDING OF NEW YORK STATE PERSONAL INCOME TAX
PART 171. REQUIREMENT OF WITHHOLDING NEW YORK STATE PERSONAL INCOME TAX FROM WAGES
20 CRR-NY 171.11
Tax On Casino Winnings In New York State Tax
171.11 Extension of withholding of New York State personal income tax to certain gambling winnings.
(1) Determining New York State personal income tax to be withheld. In addition to the wages subject to withholding of New York State personal income tax under this Part, any payment made by the New York State Division of the Lottery to a payee of winnings from a wager placed in a lottery where the proceeds from such wager exceed five thousand dollars and such proceeds are payable pursuant to a prize claim made by an individual who was a resident of New York State at the time of the selection of the prize winning lottery ticket and any payment of winnings from a wagering transaction in a pari-mutuel pool with respect to horse races to a resident individual, where the proceeds from such wager exceed $1,000 and the amount of such proceeds is at least 300 times as large as the amount wagered, must be treated as if it were a payment of wages by an employer to an employee for a payroll period.
(2) For purposes of paragraph (1) of this subdivision, proceeds from a wager shall be determined by reducing the amount received by the amount of the wager.
(b) All requirements contained in Article 5 of this Title with respect to filing New York State employer returns, furnishing information and payment of New York State personal income tax withheld, apply equally to the withholding of New York State personal income tax on payments of lottery winnings by the New York State Division of the Lottery and on winnings from a wagering transaction in a pari-mutuel pool with respect to horse races under this section, except that wherever form IT-2102 is referred to, Report of Certain Gambling Winnings (form IT-2102G) is to be substituted therefor.
The amount of New York State personal income tax to be deducted and withheld by the New York State Division of the Lottery from certain payments of lottery winnings under this section shall be computed by multiplying such winnings payment by a percentage equal to the highest effective rate of New York State personal income tax on New York taxable income for the applicable taxable year,without any allowance for withholding exemptions.
(1) For purposes of applying the provisions of subdivision (a) of this section, each payee who is to receive a payment of certain gambling winnings subject to withholding of New York State personal income tax shall furnish the payer with a statement on form IT-2102G or IT-340 (whichever is applicable), under penalties of perjury, containing:
(i) the name, address and taxpayer identification number of the payee accompanied by a declaration that no other person is entitled to any portion of such payment; or
(ii) the name, address and taxpayer identification number of the payee and of every other person entitled to any portion of such payment; and
(iii) such other information as may be required by forms and instructions of the Division of Taxation.
(2) Where more than one payment of gambling winnings subject to withholding of New York State personal income tax is to be made with respect to a single wager (i.e., a lottery prize funded by an annuity), the payee is required to furnish the payer with the statement required by paragraph (1) of this subdivision only with respect to the first such payment, provided that such other payments are taken into account in a Report of Certain Gambling Winnings referred to in Part 172 of this Article.
(1) For requirements relating to payers' returns of New York State personal income tax withheld and payment of such withheld New York State personal income tax, see Part 174 of this Article.
(2) For requirements relating to New York State information statements for payees, see Part 172 of this Article.
(3) For requirements relating to New York State information returns by payers relating to payments of certain gambling winnings subject to withholding, see Part 174 of this Article.
(f) Withholding on payments from the New York State Division of the Lottery upon a change of residence.
Where a resident payee of payments of lottery winnings from the New York State Division of the Lottery changes status from resident to nonresident, the provisions of this section are applicable to such lottery winnings unless such payee elects to make the required special accruals referred to in section 154.10 of this Title. In such case, a payee may elect to have withholding cease on such winnings by furnishing the New York State Division of the Lottery and the Division of Taxation a signed written statement containing the payee's name, social security number, former New York address, current address and any other information required by the Division of Taxation by forms and instructions. The Division of Taxation shall review a payee's statement for purposes of verification of such payee's resident status, and of such payee's compliance with the special accrual requirements under section 154.10 of this Title and give written notice to the New York State Division of the Lottery of its determination. The Division of Taxation will provide the New York State Division of the Lottery with a copy for the payee of each notice it furnishes to the New York State Division of the Lottery under this subdivision, in addition to the notice furnished to the New York State Division of the Lottery for its own use. The Division of Taxation shall also mail a similar notice to the payee at the address of the payee as shown on such payee's statement. The New York State Division of the Lottery shall continue to withhold taxes from lottery winnings payments pending written notice by the Division of Taxation that it is to comply with the election made by the payee. A verified statement of election is to take effect with respect to payments of lottery winnings which occur at least 30 days after the date on which the New York State Division of the Lottery is notified by the Division of Taxation to comply with a taxpayer's statement of election.
Civil and criminal penalties that may be applicable to payees for making a statement under section 671 of the Tax Law which results in a cessation of the deducting and withholding or in no withholding of New York State personal income tax not in accordance with section 671 of the Tax Law, include, but are not limited to, the penalties imposed pursuant to sections 685(s), 1801(a) and 1804(a) of the Tax Law.
(h) The provisions of this section shall be deemed to apply in like manner to the City of New York personal income tax on residents and the City of Yonkers income tax surcharge on residents. The amount of City of New York personal income tax on residents to be deducted and withheld from certain payments of lottery winnings by the New York State Division of the Lottery under this section shall be computed by multiplying such winnings payment by a percentage equal to the highest effective rate of New York City personal income tax on residents on New York City taxable income for the applicable taxable year, without any allowance for withholding exemptions. The amount of City of Yonkers income tax surcharge on residents to be deducted and withheld from certain payments of lottery winnings by the New York State Division of the Lottery under this section shall be computed by multiplying such winnings payment by a percentage which is equal to the product of the rate of the City of Yonkers income tax surcharge on residents for the applicable taxable year multiplied by the highest effective rate of New York State personal income tax on New York taxable income for the applicable taxable year, without any allowance for withholding exemptions.
Current through April 30, 2020
Tax On Casino Winnings In New York State 2020
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