How Do Taxes Work Out of State?

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Tax forms on a table

We get a lot of questions about taxes. We’re not accountants, and will always advise people to consult with an accountant familiar with gambling tax rules, but we will always do our best to offer some general guidance where we can. 

Here’s an example of a question we’ve received on the subject:

Regarding taxes. If you are a California resident but win hand pays in a different state, what is the rule? For example, we won three hand pays in Reno, NV in one weekend but we’re never asked if we wanted taxes taken out. Is there an exception because it was in another state?

Treiva

Thanks for the question! When it comes to taxes there are three considerations:

  • Federal taxes, which is consistent wherever you are in the United States.
  • The state tax requirements in the state you live
  • The state tax requirements in the state you are playing

If you’re out of state, you may not be given the option to deduct state taxes for your home state. In some states, like Nevada, where there is no state income tax to speak of, you may not even be asked if you want any taxes deducted from your jackpot.

What that means is you’ll have to pay the taxes when you file with your home state, so you should be prepared to set a portion of that aside. In this way you won’t be caught unprepared and scrambling for a few extra dollars come tax time.

Keep in mind the state you gamble may have its own filing requirements. Winning a jackpot in Massachusetts, for instance, even if you’re out of state, requires you to file with Massachusetts, which means you would be filing in multiple states, and the expenses that goes along with that.

Jackpots can be an exciting experience, but it certainly creates its share of paperwork as well when it comes to tax time.

Have a question? Submit yours here!


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4 Replies to “How Do Taxes Work Out of State?”

  • Phillip Bogoslowski says:

    Another part of this is if you are Canadian. If you win a jackpot in Nevada at least, you automatically lose the taxes amount. So if you win $3400, then you will get paid approximately $2300. But you can file the proper forms which can be pricey, but you can get the taxes back. I’ve heard it can be a couple hundred to fill out the proper paperwork the first time, but I’m unsure at the moment. I’m going to be doing this for a handpay I got last February for the first time.

    • FlipTheSwitch.com says:

      Good point Philip – some countries’ players do get taxed upfront, but can request it be refunded. We’ve also spoken to players who work with third-party firms who do all the work for them – while a cost, it ensures it’s done right and they get the bulk of the money back.

  • PAMELA ROHS-GOLD says:

    Recently I saw one person win a hand pay on a slot machine but then had his friend switch seats and pretend he won it….is there a problem with that legally ?

    • FlipTheSwitch.com says:

      Thanks for the question! There are casinos that will check the cameras to avoid any issues like this – there’s even been stories about how the casino will roll back the tape and say that because person X hit the button, they have to claim the jackpot. Technically if person A hits the button and person B claims it, it’s leading the casino to file inaccurate tax documents, but like many things some will simply be more strict bout it than others.

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