Blackjack Tournament Winnings TAX question

Discussion in 'Blackjack Events (USA)' started by BughouseMaster, Jul 12, 2020.

  1. BughouseMaster

    BughouseMaster Active Member

    The state of Mississippi held $450 (3%) of my $15K winnings when I won their tournament in November. When I used the tax estimator on H&R Block, it states: State income tax (W-2 box 17) Please note: Not all states tax income.

    Now, my question is since I don't live in Miss., could I deduct that $450 since the state of Mississippi withheld that from my $15K winnings? In other words, could I use that $450 withheld amount towards filing my taxes in Texas where I live? Thanks in advance!
     
  2. jamesmcnulty

    jamesmcnulty Member

    The $15,000 is taxable to both federal and state. On your fed 1040, include it on schedule 1, line 8. For MS, file a non-resident tax return to figure your MS tax. The $450 is withholding to pay your MS tax with, not the actual tax. The actual tax is figured on the MS non-resident return. If the tax is less than $450 you'll get a refund, if more than $450 you'll owe additional tax.
     
    johnr likes this.
  3. Billy C

    Billy C Top Member

    Being his residency is Texas, I think his only "state" tax liability would be to Texas. No?
     
  4. jamesmcnulty

    jamesmcnulty Member

    Hi Bill, Texas doesn't have a personal income tax, so there isn't any Texas liability. It is MS sourced income. If he lived in WI that does have a state income tax (very high btw), he would still file a MS non-resident return and take a credit on his WI return for for taxes paid to another state. That prevents him from being taxed by 2 states on the same income. Because it is MS sourced income he must file a MS tax return showing $15,000 of income
     
  5. BughouseMaster

    BughouseMaster Active Member

    oh really?! i had no idea i had to also file a MS tax return, too??? Any way to tell if i will have to pay add'l taxes for the State of MS? What happens if I dont file a non-resident tax return for MS? Are you an accountant? thanks for your help.
     
  6. BughouseMaster

    BughouseMaster Active Member

    Okay.... since i'm married and my standard deduction in MS is $12,000 that makes my gross income for 2019, $3,000, and, according to this site:

    https://www.dor.ms.gov/Forms/80100191.pdf

    On page 25 on the Schedule of Tax Computation line 2 (next $3,000), it appears i have to pay 3% tax which would mean I owe state of MS $90. Since I was taxed on the entire amount of $15K ($450), however, wouldn't this mean that I get a $360 refund?
     
  7. jamesmcnulty

    jamesmcnulty Member

    Oh yea, MS wants there chunk of money on your winnings. They get a copy of the w2g of 1099misc from the casino, just like you got. It may take them a year or two, but they will try to match it to a tax return. When they can't they will send you a letter asking for you to file a return. They will likely hold onto the $450 withholding until they get a return from you. It's really not possible to say whether you'll owe more or get a refund until the return is filed. That determines what your tax is.
    I'm a CPA, been doing individual taxes for over 25 years. Yea, that makes me almost as old as Moses!
     
  8. jamesmcnulty

    jamesmcnulty Member

    You should file MS form 80-205
     
  9. jamesmcnulty

    jamesmcnulty Member

    I just looked up the MS statute for gambling income (MS code 27.7.901) I hate to say it but I was totally wrong. Gambling winnings are taxed at 3%. MS considers the w2g as a filed tax return, amount of tax is the withheld amount. No other filings are required. They're the only state I know of that does it like that.
     
    KenSmith likes this.
  10. BughouseMaster

    BughouseMaster Active Member

    oh damn! so i won't get any money back then? i just filled in all these forms for nothing then ?! I thought my income would be $3000 since std deduction less my winnings is $3k....
     
  11. BughouseMaster

    BughouseMaster Active Member

    Taxed at 3% starting at what amount? What's so stupid is that TABLE GAME players can win over $10K and not get taxed a dime yet I win a tournament and they instantly get 3%?! SMDH!
     
  12. Dakota

    Dakota Top Member

    A couple of things...

    1. jamesmcnulty's revision is absolutely correct and is exactly what happened to me a few years ago.

    2. BughouseMaster's Table Game players win comment is not correct. Title 31 requires not just wins, but all monetary transactions which total over $10,000 during a casino's "gaming day" (not to be confused with promotional day) be reported to the IRS. That total includes markers, other cash transactions and all wins, no matter how small, over all games and all sessions . And don't ever bring up the subject of Title 31 with casino personnel because they are not allowed to discuss it and can get into trouble by doing so.
     
    johnr likes this.
  13. KenSmith

    KenSmith Administrator Staff Member

    The $10K limit forces a CTR (Cash Transaction Report), but that doesn't mean the money is taxed. It is reported not to the IRS but to FinCen.
    https://en.wikipedia.org/wiki/Currency_transaction_report

    As far as the Mississippi rule 3% rule, it is indeed egregious.
    The only possible good news...
    If you live outside Mississippi and pay state income tax to the state where you live, you can probably use the Mississippi tax paid as a credit against your home state's income tax.
    Every state is different, but I think that would be available in most.

    However, since BughouseMaster lives in TX, this won't help him a bit. Just consider it a gift to the Magnolia state!
     
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  14. Dakota

    Dakota Top Member

    Thanks for the clarification, Ken.
     

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