Understanding Income Tax on Gambling Winnings for Non-Resident Minnesotans

In the state of Minnesota, both residents and non-residents are required to pay taxes on gambling winnings. While residents are taxed at a certain rate, non-residents may have a different experience. This article delves into the details of whether non-residents in Minnesota must pay income tax on gambling winnings and what they need to know about the process.

1. Do non-residents pay income tax on gambling winnings in Minnesota?

Yes, non-residents are required to pay income tax on gambling winnings in Minnesota. The state does not differentiate between residents and non-residents when it comes to taxing gambling winnings. Therefore, anyone who wins money from gambling in Minnesota must report these winnings and pay the appropriate tax.

2. How much tax do non-residents pay on gambling winnings in Minnesota?

Non-residents in Minnesota are taxed at a rate of 6.85% on their gambling winnings. This rate is the same as the rate for residents. However, non-residents must also pay a 0.75% tax on their winnings, which is known as the "tax on tax." Therefore, the total tax rate for non-residents on gambling winnings is 7.6%.

3. How do non-residents report gambling winnings in Minnesota?

Non-residents who win money from gambling in Minnesota must report these winnings on their state income tax return. They should use form M1 to report their winnings. The form requires them to provide the following information:

- The amount of winnings

- The date of the win

- The name and address of the gambling establishment

If the gambling establishment withholds tax from the winnings, non-residents should also include the amount withheld on form M1.

4. Are there any exceptions to the tax on gambling winnings for non-residents in Minnesota?

Yes, there are a few exceptions to the tax on gambling winnings for non-residents in Minnesota. These exceptions include:

- Winnings from bingo, pull tabs, and raffles are not subject to state income tax.

- Winnings from certain lottery games, such as Mega Millions and Powerball, are not subject to state income tax if the prize is less than $600.

- If a non-resident's total gambling winnings for the year are less than $600, they do not need to report these winnings on their state income tax return.

5. Can non-residents claim a refund on gambling winnings tax in Minnesota?

Non-residents who have paid tax on their gambling winnings in Minnesota may be eligible for a refund if they have overpaid their tax. To claim a refund, they must file an amended state income tax return using form M1X. They should include a copy of the original tax return and the form M1X, along with any supporting documentation that proves they have overpaid their tax.

In conclusion, non-residents in Minnesota are required to pay income tax on their gambling winnings. The tax rate is 7.6%, and they must report their winnings on their state income tax return. However, there are exceptions to the tax on certain types of winnings, and non-residents may be eligible for a refund if they have overpaid their tax.

Questions and Answers:

1. Q: Are non-residents taxed on all types of gambling winnings in Minnesota?

A: Yes, non-residents are taxed on all types of gambling winnings in Minnesota, except for certain exceptions mentioned earlier.

2. Q: Do non-residents have to pay tax on gambling winnings from online casinos in Minnesota?

A: Yes, non-residents are taxed on gambling winnings from online casinos in Minnesota, as long as the winnings are subject to state income tax.

3. Q: Can non-residents deduct gambling losses from their taxable winnings in Minnesota?

A: No, non-residents cannot deduct gambling losses from their taxable winnings in Minnesota. They can only claim a refund if they have overpaid their tax.

4. Q: Is there a minimum amount of gambling winnings that non-residents must report in Minnesota?

A: Yes, non-residents must report gambling winnings in Minnesota if the total amount of winnings is $600 or more. However, if the winnings are from certain lottery games and the prize is less than $600, they do not need to report these winnings.

5. Q: Can non-residents claim a refund on tax withheld from gambling winnings in Minnesota?

A: Yes, non-residents can claim a refund on tax withheld from their gambling winnings in Minnesota if they have overpaid their tax. They must file an amended state income tax return using form M1X to claim the refund.