Today’s mail contained a nice surprise for us – a check for $4,693.71 from the wonderful state of Indiana! I had just about given up on ever seeing any of the Indiana tax (3.4%) that was withheld from every $1200+ jackpot we hit in 2009 on a two-day visit to the Horseshoe in Hammond. We were extremely lucky that trip, but when you are playing $1 Fifty-Play, you will get a lot of W-2G’s and that gross total certainly won’t mean that this was your net win.
Now, if we just filed as a recreational gambler, we would have had no hope at all getting any of the automatically withheld Indiana tax refunded to us. From having lived in Indiana in the past, we know that Indiana law prescribes that there is no deduction for gambling losses. There is no line for them on the Indiana tax return. (And this is the painful situation for many recreational gamblers in states that have those same gambling tax rules.)
However, because we file as professional gamblers, using Schedule C on our federal return, when we transfer our figures over to the state return, only our net profit shows up (not the W-2G gross amount). Then Indiana tax is figured on a percentage basis, and that 2-day gambling action was only a tiny fraction of our total play for the whole year in other states and we should owe only a couple of hundred dollars. Well, that’s the way it should have been from the very first, but I think they have their computers set up to kick out and dispute all returns that show W-2G withholding. So for many many months I had to write numerous letters, send all sorts of documentation, and talk to multiple Indiana tax employees.
I was getting tired of the whole rigmarole – and was almost ready to give up. Brad said that since we had won big there to just let it go and we just wouldn’t ever play in Indiana again. But I am stubborn. I wrote one last letter summarizing my whole case, mentioning that the logical conclusion would be that they accept my explanation – and that I really didn’t want to turn to legal measures that would cost both me and the state unnecessary expense.
I guess they decided that I wasn’t going to give up and go away – and soon after that last letter the check was sent out. One of my sweetest victories over government bureaucracies!