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!
Don’t blow it all on gas,groceries and keno
Is there a way to email you a question or comment other than leaving a comment to a previous question?
Any “Frugal” advice for the many who must file as recreational gamblers regarding state withholding on W-2Gs outside our tax home state?
Most states have closed their loopholes to make Non-Resident withholding, non-refundable.
If an Indiana resident hits a $4,000 royal in Mississippi, he is only paid $3,880. You cannot file a Non-Resident return to claim a refund, so did you “win” $4,000 or $3,880?
Thanks for all the great info you put out.
With the feds looking for new revenue sources, it is more likely they would LOWER the tax reporting figure rather than raise it!!!
I wish the feds would raise the tax requirements to $2.000 or more instead of $1200 on a jackpot has there been any talk about this recently?
Way to go, big Sis! You’re a great example of your touted “just ask” policy, it its purest form.
It works big and small. Just yesterday, I had a coupon worth $10 expire for a knife sharpening service. I had pre-purchased a pre-paid pay-$10-for-$20 of knife sharpening, and I had let it lapse. I called and very politely asked if they would honor it. The lady on the phone said, “probably not.” I “hooked onto” that “probably” and asked her, again very politely, if she could check for me and call me back. Sure enough, about 10 minutes later, my phone rang and she told me that it would be honored.
I know this is not near at big as your tax refund from Indiana, but the principle is the same. Thanks for all the things I’ve learned from your Frugal books that relate not just to video poker.
Love you, Sis <3
You took on City Hall and won. Congratulations on your persistence. There should be some kind of medal for that.
George
Congrats! Nice to hear you got to keep what was yours! In this economy and the goverment wanting more, more more, its just crazy. Enjoy your extra unexpected jackpot! Take care!