Tax Question

[Bigsmc]

Originally Posted by cal828

Just curious. Do betting services like youbet and others report your total winnings on a 1099 to the IRS or do they just report single winnings over $600?

Only the W2G's

[Danzig]

saw turbo tax mentioned above....i highly recommend. i did my taxes last monday evening and already got state back, and will have (if it isn't there already) federal any day now....direct deposit baby.
it takes longer the first time you do it...but every year after that, it retrieves all your info, so no re-entering stuff.

i don't make a red cent, so sorry if it sounds like a commercial...but seriously, give it a try.

[Port Conway Lane]

Just to update and for those of you who may be as ignorant as I was of the tax laws I was assessed an interest penalty from the state of Maryland for $81 because I did not report the contest winnings. I was required to report those winnings when I received the check and pay the state an estimated tax. This could apply to gambling winnings as well.
Freakin thieves.

[Holland Hacker]

Originally Posted by Port Conway Lane

Just to update and for those of you who may be as ignorant as I was of the tax laws I was assessed an interest penalty from the state of Maryland for $81 because I did not report the contest winnings. I was required to report those winnings when I received the check and pay the state an estimated tax. This could apply to gambling winnings as well.
Freakin thieves.

Generally speaking estimated taxes are due on taxes and should be equal to 100% (or 150% for High AGI taxpayers) of prior year tax or 90% of your current year tax liability. Assuming you had other income in Maryland in last year and had at least an amount equal to or greater than last years tax paid in through withholodings you shouldn't owe the underpayment penalty. If you didn't file in Maryland in a prior year I'm not sure if you can rely on the prior year safe harbor. You can check the requirments found in the instructions.

Out of curiosity do you live in Maryland? I'm trying to figure out why Maryland is entitled to any tax. What if anything did the terms & conditions of the contest say with respect to taxes?

[Port Conway Lane]

Any income I earn is taxed by Maryland. They ask for my agi on my federal form and because the contest winnings are part of the agi Maryland wants their cut AND wants it (estimated tax on the winnings)within one quarter after I cash the check. I failed to do so and now they hit me with the interest penalty.
Unfortunately my employer took out the bare minimum in witholding so it was not enough to cover the $5,000.

While I'm typing if anyone is interested in a slew of Blood Horse and racing forms from the early to mid 80's I'm moving and trashing them within two weeks. PM me if interested, I live in Laurel 4 miles south of the track.

[Holland Hacker]

Here is a blurb from Marylands webite for estianted taxes on gambling winnings:

Gambling Winnings
If you receive winnings from Maryland lottery games, racetrack betting or gambling, you must pay income tax on the prize money. This would apply if you were either a resident of Maryland or a nonresident.

If your winnings total more than $5,000, Maryland income taxes will automatically be withheld from your newfound income.

If your prize money totals between $500 and $5,000, you must file Maryland Form 502D and pay the tax on that income within 60 days from the time you receive the prize money.

You should calculate the amount of tax due following the instructions included with Form 502D. You can claim a credit for taxes paid with Form 502D when you file your annual income tax return.

If you win less than $500, you don't have to file Form 502D, but you still must report the winnings and pay tax on it when you file your annual state income tax return.

If you fail to pay the required estimated taxes due or report income, you could be subject to penalty and interest charges.

It appears as though you are correct that you owe the underpayment penalty. I did not see the typical safe harbor provisions based on prior years that most other states have in Maryland, and I thought I had it rough in Nj wih taxes.

[Riot]

If your prize money totals between $500 and $5,000, you must file Maryland Form 502D and pay the tax on that income within 60 days from the time you receive the prize money.

Wow - seems a sneaky way for the state to accumulate some P & I income. Who would think this would be something that couldn't fairly wait for the annual visit with one's CPA?

[Port Conway Lane]

Originally Posted by Holland Hacker

Here is a blurb from Marylands webite for estianted taxes on gambling winnings:

Gambling Winnings
If you receive winnings from Maryland lottery games, racetrack betting or gambling, you must pay income tax on the prize money. This would apply if you were either a resident of Maryland or a nonresident.

If your winnings total more than $5,000, Maryland income taxes will automatically be withheld from your newfound income.

This could be complex and I wonder how this works with ADW's. Let's say someone lives in California and wagers on the Preakness through Twinspires and cashes a signer for 2k.The feds get a 1099 and the guy reports all of his gambling income proving he lost more than 2k during the year clearing him of any tax liability.

1) He is required to report the $2,000 to Maryland.
2) Does Twinspires send Maryland a 1099?
3) I live in Prince Georges County in which I am taxed 55% of my state tax. Does this guy pay less on that gambling income than I do?
4)He was able to negate The $2,000 with the feds. Does he have to prove he lost $2,000 on Maryland racing during the year to avoid being taxed by Maryland?

In theory everyone is required to report gambling income whether or not it is reported to the IRS. The ADW's have every wager made by an individual which makes me wonder: If a person wins $1,000 on Kentucky and Florida racing during the course of the year they could be taxed on that income, assuming the laws in those states are the same as Maryland,despite the fact that their total gambling income on all tracks could show a loss.

I'm unsure if the above is a fact but that's the way I read it according to the blurb posted by H.H.