Lots of old and outdated and just plain wrong info being posted here on this subject. Also there is confusion about STATE and FEDERAL withholding rules. Usually there isn't required FED withholding unless you a non-USA-resident or you don't give your SS#. You can request Fed withholding but not all casinos want to "bother" with that.
State withholding depends on the state rules. I do know it is mandatory in Indiana and LA and in some other states but I don't have that list. I plan to add that in the new edition of the tax book.
MS is a special case. Here is the verified info from the 2015 edition of "Tax Help for Gamblers." I am just starting to work on the 2018 edition and haven't verified this particular section recently but I believe nothing has changed since 2015.
MISSISSIPPI—A CATEGORY OF ITS OWN
JEAN: Finally, there’s Mississippi, which adds a new kink to state income taxes on gambling. Formerly, they automatically withheld 5% state income tax from W-2G jackpots, but in 2002 they began taking out a 3% tax. For a couple of years, no one really knew what to call it. Was it a gambling tax? Was it a sin tax, similar to the one on cigarettes? Finally, the state, in the instructions for their state tax forms, began calling it a “non-refundable state income tax.”
MARISSA: Mississippi residents do get a small break, wherein the W-2G amount doesn’t have to be counted in their gross income for state income-tax purposes. And non-residents who live in a state with an income tax may take the withheld Mississippi tax as a credit
on their state taxes if they’ve counted Mississippi winnings in their gambling income. Or those who itemize on their federal return could list the withheld amount as a deduction on Schedule A, under State Income Taxes. It is, however, a preference item for figuring the Alternative Minimum Tax, which means that the deduction could hurt you in certain situations. If you are a recreational gambler who doesn’t fit into any of the above categories, that withheld amount is a permanent loss. Gamblers who file as professionals may take this Mississippi withholding tax as a business expense.
JEAN: If I still lived in Indiana and hit a W-2G jackpot as I did before this new law went into effect, I wouldn’t need to go through the hassle I described earlier of filing a non-resident Mississippi state return. I could simply take the amount of the Mississippi tax withheld as a credit against my Indiana state taxes. Since I now live in Nevada, which has no state tax, and I file as a business, if I have Mississippi tax withheld, I can list that amount as a business expense.
Posted by: queenofcomps@cox.net
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