Hello to my fellow NH poker players.
State Director Patrick "Skallagrim" Fleming reporting on our glorious legislature's latest achievements.
The "Gambling Winnings" tax is upon us. But at least it is not as bad as the version that originally passed the House. It looks like our calls and letters made at least SOME difference.
Here is the important part of the law:
"77:38 Definitions. In this subdivision:
....
III. “Gambling winnings” means winnings from lotteries and games of chance including, but not limited to bingo, slot machines, keno, poker tournaments, and any other gambling winnings subject to federal income tax withholding.
IV. “New Hampshire entities” means establishments the purpose of which is to engage in any gaming regulated by the racing and charitable gaming commission and the sale of lottery tickets as permitted by the lottery commission.
77:39 Imposition of Tax.
I. A tax of 10 percent is imposed on:
(a) Gambling winnings of New Hampshire residents from anywhere derived.
(b) Gambling winnings of nonresidents of New Hampshire derived from New Hampshire entities.
II. The lottery commission and the charitable gaming and racing commission shall withhold all tax due and payable to the state from any payout of gambling winnings.
77:40 Who Taxable; What Taxable.
I. Taxable income is income that is received from gambling winnings during the calendar year.
II. A tax is imposed on all winnings as evidenced by federal tax withholding form W-2G."
Now if I am reading this correctly, what our legislature did was place a tax on gambling winnings that reach the level where a Federal W-2G is issued. In other words, any winnings you get that do NOT ALSO result in the issuance of a W-2G are NOT subject to this tax.
A W-2G is a Federal IRS form issued in accord with certain gambling winnings. Sometimes this also results in actual withholding of a percentage of those winnings.
Here are the IRS rules for when a W-2G must be issued:
"1. The winnings (not reduced by the wager) are $1,200 or more from a bingo game or slot machine,
2. The winnings (reduced by the wager) are $1,500 or more from a keno game,
3. The winnings (reduced by the wager or buy-in) are more than $5,000 from a poker tournament,
4. The winnings (except winnings from bingo, slot machines, keno, and poker tournaments) reduced, at the option of the payer, by the wager are:
1. $600 or more, and
2. At least 300 times the amount of the wager, or
5. The winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding)."
For #5 above the IRS says "Withhold at the 25% rate if the winnings are more than $5,000 and are from Sweepstakes, Wagering pools, Lotteries, or Other wagering transactions if the winnings are at least 300 times the amount wagered.
Do not withhold at the 25% rate on winnings from bingo, keno, slot machines, or any other wagering transaction if the winnings are $5,000 or less
So, the bottom line for us poker players, at least as far as I can figure (please do post if there are areas or points you think I am missing):
The 10% NH "Gambling Winnings" tax only applies to poker players who win a poker tournament with a cash prize of more than $5,000.00 + the buy-in.
Thats not great, but its not near as bad as this tax was when first proposed.
A deep thank you is therefore in order to all who helped fight this tax by writing your representatives.
Skallagrim