Are Gambling Winnings Taxable In Connecticut

Under current law, nonresidents who have gambling winnings from Connecticut are subject to Connecticut income tax on those winnings only if they win the money in Connecticut's state-run lottery. Nonresidents'casino and pari-mutual winnings are not subject to the state income tax. However, if the taxpayer also had gambling winnings in New Jersey, he could not credit his New Jersey tax payment for those winnings against his Connecticut tax because, under Connecticut law, gambling winnings are not credit-eligible income.

1. 'Taxpayers can deduct gambling losses only up to the amount of their gambling winnings,' says Leddy, 'and only if they itemize their deductions.' For example, if your gambling winnings totaled $5,000 in the tax year, but you lost $6,000, you can only deduct $5,000 of those losses.
2. Also, reportable Connecticut Lottery winnings are taxable regardless of amount. Ancillary Activity Test - The nonresident's presence in Connecticut is ancillary to his or her primary business or employment duties that are performed at a base of operations outside of Connecticut.

California refers taxpayers to the above IRS web page for taxation of gambling winnings and losses.

http://www.taxes.ca.gov/Small_Business/running/run_credits.html

Connecticut Gambling losses are not deductible for Connecticut income tax purposes even though, in certain circumstances, they are deductible for federal income tax purposes. 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.
Connecticut Income Tax Treatment of Gambling Winnings:
http://www.ct.gov/drs/cwp/view.asp?a=1510&q=306106
Connecticut Income Tax Treatment of State Lottery Winnings:
http://www.ct.gov/drs/cwp/view.asp?a=1510&q=306134
Peter B Stone v. Commissioner of Revenue Services (New Britain, CT February 7, 2007):
http://www.jud.ct.gov/external/super/Tax/Decisions/CV-04-4001070.pdf
http://cga.ct.gov/2005/pub/Chap946.htm#Sec53-278b.htm
Sec. 53-278b. Gambling; professional gambling; penalties. (a) Any person who engages in gambling, or solicits or induces another to engage in gambling, or is present when another person or persons are engaged in gambling, shall be guilty of a class B misdemeanor; provided natural persons shall be exempt from prosecution and punishment under this subsection for any game, wager or transaction which is incidental to a bona fide social relationship, is participated in by natural persons only and in which no person is participating, directly or indirectly, in professional gambling.
(b) Any person who engages in professional gambling shall be guilty of a class A misdemeanor.

http://cga.ct.gov/2005/pub/Chap946.htm#Sec53-278d.htm
Sec. 53-278d. Transmission of gambling information. (a) Any person who knowingly transmits or receives gambling information by telephone, telegraph, radio, semaphore or other means, or knowingly installs or maintains equipment for the transmission or receipt of gambling information, shall be guilty of a class A misdemeanor.

http://www.ct.gov/drs/cwp/view.asp?a=1510&q=306106
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 (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 (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.

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

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.

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 such winnings.

CT and NJ taxation:
http://www.cga.ct.gov/2003/olrdata/fin/rpt/2003-R-0481.htm

Are Gambling Winnings Taxable In Connecticut State

Massachusetts Directive 03-3, Factors for Determining When Gambling is a Trade or Business.
Issue: What factors does the Commissioner consider in determining when the gambling activities of a taxpayer constitute a trade or business for purposes of G.L. c. 62?
Directive: In determining when the gambling activities of a taxpayer constitute a trade or business for purposes of G.L. c. 62, the Commissioner will consider a set of factors, as set forth below.
Discussion of Law:
Massachusetts gross income is federal gross income, with certain modifications not relevant here. G.L. c. 62, § 2(a). Federal gross income is all income from whatever source derived, including gains from gambling. I.R.C. § 61.[1] Thus, gambling winnings are included in Massachusetts gross income. See also TIR 79-2, DOR Directive 86-24.
Massachusetts law adopts the deductions permitted under section 62 of the Internal Revenue Code ('Code'), with certain modifications. G.L. c. 62, § 2(d). The deductions allowed under section 62 of the Code include those deductions that are attributable to a trade or business. I.R.C. § 62(a)(1). In particular, section 165 of the Code allows a deduction for losses from wagering transactions to the extent of wagering gains. I.R.C. § 165(d). Thus, a Massachusetts taxpayer may deduct wagering losses to the extent of winnings, but only if the wagering activities of the taxpayer constitute a trade or business.[2]
In the context of professional gambling, in Commissioner v. Groetzinger, 480 U.S. 23 (1987), the Supreme Court held that determining whether a taxpayer is engaged in a trade or business 'requires an examination of the facts in each case.' The Court further held that 'if one's gambling activity is pursued full time, in good faith, and with regularity, to the production of income for a livelihood, and is not a mere hobby, it is a trade or business within the meaning of the statutes….' Id. at 35. In Massachusetts, the Appellate Tax Board has relied on Groetzinger and its fact and circumstances test in determining when a taxpayer's gambling activities constituted a trade or business. Cerpovicz v. Commissioner of Revenue, A.T.B. Docket No. 128164 (1987); DiCarlo v. Commissioner of Revenue, A.T.B. Docket No. 139866 (1989); Menard v. Commissioner of Revenue, A.T.B. Docket Nos. 139277, 144198-99, 151689 (1990) (a taxpayer may be in two trades or businesses).
The determination of whether a taxpayer is engaged in a trade or business remains one of facts and circumstances. However, in determining when the gambling activities of a taxpayer constitute a trade or business for purposes of G.L. c. 62, the Commissioner will consider a set of factors. These factors are not exclusive, and are meant to provide illustrative guidance to taxpayers. The burden of proof rests with the taxpayer claiming to be a professional gambler. See William Rodman & Sons, Inc. v. State Tax Commission, 373 Mass. 606 (1977); Uniacke v. Commissioner of Revenue, A.T.B. Docket No. F210466 (1995); Olson v. Commissioner of Revenue, A.T.B. Docket No. C256266 (2001).
The following factors will be considered:

• gambling activities are entered into and carried on in good faith for the purpose of making a profit;
• gambling activities are carried on with regularity;
• gambling activities are pursued on a full-time basis, or to the fullest extent possible if taxpayer is engaged in another trade or business or has employment elsewhere;
• gambling activities are solely for the taxpayer's own account and taxpayer does not function as a bookmaker;
• taxpayer maintains adequate records, including accounting of daily wagers, winnings and losses (see I.R.S. Rev. Proc. 77-29);
• the extent and nature of taxpayer's activities which further the development of a gambling enterprise; and
• taxpayer claims deductions associated with the conduct of a trade or business for gambling-related expenses.

This Directive modifies DOR Directive 86-24 to the extent that the position taken therein is inconsistent with the decision in Groetzinger and the decisions made by the Appellate Tax Board in reliance thereon.

New Jersey which generally taxes gross income and does not recognize losses or itemized deductions, does in fact allow the netting of gambling winnings. (see line 23 of the 2004 form NJ-1040, which is not to be reduced below zero).
Under the provisions of N.J.S.A. 54A: 5-1(g), all gambling winnings, whether they are the result of legalized gambling (casino, racetrack, etc.) or illegal gambling, with the exception of New Jersey Lottery winnings, are subject to the New Jersey Gross Income Tax for resident taxpayers. The lottery winnings of residents are subject to tax no matter where these winnings are received. Similar to the treatment of gambling winnings under the Federal Income Tax Code, losses from gambling incurred during the same period as the winnings may be used to offset winnings. In other words, taxpayers may deduct gambling losses from their gambling winnings during the tax period not to exceed the total of the winnings.
Although no specific rider to the New Jersey Gross Income Tax Return is required, it is requested that a taxpayer who enters gambling winnings (net of losses) on the New Jersey return indicate the total winnings and total losses on a supporting statement. This supporting statement may eliminate certain questions in the event the return is selected for audit.
http://www.state.nj.us/treasury/taxation/pdf/pubs/tb/tb20r.pdf

New York Publication 88, page #15
New York source income of a nonresident does not include the following income even if it was included in your federal adjusted gross income:
Gambling winnings, other than lottery winnings won in the New York State lottery as described on page 12, unless you are engaged in the business of gambling and you carry on that business in New York State.
http://www.tax.state.ny.us/pdf/publications/income/pub88_1206.pdf

Are Gambling Winnings Taxable In Connecticut Unemployment

Under current law, nonresidents who have gambling winnings from Connecticut are subject to Connecticut income tax on those winnings only if they win the money in Connecticut's state-run lottery. Nonresidents'casino and pari-mutual winnings are not subject to the state income tax. However, if the taxpayer also had gambling winnings in New Jersey, he could not credit his New Jersey tax payment for those winnings against his Connecticut tax because, under Connecticut law, gambling winnings are not credit-eligible income.

1. 'Taxpayers can deduct gambling losses only up to the amount of their gambling winnings,' says Leddy, 'and only if they itemize their deductions.' For example, if your gambling winnings totaled $5,000 in the tax year, but you lost $6,000, you can only deduct $5,000 of those losses.
2. Also, reportable Connecticut Lottery winnings are taxable regardless of amount. Ancillary Activity Test - The nonresident's presence in Connecticut is ancillary to his or her primary business or employment duties that are performed at a base of operations outside of Connecticut.

California refers taxpayers to the above IRS web page for taxation of gambling winnings and losses.

http://www.taxes.ca.gov/Small_Business/running/run_credits.html

Connecticut Gambling losses are not deductible for Connecticut income tax purposes even though, in certain circumstances, they are deductible for federal income tax purposes. 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.
Connecticut Income Tax Treatment of Gambling Winnings:
http://www.ct.gov/drs/cwp/view.asp?a=1510&q=306106
Connecticut Income Tax Treatment of State Lottery Winnings:
http://www.ct.gov/drs/cwp/view.asp?a=1510&q=306134
Peter B Stone v. Commissioner of Revenue Services (New Britain, CT February 7, 2007):
http://www.jud.ct.gov/external/super/Tax/Decisions/CV-04-4001070.pdf
http://cga.ct.gov/2005/pub/Chap946.htm#Sec53-278b.htm
Sec. 53-278b. Gambling; professional gambling; penalties. (a) Any person who engages in gambling, or solicits or induces another to engage in gambling, or is present when another person or persons are engaged in gambling, shall be guilty of a class B misdemeanor; provided natural persons shall be exempt from prosecution and punishment under this subsection for any game, wager or transaction which is incidental to a bona fide social relationship, is participated in by natural persons only and in which no person is participating, directly or indirectly, in professional gambling.
(b) Any person who engages in professional gambling shall be guilty of a class A misdemeanor.

http://cga.ct.gov/2005/pub/Chap946.htm#Sec53-278d.htm
Sec. 53-278d. Transmission of gambling information. (a) Any person who knowingly transmits or receives gambling information by telephone, telegraph, radio, semaphore or other means, or knowingly installs or maintains equipment for the transmission or receipt of gambling information, shall be guilty of a class A misdemeanor.

http://www.ct.gov/drs/cwp/view.asp?a=1510&q=306106
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 (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 (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.

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

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.

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 such winnings.

CT and NJ taxation:
http://www.cga.ct.gov/2003/olrdata/fin/rpt/2003-R-0481.htm

Are Gambling Winnings Taxable In Connecticut State

Massachusetts Directive 03-3, Factors for Determining When Gambling is a Trade or Business.
Issue: What factors does the Commissioner consider in determining when the gambling activities of a taxpayer constitute a trade or business for purposes of G.L. c. 62?
Directive: In determining when the gambling activities of a taxpayer constitute a trade or business for purposes of G.L. c. 62, the Commissioner will consider a set of factors, as set forth below.
Discussion of Law:
Massachusetts gross income is federal gross income, with certain modifications not relevant here. G.L. c. 62, § 2(a). Federal gross income is all income from whatever source derived, including gains from gambling. I.R.C. § 61.[1] Thus, gambling winnings are included in Massachusetts gross income. See also TIR 79-2, DOR Directive 86-24.
Massachusetts law adopts the deductions permitted under section 62 of the Internal Revenue Code ('Code'), with certain modifications. G.L. c. 62, § 2(d). The deductions allowed under section 62 of the Code include those deductions that are attributable to a trade or business. I.R.C. § 62(a)(1). In particular, section 165 of the Code allows a deduction for losses from wagering transactions to the extent of wagering gains. I.R.C. § 165(d). Thus, a Massachusetts taxpayer may deduct wagering losses to the extent of winnings, but only if the wagering activities of the taxpayer constitute a trade or business.[2]
In the context of professional gambling, in Commissioner v. Groetzinger, 480 U.S. 23 (1987), the Supreme Court held that determining whether a taxpayer is engaged in a trade or business 'requires an examination of the facts in each case.' The Court further held that 'if one's gambling activity is pursued full time, in good faith, and with regularity, to the production of income for a livelihood, and is not a mere hobby, it is a trade or business within the meaning of the statutes….' Id. at 35. In Massachusetts, the Appellate Tax Board has relied on Groetzinger and its fact and circumstances test in determining when a taxpayer's gambling activities constituted a trade or business. Cerpovicz v. Commissioner of Revenue, A.T.B. Docket No. 128164 (1987); DiCarlo v. Commissioner of Revenue, A.T.B. Docket No. 139866 (1989); Menard v. Commissioner of Revenue, A.T.B. Docket Nos. 139277, 144198-99, 151689 (1990) (a taxpayer may be in two trades or businesses).
The determination of whether a taxpayer is engaged in a trade or business remains one of facts and circumstances. However, in determining when the gambling activities of a taxpayer constitute a trade or business for purposes of G.L. c. 62, the Commissioner will consider a set of factors. These factors are not exclusive, and are meant to provide illustrative guidance to taxpayers. The burden of proof rests with the taxpayer claiming to be a professional gambler. See William Rodman & Sons, Inc. v. State Tax Commission, 373 Mass. 606 (1977); Uniacke v. Commissioner of Revenue, A.T.B. Docket No. F210466 (1995); Olson v. Commissioner of Revenue, A.T.B. Docket No. C256266 (2001).
The following factors will be considered:

• gambling activities are entered into and carried on in good faith for the purpose of making a profit;
• gambling activities are carried on with regularity;
• gambling activities are pursued on a full-time basis, or to the fullest extent possible if taxpayer is engaged in another trade or business or has employment elsewhere;
• gambling activities are solely for the taxpayer's own account and taxpayer does not function as a bookmaker;
• taxpayer maintains adequate records, including accounting of daily wagers, winnings and losses (see I.R.S. Rev. Proc. 77-29);
• the extent and nature of taxpayer's activities which further the development of a gambling enterprise; and
• taxpayer claims deductions associated with the conduct of a trade or business for gambling-related expenses.

This Directive modifies DOR Directive 86-24 to the extent that the position taken therein is inconsistent with the decision in Groetzinger and the decisions made by the Appellate Tax Board in reliance thereon.

New Jersey which generally taxes gross income and does not recognize losses or itemized deductions, does in fact allow the netting of gambling winnings. (see line 23 of the 2004 form NJ-1040, which is not to be reduced below zero).
Under the provisions of N.J.S.A. 54A: 5-1(g), all gambling winnings, whether they are the result of legalized gambling (casino, racetrack, etc.) or illegal gambling, with the exception of New Jersey Lottery winnings, are subject to the New Jersey Gross Income Tax for resident taxpayers. The lottery winnings of residents are subject to tax no matter where these winnings are received. Similar to the treatment of gambling winnings under the Federal Income Tax Code, losses from gambling incurred during the same period as the winnings may be used to offset winnings. In other words, taxpayers may deduct gambling losses from their gambling winnings during the tax period not to exceed the total of the winnings.
Although no specific rider to the New Jersey Gross Income Tax Return is required, it is requested that a taxpayer who enters gambling winnings (net of losses) on the New Jersey return indicate the total winnings and total losses on a supporting statement. This supporting statement may eliminate certain questions in the event the return is selected for audit.
http://www.state.nj.us/treasury/taxation/pdf/pubs/tb/tb20r.pdf

New York Publication 88, page #15
New York source income of a nonresident does not include the following income even if it was included in your federal adjusted gross income:
Gambling winnings, other than lottery winnings won in the New York State lottery as described on page 12, unless you are engaged in the business of gambling and you carry on that business in New York State.
http://www.tax.state.ny.us/pdf/publications/income/pub88_1206.pdf

Are Gambling Winnings Taxable In Connecticut Unemployment

Are Gambling Winnings Taxable In Connecticut Tax

Akron, Ohio
Gambling Winnings
Gambling winnings, including lottery winnings, are taxable to the City of Akron. Gambling losses are not deductible against gambling winnings unless the taxpayer is deemed to be a 'professional gambler,' where gambling is the taxpayer's business activity for federal tax purposes. Gambling losses are not deductible against any other taxable income.
http://ci.akron.oh.us/asp/TaxFAQs.asp
Mariemont, Ohio
The Village of Mariemont, Ohio INCOME TAX RULES AND REGULATIONS
(5) Other compensation and other income, as reported on W-2's or 1099's, including but not limited to tips; bonuses; profit sharing; severance or termination pay; wage continuation payments made as a result of early retirement or employment termination; wage continuation payments made as a result of sickness or temporary disability and whether paid by the recipient's employer or by a third party; tips or gratuities received; employee contributions to tax sheltered annuities, non-qualified pension plans, or into employer or third party trusts or pension plans as permitted by IRS; ordinary income portion of stock options or employee stock purchase plans; strike pay; jury duty pay; employee contributions or amounts credited to non-qualified pension plans or deferred compensation plans at the time of deferral and to the extent subject to Medicare Tax; working conditions fringe benefits subject to tax by IRS; guardian, executor, conservator, trustee, or administrator fees; ordinary income portion of lump sum distributions which become subject to federal tax because the recipient did not roll over the distribution within the time required by IRS; lottery winnings, sports winnings, gambling winnings of any type, income from games of chance (from which no deductions are permitted, unless the taxpayer is considered a professional gambler by IRS rules and is accordingly required to file a Schedule C with the IRS; in such case the taxpayer may take appropriate deductions against income from gambling activities); gifts of any type in connection with services rendered; compensation paid to casual employees and other types of employees, and compensation received by domestic servants.
http://www.mariemont.org/forms/mariemont_tax_rulesregs2.htm