Michigan gambling winnings tax

For example, you received three Form W-2Gs for a total of $5, of gambling winnings. $5, is reported on page 1 of the IRS tax return as income. Then $5, of gambling losses is reported as an itemized deduction. On Form , gambling winnings are totaled on Line 21, and that amount can increase total AGI, reported on Line 37, and again reported on Line It is the increase in AGI that can negatively affect many tax credits and tax deductions. Your gambling winnings are generally subject to a flat 25% tax. However, for the following sources listed below, gambling winnings over $5, are subject to income tax withholding: Any sweepstakes, wagering pool (including payments made to winnners of poker tournaments), or lottery.

Tax Rules for Gambling Income & Losses

This is especially true if you gamble regularly. It only means that you do not have to fill out Form W2-G for these particular table-based games. Gamblers know that all winnings are taxable. The total amount of gambling winnings is reported on page 1 of the IRS tax return. State law requires the Detroit casinos to withhold a tax on a lower amount and on different types of winnings than is required under the federal Internal Revenue Code.

  Interesting Fact about casino


  •   All casinos are built on the principle of the most tangled labyrinths. In the gaming halls there are no direct passages. Because the longer a person walks along the aisles, the more likely that he will play in the meeting slot machines and gambling.
  •  The annual profit from the gaming industry in the US is 18 billion dollars.

Michigan Taxes on Gambling Income and Keeping Records

The bill would amend the Income Tax Act to require the Detroit casinos to withhold a tax on the winnings of all taxpayers residents and non-residents alike if the winnings meet the threshold for withholding under the federal Internal Revenue Code.

It would also reduce the level of withholding for nonresidents to conform to federal withholding levels. A fiscal analysis is in progress. Public Act 21 of amended the Income Tax Act to include, casino winnings from the Detroit casinos and tribal casinos, as well as winnings at state horse racetracks in the taxable income of nonresidents. Public Act 22 was necessary to enforce Public Act However, in the short time that Public Act 22 has been effective a problem has emerged.

The act requires the Detroit casinos to withhold the appropriate amount of state income tax based on any winnings by nonresidents that are reportable under the federal Internal Revenue Code. The problem is that the federal IRC requires the casinos to withhold federal income tax on a different amount of winnings not on the reportable amount. As a result, state and federal law do not treat patrons of the Detroit casinos equally. State law sets a lower withholding threshold than required under federal law and only applies to nonresidents.

Legislation has been introduced that would bring some consistency between the state and federal taxation of gambling winnings. The bill would amend the Income Tax Act to require the Detroit casinos to withhold a tax on the winnings of all individuals at the casino both residents and nonresidents of Michigan. See above for a description of section Gambling winnings of Michigan residents are subject to the state income tax to the extent that they are included in the federal adjusted gross income AGI , which serves as the starting point for the calculation of Michigan income tax liability.

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The winnings except winnings from bingo, slot machines, keno and poker tournaments reduced, at the option of the payer, by the wager are: At least times the amount of the wager, or 5. The winnings are subject to federal income tax withholding either regular gambling withholding or backup withholding.

Withholding for Federal Income Tax There are two types of withholding on gambling winnings: Noncash payments must be taken into account at its fair market value FMV for purposes of reporting and withholding. Backup withholding is required when winner does not furnish a correct taxpayer identification number i. Backup withholding is also figured on the total amount of the winnings reduced, at the option of the payer, by the amount wagered.

Withholding for Michigan Income Tax Withholding is required for Michigan income tax whenever regular not backup federal withholding is required. The withholding requirement applies to all gambling including casinos, race tracks and organizations conducting charitable gambling. Non-residents Michigan requires casinos and race tracks to withhold on the gambling winnings of non-residents once the winnings are reported on W-2G.

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Therefore, non-residents who gamble at casinos or race tracks are subject to Michigan withholding at a lower winnings threshold because federal reporting is triggered at a lower winnings level than federal withholding. Michigan does not require backup withholding. Withholding Rate The Michigan income tax withholding rate is 4.

All gambling winnings, including casino, race track and charitable gambling are taxable and must be claimed on a Michigan return even if the winnings are below the reportable level or below the withholding level. The payer of gambling winnings is required to file Forms W2-G with the IRS by the last day of February of the year following the year of prize award.


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