Whether it's $5 or $5,000, from an office pool or from a casino, all gambling winnings must be reported on your tax return as 'other income' on Schedule 1 (Form 1040), line 8.If you win a non-cash. If you are deducting state income taxes paid on Schedule A then by all means take the deduction. Since you won the money in IN, IN can tax it. You need to file a non-resident IN return showing the.

Indiana deductions are used to reduce the amount of taxable income. First, check the list below to see if you're eligible to claim any of the deductions. If you are, you'll claim them when you file your annual Indiana income tax return - Form IT-40 or IT-40PNR.

Are Gambling Winnings Taxable In Indiana 2018

Important: Some deductions available for earlier tax years may not be listed below. Find information on prior tax year deductions on their respective webpages.

Updated March 3, 2020

• Civil Service Annuity Deduction

  Details

  If you received a civil service pension (nonmilitary*) and are at least 62 years of age, then you may be eligible for up to a $16,000 deduction. Beginning with tax year 2015, a surviving spouse (no minimum age requirement) may be eligible to claim the deduction.
  For each qualifying individual, the deduction is limited to:

  • the lesser of the amount of taxable civil service annuity income included in federal adjusted gross income or $16,000,
  • less all amounts of Social Security income and tier 1 Railroad Retirement income (issued by the Railroad Retirement Board) received by the qualifying individual (as reported on Form 1040, line 20a, or Form 1040A, line 14a).

  Example: The taxable amount of your civil service annuity is $6,000. You received $1,200 in Social Security income. You are age 67.

  Here is how to figure your deduction.
  Lesser of the taxable amount of the annuity or $16,000............... $6,000
  Total of Social Security/tier 1 Railroad Retirement income ........ - $1,200
  Allowable deduction .......................................................................... $4,800
  *See Military service deduction: Active, reserve and retirement pay for information about the taxability of military pension income.

  Who is eligible?

  You may qualify if your federal form includes federal civil service annuity income and you are at least 62 at the end of the tax year or a surviving spouse.

  Additional Forms

  Schedule 2, Schedule C

• Disability Retirement Deduction

  To qualify for this deduction you must have:

  • Been permanently and totally disabled at the time of your retirement;
  • Retired on disability before the end of the year; and
  • Received disability retirement income in the tax year.

  If you meet these requirements, view Schedule IT-2440.

• Enterprise Zone Employee Deduction

  Details

  Certain areas within Indiana have been designated as enterprise zones. These zones are established to encourage investment and job growth in distressed urban areas.

  If you lived in and were an employee in one of these zones, and worked for a qualified employer in that zone, you may be eligible to claim a deduction. Your employer will provide you with a form IT-40QEC if you're eligible to claim this deduction.

  If your employer provided the form IT-40QEC to you, your deduction will be one-half of the earned income shown on that form, or $7,500, whichever is less. Make sure to keep the IT-40QEC with your records as the department may request it at a later date.

  Who is eligible?

  Your employer will provide for IT-40QEC if you work in an enterprise zone. You must both live and work in an enterprise zone to be eligible.

  Additional Forms

  Schedule 2, Schedule C

• Human Services Tax Deduction

  Details

  You might be able to take this deduction if you lived in Indiana and:

  • Received Medicaid payments;
  • Were not living at home; and
  • Were receiving care in a hospital, skilled nursing facility, an intermediate care facility, licensed county home, licensed boarding or residential home, or a certified Christian Science facility.*

  If you meet the above requirements, see the instructions for Schedule 2, line 11 in the individual income tax booklet to see if you're eligible to claim the deduction and to help you figure it.
  *An eligible Christian Science facility must be listed with and certified by the Commission for Accreditation of Christian Science Nursing Organizations/Facilities, Inc.

  Who is eligible?

  Any Medicaid recipients who are living in a hospital, skilled nursing facility, intermediate care facility, licensed county home, licensed boarding or residential home, or a Certified Christian Science facility.

  Additional Forms

  Schedule 2, Schedule C

• Indiana Net Operation Loss Deduction

  Details

  You may take a deduction for the Indiana portion of the federal net operating loss deduction (NOL) you added back on line 2 of Schedule 1. (This will be a net operating loss deduction from an earlier year(s) carried forward to 2017.) Write the amount you deduct as a positive figure.

  Note: It is possible to have an Indiana NOL without also having a federal NOL. See Schedule IT-40NOL (link to: 5695.htm) for more information.

  Who is eligible?

  You may take this deduction for the Indiana portion of the federal net operating loss deduction (a net operating loss from an earlier year carried forward) or if there is a state-only net operating loss.

  Additional Forms

• Indiana Partnership Long Term Care Policy Premiums Deduction

  Details

  Indiana has a Long Term Care Insurance Program, which is an innovative partnership between the State of Indiana and private long-term care insurance companies. The premiums paid for this policy are eligible for a deduction.
  The Indiana Partnership policy will have the following box of information on the outline of coverage, the application, or on the front page of the policy:

  This policy qualifies under the Indiana Long Term Care Program for Medicaid asset protection. This policy may provide benefits in excess of the asset protection provided in the Indiana Long Term Care Program.

  Find out more about this program.
  Claim the deduction on your form IT-40 Schedule 2, or IT-40PNR Schedule C.

  Who is eligible?

  Anyone paying premiums for Indiana partnership long term care insurance.

  Additional Forms

• Interest from U.S. Government Obligations Deduction

  Details

  If you've included any interest from U.S. government obligations on your Indiana tax return, you're eligible for a deduction.

  Examples of U.S. government obligations include U.S. Savings Bonds, U.S. Treasury Bills and U.S. Government Certificates. This interest is usually reported on federal Schedule B.

  Interest income reported from a trust, estate, partnership or S corporation that is from the U.S. government obligations is also deducted.

  Who is eligible?

  Any income that is a direct obligation of the U.S. government such as U.S. savings bonds, U.S. Treasury bills and certificates.

  Additional Forms

  Schedule 2, Schedule C

• Military Retirement Income and/or Survivor's Benefits Deduction

  Details

  The taxability of this type of income is being phased out over the next four years. Beginning with 2019, you may be eligible to deduct up to $6,250 of these benefits plus 25% of the amount received that exceeds $6,250. See the IT-40 instruction booklet for more information about these deductions.

  Who is eligible?

  Anyone who reports military retirement income and/or survivor's benefits is eligible.

  Additional Forms

  Schedule 2, Schedule C

• Military Service Deduction

  Details

  You are eligible to take a deduction if the income you report on your income tax return includes active or reserve military pay.
  Also, if you are retired from the military or are the surviving spouse of a person who was in the military, you may be able to take this deduction if:

  • You were at least 60 years of age by the end of the year;
  • You were receiving military retirement or survivor's benefits during the year; AND
  • The total benefits received as retirement income were reported on your federal return.

  This deduction is equal to the actual amount of military income received (i.e. military pay, retirement pay, and/or survivor's benefits) or $5,000, whichever is less. If both you and your spouse received military income, you may each claim the deduction for a maximum of $10,000.
  Note: Military income earned while in a combat zone may be exempt (not taxed) on your federal income tax return. If that income is exempt on your federal income tax return, then it will also be exempt (not taxed) for Indiana income tax purposes. Since Indiana isn't taxing this income, your combat zone income is not eligible for a deduction.

  Who is eligible?

  Anyone who has income that may include active or reserve military pay.

  Additional Forms

  Schedule 2, Schedule C

• National Guard and Reserve Component Members Deduction

  Details

  There is a deduction for certain members of the reserve components of the Army, Navy, Air Force, Coast Guard, Marine Corps or the Merchant Marine, or a member of the Indiana Army National Guard or the Indiana Air National Guard.

  A deduction is available for the income received as a result of service on involuntary orders during the period the above members were deployed and mobilized for full-time service, or during the period the above member's Indiana National Guard unit was federalized.

  See instructions in the IT-40 Instruction booklet for more information.

  Who is eligible?

  A member of the reserve components of the Army, Navy, Air Force, Coast Guard, Marine Corps or Merchant Marine OR a member of the Indiana Army National Guard or Indiana Air National Guard may be eligible.

  Additional Forms

  Schedule 2, Schedule C

• Olympic/Paralympic Medal Winners Deductions

  Details

  You are eligible for a deduction if you won a gold, silver and/or bronze medal from participating in the Olympic/Paralympic games. The deduction equals the value of the medal(s) won plus the amount of income received during the taxable year from the United States Olympic Committee as prize money for winning the Olympic medal(s).

  Who is eligible?

  Anyone who won a gold, silver and/or bronze medal from participating in the Olympic/Paralympic games.

  Additional Forms

  Schedule 2, Schedule C

• Private School/Homeschool Deduction

  Details

  You may be eligible for a deduction based on education expenditures paid for each dependent child who is enrolled in a private school or is homeschooled.

  • Your dependent child must be eligible to receive a free elementary or high school education in an Indiana school corporation;
  • You must be eligible to claim the child as a dependent on your federal tax return; AND
  • The child must be your natural or adopted child, if not, you must have been awarded custody of the child in a court proceeding making you the court appointed guardian or custodian of the child.

  Who is eligible?

  If you have education expenditures for each dependent child who is enrolled in a private school or homeschooled you may be qualified for a $1,000 deduction per qualified child.

  Additional Forms

  Schedule 2, Schedule C

• Qualified Patents Income Exemption Deduction

  Details

  Some of the income from qualified patents included in federal taxable income may be exempt from Indiana adjusted gross income tax. A qualified patent is a utility patent or a plant patent issued after Dec. 31, 2007, for an invention resulting from a development process conducted in Indiana. The term does not include a design patent. You must maintain the completed Schedule IN-PAT with your records as the department can require you to provide it at a later date.

  Who is eligible?

  Anyone with a qualified patent, that has federal taxable income from a qualified patent may be exempt from Indiana adjusted gross income tax.

  Additional Forms

• Railroad Unemployment and Sickness Benefits Deduction

  Details

  Benefits issued by the U.S. Railroad Retirement Board are not taxable by Indiana. Deduct unemployment and/or sick pay benefits issued by the U.S. Railroad Retirement Board on this line if:

  • You included these benefits as taxable income on your federal tax return, and
  • You did not already deduct these benefits on Schedule 2, lines 5 and/or 6.

  Do not include any supplemental sick pay benefits on this line. Make sure to keep the statements (such as Form 1099G) issued by the U.S. Railroad Retirement Board as the department may request them at a later date.

  Who is eligible?

  If you were issued benefits by the U.S. Railroad Retirement Board you may be eligible.

  Additional Forms

  Schedule 2, Schedule C

• Recovery of Itemized Deductions, Including State Tax Refund

  Details

  If you included 'recovered' itemized deductions as other income on your federal income tax return, then that amount should be deducted on your Indiana income tax return.
  A recovered state tax refund should be reported on its own line called 'State tax refund reported on federal return' on the deduction schedule (IT-40 Schedule 2, or IT-40PNR Schedule C).
  All other recovered itemized deductions should be reported on the line called 'Recovery of deductions' on the deduction schedule (IT-40 Schedule 2, or IT-40PNR Schedule C).

  Who is eligible?

  Anyone who completed the 'other income' line on the federal Form 1040/1040-SR.

  Additional Forms

  Schedule 2, Schedule C

• Renter's Deduction

  Details

  You may be able to deduct up to $3,000 of the rent paid on your Indiana home.
  You may be able to take this deduction if:

  • You paid rent on your principal place of residence, AND
  • The place you rented was subject to Indiana property tax.

  Your 'principal place of residence' is the place where you have your true, fixed, permanent home and where you intend to return after being absent.
  Rent paid for summer homes or vacation homes is not deductible.
  You cannot claim the renter's deduction if the rental property was exempt from Indiana property tax. Examples of this type of property are:

  • Government owned housing;
  • Property owned by a nonprofit organization;
  • Student housing;
  • Property owned by a cooperative association; and
  • Property located outside of Indiana.

  How much rent can I take off? You can deduct up to $3,000 or the amount of rent paid, whichever is less.
  Example: Emily paid $4,800 in rent on her principal residence. She will claim a $3,000 renter's deduction.
  Example: Bill paid $400 in rent at his first apartment, moved to another location and paid $3,300 for the remainder of the year. His deduction will be limited to $3,000 even though he paid $3,700 altogether.

  Who is eligible?

  Anyone who paid rent on your principal place of residence AND rented a place that was subject to Indiana property tax.

  Additional Forms

  Schedule 2, Schedule C

• Repayment of Previously Taxed Income Deduction

  Details

  You may be able to claim a deduction for the repayment of previously taxed income, also known as “claim of right,” if:

  • You reported the income to Indiana in a previous year,
  • You repaid some or all of it this year, and
  • For federal tax purposes, you are eligible to:
    • claim the repayment as an itemized deduction, or
    • claim a credit based on the repayment amount.

  Example: Ryan was a full-year Indiana resident in 2018, and received $1,700 unemployment compensation that year. He reported the full amount on his 2018 federal and Indiana income tax returns. Early in 2019 Ryan found out he had to repay $345 of that compensation; he repaid it that June. For 2019 federal tax purposes he is eligible to claim an itemized deduction* based on the $345 amount repaid. Ryan is eligible to claim the $345 amount as a repayment of previously taxed income as a deduction on his 2019 state tax return.
  *In this example Ryan is not required to claim itemized deductions when figuring his federal taxable income; he may have opted to use the standard deduction instead. Regardless, he is still eligible to claim the deduction on his state tax return.
  Important: Indiana does not tax Social Security income. Therefore, if you repaid some Social Security income during the year, it is not eligible for a deduction based on being repaid (because Indiana did not previously taxed this income).
  See the IT-40 instruction booklet for more information about the Repayment of Previously Taxed Income.

  Who is eligible?

  Anyone who has:

  • reported income to Indiana in a previous year
  • repaid some or all of it this year AND
  • for federal tax purposes is eligible to claim the repayment as an itemized deduction or claim a credit based on the repayment amount

  Additional Forms

  Schedule 2, Schedule C

• Residential Homeowner's Property Tax Deduction

  Details

  You may be able to take a deduction of up to $2,500 of the Indiana property taxes paid on your principal place of residence. Your principal place of residence is the place where you have your true, fixed home and where you intend to return after being absent.

  Who is eligible?

  Anyone who pays property taxes on their principal place of residence in Indiana.

  Additional Forms

  Schedule 2, Schedule C

• Social Security and Railroad Retirement Benefits

  Details

  Indiana does not tax Social Security and railroad retirement benefits issued by the Railroad Retirement Board.
  All Social Security benefits and/or railroad retirement benefits (issued by the Railroad Retirement Board) included in the income taxed on your federal income tax return should be deducted on your Indiana tax return.

  Who is eligible?

  Anyone who received Social Security income and/or railroad retirement benefits that are issued by the U.S. Railroad Retirement Board and included in federal adjusted gross income.

  Additional Forms

  Schedule 2, Schedule C

• Unemployment Compensation Deduction

  Details

  Indiana may tax a smaller amount of unemployment compensation than what is being taxed on your federal income tax return. Make sure to enclose your 1099G to claim the deduction.

  Who is eligible?

  Anyone who reported unemployment compensation on the federal income tax return may be eligible.

  Additional Forms

  Schedule 2, Schedule C

Powerball prizes are subject to tax so it is not just a case of looking at the advertised amounts to see how much money you would receive if you won. The rate of withholding depends on how much you win and the jurisdiction in which you buy your ticket. A federal tax is levied on all winners of prizes greater than $5,000, while many of the participating states apply their own tax on top of this. In addition, some locations, such as New York City, levy a local tax on lottery winnings.

You can find out how much tax you might have to pay below. As it is such a complex issue, you should consult a financial expert in the event of a big lottery win so that you're fully aware of your tax obligations.

Federal Taxes on Lottery Winnings

Lottery winnings are treated as income in the United States, so your final tax bill depends on how much money you make in total in a year, not just the amount you win in the lottery. The following table shows the federal tax obligations for a Powerball winner filing as a single taxpayer. The rates you pay may differ depending on your individual circumstances.

Federal tax rules are consistent across the U.S. You do not have to pay tax on any prize up to $600, but you must report your winnings to the Internal Revenue Service (IRS) if you win an amount between $600.01 and $5,000. You will be issued a W-2G form to complete with your tax returns.

Are Gambling Winnings Taxable In Indiana 2019

A federal tax of 24 percent will be taken from all prizes above $5,000 (including the jackpot) before you receive your prize money. You may then be eligible for a refund or have to pay more tax when you file your returns, depending on your total income. If you win the jackpot you will be subject to the top federal tax rate of 37 percent. Players who are not U.S. citizens are subject to an initial federal tax payment of 30 percent rather than 24 percent.

Deductions for Gambling Losses

Playing the lottery is classed as gambling as far as the Internal Revenue Service (IRS) is concerned, which means that you are entitled to a tax deduction on any losses incurred. To file these deductions, you will need to keep an accurate record of your wins and losses, as well as any evidence of them, such as the tickets you bought. You must itemize the deductions on the tax form 1040, obtainable from the IRS website. The losses you deduct cannot exceed your income from all forms of gambling, including but not limited to horse racing, casinos, and raffles.

If you win the jackpot and take the annuity payout, the annual payments will be recorded individually in each tax year, and will count towards your gambling income for that year. This should be taken into consideration when recording wins and losses for tax deduction purposes.

State Taxes

In addition to federal taxes, your Powerball winnings may also be subject to state taxes. It is important to remember that the tax levied on your prize will not only vary by state but also depending on your individual circumstances.

The following table shows the rate of withholding for each participating jurisdiction, along with the threshold for when prizes start to be taxed at a state level.

Tax Calculator

Use the tax calculator below to calculate how much of your payout you would be taking home following the respective federal and state taxes that are deducted. Just enter the amount you have won and select your state. Then select if this was the jackpot or not, and if it was then choose whether you took the annuity option or cash lump sum.

Local Taxes

In addition to federal and state taxes, many cities, counties and municipalities in the United States levy a local income tax. This can vary greatly depending on the location, but in all cases it will be applied on top of any other income taxes. New York City, for example, applies a local tax of 3.876 percent in addition to the top state income tax rate of 8.82 percent and the top federal rate of 37 percent.

This means that a New York resident who opts for the cash lump sum payout of Powerball’s starting jackpot will end up with a final payout of roughly $8.4 million, just 42 percent of the advertised $20 million (*During the Coronavirus pandemic, the starting jackpot may be lower than this) prize. Being aware of these rules before you make a prize claim can protect you from the shock of seeing millions of dollars slashed from your prize money.

Are Gambling Winnings Taxable In Indiana State

Taxes for Lottery Pools

If you win a large prize as part of a lottery pool, you are still required to pay taxes on your winnings. Each member of the group will be liable to pay their share of taxes, so everyone will need to report the income when filing their returns. Some states make this easy, as they allow each member of a lottery pool to claim individually through a shared or multiple ownership claim. In these cases the prize money will be paid directly to each member of the pool and the appropriate taxes will be withheld at the point of payment.

Are Gambling Winnings Taxable In Indiana 2020

It gets slightly more complicated when the entirety of the prize money is paid to one representative, who is then responsible for distributing the winnings to other people. In these cases, anyone receiving a share of the money who is not named as the actual winner will need to complete IRS form 5754 to report the income. This will need to be filled out by every member of the group except the named claimant before the prize money is distributed. Form 5754 must be filed by December 31st of the tax year in which the prize was paid.

In the event of a big prize win, you should contact your state lottery for further guidance about your tax obligations and what you need to do to report the income correctly.