Gross income test
A winner must file a Connecticut income tax return and report his or her gambling winnings if the winnerís gross income for the 2009 taxable year exceeds:
$12,000 and the winner is filing separately;
$13,000 and the winner is filing single;*
$19,000 and the winner is filing head of household; or
$24,000 and the winner is filing jointly or qualifying widow(er) with dependent child.
A winnerís gross income includes all income received in the form of money, goods, property, and services not exempt from federal income tax and any additions required to be reported on Form CT-1040, Schedule 1. Gross income includes but is not limited to compensation for services including wages, fees, commissions, taxable fringe benefits, and similar items; gross income from a business; capital gains; interest and dividends; gross rental income; gambling winnings; alimony; taxable pensions and annuities; prizes and awards; income from partnerships, S corporations, estates, and trusts; individual retirement account distributions; unemployment compensation; and federally taxable Social Security benefits.
If a winnerís gross income does not exceed the applicable gross income threshold and Connecticut income tax has been withheld from his or her gambling winnings, the Connecticut income tax will not be refunded to the winner unless he or she files a Connecticut income tax return.
2. Are gambling losses deductible?
Gambling losses are not deductible for Connecticut income tax purposes even though, in certain circumstances, they are deductible for federal income tax purposes.
3. May a resident or part-year resident claim a credit against his or her Connecticut income tax for income tax paid to another state on gambling winnings?
No. Neither a resident nor part-year resident is eligible to claim a credit against his or her Connecticut income tax for income tax paid to another state on gambling winnings.
4. Will Connecticut income tax be withheld from gambling winnings?
Connecticut income tax will be withheld from a payment of gambling winnings if all of the following conditions are met:
The payer maintains an office or transacts business in Connecticut;
The payment is subject to federal income tax withholding; and
The payment is made to a resident or to someone receiving the payment on behalf of a resident.
For example, a dog track located within Connecticut must withhold Connecticut income tax from a payment of winnings only if the payment is subject to federal income tax withholding and the payment is made to a resident or to someone receiving the payment on behalf of a resident. Also, if a payer of gambling winnings is a nonprofit organization maintaining an office or carrying on activities in Connecticut, the nonprofit organization must withhold Connecticut income tax from a payment of gambling winnings if it is required to withhold federal income tax from the payment and the payment is made to a resident or to someone receiving the payment on behalf of a resident.
The fact that federal or Connecticut income tax may have been withheld from a winnerís winnings does not excuse the winner from filing a federal income tax return or a Connecticut income tax return.
Connecticut income tax will not be withheld from gambling winnings if the payer does not maintain an office or transact business in Connecticut, if the payment is not subject to federal income tax withholding, or if the payment is not made to a resident or someone receiving the payment on behalf of a resident.
5. Is a winner required to provide his or her name, address, and Social Security Number (SSN) to the payer?
Yes. A winner is required by federal law to provide proper identification to verify his or her name, address, and Social Security Number.
6. How is a winnerís residency status determined?
A payer of gambling winnings determines the residency status of a winner based upon the address furnished and the identification provided by the winner. The payer must additionally require two forms of identification from the winner including but not limited to a Social Security card or a driverís license.
7. What if there is more than one winner?
If more than one person is entitled to a share of the winnings subject to reporting or withholding, one federal Form 5754, Statement by Person(s) Receiving Gambling Winnings, must be completed identifying each person entitled to a share. Federal Form 5754 is also used when the person receiving gambling winnings subject to reporting or withholding is not the actual winner. This form will list the name, address, and taxpayer identification number of all persons receiving any payment of the winnings. The form must be signed, under penalty of perjury, by the person or persons receiving the winnings. The payer uses the information on federal Form 5754 to prepare federal Form W-2G for each of the winners. A copy of federal Form 5754 must be retained by the payer. A copy of federal Form 5754 need not be submitted to DRS, but must be made available upon request. If the person receiving the winnings is unable to properly identify any of the persons entitled to a share of the winnings or their state of residence, the amount of the winnings applicable to the other person is considered to have been won by a resident of Connecticut and Connecticut income tax must be deducted and withheld from the winnings.
8. Will payments of gambling winnings be reported to DRS?
If a payer of gambling winnings maintains an office or transacts business in Connecticut, the payer is required to report payments of gambling winnings to DRS if the payer is required to report the payment to the IRS and the payment is made to a resident or to someone receiving the payment on behalf of a resident.
The fact that a payer may not have been required to report a payment of gambling winnings to the IRS does not excuse the winner from reporting those winnings for federal and Connecticut income tax purposes.
While payers of gambling winnings not maintaining an office or transacting business in Connecticut are not required to report payments to DRS, the IRS provides information about gambling winnings of Connecticut residents to DRS.
Effect on Other Documents: Informational Publication 2008(13), Connecticut Income Tax Treatment of Gambling Winnings Other Than State Lottery Winnings, is modified and superseded and may not be relied upon on or after the date of issuance of this Informational Publication.
Effect of This Document: An Informational Publication issued by DRS addresses frequently-asked questions about a current position, policy, or practice, usually in a less technical question and answer format.
For More Information: Call DRS during business hours, Monday through Friday:
TTY, TDD, and Text Telephone users only may transmit inquiries anytime by calling 860-297-4911.
Forms and Publications: Visit the DRS website at www.ct.gov/DRS to download and print Connecticut tax forms and publications.