Form 1042-S for Gambling Winnings

[jrubiojr]

Have a client who had some winnings in the lottery, they are both Resident Aliens and file 1040 accordingly,,why the state issued 1042-S instead of W2G, I don't know...but I am assuming I should be able to report as W2G gambling winnings and fine with it. Opinions?

[Koss]

Withholding?

Was tax withheld?

If so, I don't think you should key the form as a 1099-G. That's just not what it is. If you want to e-file the return, and there is tax withheld, you have to enter it on the correct form.

I don't know whether your software supports e-filing for Form 1042-S. In fact, I don't know whether my software supports e-filing for Form 1042-S.

If there was no tax withheld, then you can enter the winnings as gambling winnings that were not reported on Form 1099-G, e.g., your client cashed a bunch of instant tickets throughout the year, each one under the withholding threshold, and actually decided to tell you about it.

That sounds like a really boneheaded move by a clerk at the state lottery office. They probably freaked out when the winner said he wasn't a US citizen. If your client is a resident alien, he is not a "foreign person." It's definitely not the right form.

You might be able to get them to re-issue it using the proper form.

BMK

[David1980]

I agree with Koss in that I would not enter it on a W-2G because you do not in fact have a W-2G. I also think the first thing to try to do would be to get the issuer to correct it by issuing a W-2G instead of the 1042-S.

If however it comes down to it and the are unwilling to issue the proper form, I would enter the tax withheld on the appropriate line of the 1040 and efile it without hesitation. Obviously the income is going to end up on line 21 and it's easy enough to enter something there. Most software lets you make adjustments somehow to the line for tax withheld.

If you were to file on paper, you would mail in all forms that have withholding. However, the IRS doesn't accept all forms that have withholding as part of the efile image. For example, a 1099-G or 1099-B with fed income tax withheld does not get included with the return electronically (the full list of what can go is at http://www.irs.gov/efile/article/0,,id=204167,00.html) so I don't feel so bad about them not getting the 1042-S in the efile image. (Which you'll notice also isn't on that list, so it isn't a question of whether the software supports transmitting a 1042-S with a 1040.)

If an IRS letter comes down the road the 1042-S with explanation can always be sent with response.