The majority of U.S. states impose an income tax on any income which is "sourced" within their state, for both residents and U.S. nonresidents (foreign nonresidents as well, but this post addresses just U.S. residents). This includes gambling income, which means that a poker player who travels to play in another state may be liable for state income tax to that state if they meet the minimum state income tax filing requirements for that state.
If you pay nonresident state income tax to another state, you may be able to deduct the amount paid to the other state from your own state income taxes, depending on the tax laws of your state. However, if you live in a state without a personal income tax, such as Florida, this does not exempt you from paying nonresident income taxes in the other states.
Here are a few examples for nonresident gambling income:
California: All gambling income is subject to CA state income tax except for CA Lottery winnings.
Connecticut: Casino gambling income in CT is not considered CT sourced income and therefore not subject to nonresident CT income tax. CT Lottery winnings of $5,000 or more are subject to CT state income tax for nonresidents.
Colorado: Gambling winnings for nonresidents is not subject to CO state income tax for amateurs, but is subject to CO state income tax for professional players as business income.
Illinois: Nonresident gambling income is not subject to IL state income tax except for IL Lottery winnings.
Iowa: All gambling income is subject to IA state income tax. Nonresidents are required to file an Iowa return if Iowa-source income, including gambling winnings, is $1,000 or more and gross income (from all sources, not just Iowa) is more than $9,000 if single or $13,500 for married filers.
Louisiana: All gambling income is subject to LA state income tax.
Minnesota: All gambling income is subject to MN state income tax.
Nevada: There is no personal state income tax.
New Jersey: All gambling income is subject to NJ state income tax except for NJ Lottery winnings.
New Mexico: All gambling income is subject to NM state income tax.
Pennsylvania: All gambling income is subject to PA state income tax except for PA State Lottery winnings.
Wisconsin: All gambling income is subject to WI state income tax, however the threshold for filing a WI state income tax return is $2000 or more gross income, including gambling winnings.
Article:
Russ Fox's blog on this topic.
Last edited by PokerXanadu; 04-07-2012 at 08:43 AM.