10. State Tax withholdings - casual vs pro gambler?
>
> I have read some sources that say getting withholdings back
> from states like Indiana is difficult and nearly impossible
> for a casual gambler. I am confused by this because the
> losses are itemized on sch A for a casual gambler while sch
> C is used by a professional one and the fed reutrn is the
> basis for determining net taxable gains on gambling.
>
> So, can anyone help me understand why there may be a much
> harder time for a casual gambler to get state gambling
> withholdings refunded? What am I missing? Would like to know
> before I set up a trip outside NV.
>
I am not a tax expert, and am probably wrong, but that has never kept me from sharing my understanding of something with others, even if it is in complete error; this post may prove my point :)
I don't know the details, and don't know the difference, if any, of pro vs non-pro, but my understanding is that Indiana's income tax is essentially a gross income tax, and that most (all) federal deductions are not applicable -- so all these "schedules" you mention for federal returns are not "in play" for the state tax (and I don't know for sure about other states, but I think that most states have their own forms and don't care about federal tax forms).
I believe there are many states that tax gross gambling winnings and do not allow them to be offset by gambling losses -- this, of course, makes it even more important how you document / record your "sessions". Such states may or may not have reciprocal agreements with some or all other states over the implications of taxing a non-resident. Pretty obviously, if you pay a gross income tax on gambling winnings, even if you "cheat" and only report W2G gambling income (which will look pretty suspicious), you will find virtually no VP opportunities with net after-tax positive expectation, unless you play single-line quarters with no potential for a W2G payout (doesn't sound like that's what you have in mind as a strategy to achieve 7*).
Consult your accountant for advice, with a suggestion that he/she not research it personally, but that he/she consult (either on your behalf at a fee, or via some publication) the opinion and knowledge of an expert in gambling income/loss tax treatment (ie, the "regular" accountants usually do not know the in's and out's of gambling tax laws in general, and certainly not on a state-by-state basis).
Having said all this, someone else probably knows more about it than me, and may even be correct in their knowledge. But generally speaking, getting tax information from people who are not tax experts is not a sound strategy for getting correct information :)
--BG
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