It’s not uncommon for a slot machine player to play at a casino outside their home state. That sometimes leads to confusion over the way taxes work, particularly at the state level.
This is one example of a question I’ve fielded recently:
When you hit a Jackpot from a state that has a state tax, why should I be forced to pay it when my state does not have a state tax?
The answer is pretty simple really – like many other laws that we have to obey when in a state physically, certain states make it part of the rules of engagement that you have to deal with when gambling in a state, by making it a requirement that you pay state tax on jackpot handpays.
So, when you have to pay a state in which you’re gambling at the time, it’s because that’s the rules with which a casino and a gambler has to abide by within when you’re in that state, not unlike how American citizens have to abide by US taxable handpay laws nationwide when we’re in the US, but not when we’re in Canada.
This will mean that you may have a more complicated tax filing journey because you have an additional state or more to contend with, depending on your situation. If this is something you wish to avoid, you may want to do a bit of homework around which casinos are in states that have these requirements, and play at ones that don’t, just to avoid the hassle.
The reality is filing an additional state usually isn’t a massive difference in cost and time effort, and the state tax is usually marginal (a few percent is what I’ve traditionally seen). That said, some people hate any money at all being pulled from their casino wins, given the casino losses that usually come with them, so they want to avoid those expenses at all costs.
If that’s you, a little extra homework can yield a bit less hassle in that department.