Indiana Gambling Winnings

[Bonnie]

I am in Kentucky and have a client who had gambling winnings at Caesars in Indiana. Of course they withheld IN state tax. I was going through the IN program to see if they have any refund and in doing an IN nonresident return it is calculating EIC for IN. I just don't see how this can be right so wanted some other input. Gambling winnings are $1522 and IN withheld $52 at the time of the win. The program is calculating $74 of EIC for IN and giving the TP a refund of $81. I called IN and asked about the EIC and was told by the person who answered the call that TP can claim the EIC for Indiana on the gambling winnings. I still question if this is correct as the woman in Indiana who I spoke with didn't seem very knowledgable and left me on hold a long time while researching this. I can't see IN giving them back more than was withheld when they won. Any thoughts would be appreciated.

Thanks
Bonnie

[Snaggletooth]

I Agree

Bonnie, I agree that this is very bizarre.

Many of the gambling states have got smart to withholding. MS and IN withheld maximum money from winnings. Their greed was their undoing. Non-residents filed literally millions of returns for refunds of less than $50-$60. Mississippi at one point was processing over twice as many non-resident returns as residents.

So they reduced their withholding rates. The withholding rates are now so meager that it is more trouble to file the return than the refund is worth. This was exactly their intent.

I can tell you quickly I am not familiar much with Indiana tax. But I can almost promise you if they have EIC, it is not from gambling winnings -- or if indeed this is the case, their legislators didn't intend it and it is a quirk.

[ChEAr$]

Eic?

I am in Kentucky and have a client who had gambling winnings at Caesars in Indiana. Of course they withheld IN state tax. I was going through the IN program to see if they have any refund and in doing an IN nonresident return it is calculating EIC for IN. I just don't see how this can be right so wanted some other input. Gambling winnings are $1522 and IN withheld $52 at the time of the win. The program is calculating $74 of EIC for IN and giving the TP a refund of $81. I called IN and asked about the EIC and was told by the person who answered the call that TP can claim the EIC for Indiana on the gambling winnings. I still question if this is correct as the woman in Indiana who I spoke with didn't seem very knowledgable and left me on hold a long time while researching this. I can't see IN giving them back more than was withheld when they won. Any thoughts would be appreciated.

Thanks
Bonnie

I read that you're saying a Kentucky resident (your client, since you say you are in KY),
had IN income, yet even as a non resident qualifies for EIC? Normally that's not the
case. EIC only for residents.

[Bonnie]

I read that you're saying a Kentucky resident (your client, since you say you are in KY),
had IN income, yet even as a non resident qualifies for EIC? Normally that's not the
case. EIC only for residents.

Yes, that is what is happening. I have Tax Slayer Pro software and it computes the EIC on the non resident form. I thought this couldn't be right but when I called IN the gal I spoke to said it is OK. ??? I'm still just not sure or comfortable with the whole thing. And the IN income was only the gambling winnings. All earned income was earned in KY.

Bonnie

[ChEAr$]

I'm amazed and appalled

Yes, that is what is happening. I have Tax Slayer Pro software and it computes the EIC on the non resident form. I thought this couldn't be right but when I called IN the gal I spoke to said it is OK. ??? I'm still just not sure or comfortable with the whole thing. And the IN income was only the gambling winnings. All earned income was earned in KY.

Bonnie

EIC for a non resident? will wonders never cease?

(whistling... "my bonnie lies over the ocean.... my bonnie. ...."

[ChEAr$]

Bonnie, you need to

Yes, that is what is happening. I have Tax Slayer Pro software and it computes the EIC on the non resident form. I thought this couldn't be right but when I called IN the gal I spoke to said it is OK. ??? I'm still just not sure or comfortable with the whole thing. And the IN income was only the gambling winnings. All earned income was earned in KY.

Bonnie

look at and read the Indiana instructions for EIC. I just looked and it says to qualify
one must be a full year or part year resident of the state. A non resident does not
qualify, and Tax Slayer should make that distinction if you've classified client correctly
as a non resident versus part year resident.

Or, is there something else I should know?

[Bonnie]

look at and read the Indiana instructions for EIC. I just looked and it says to qualify
one must be a full year or part year resident of the state. A non resident does not
qualify, and Tax Slayer should make that distinction if you've classified client correctly
as a non resident versus part year resident.

Or, is there something else I should know?

I just looked at IN web site and read the instructions for EIC. It says you must be an
IN resident and/or have income from IN sources. Well, my customer isn't an IN reisdent but does have income from IN gambling winnings so I guess that qualifies as the "Or". I checked with Tax Slayer Pro and this is the same info they gave me.

This is the craziest thing I have seen yet.

Bonnie