West Virginia casino winnings

[TAXMAN]

TP a resident of VA went to WV to play the casino's. Hit one for 6k. West VA withheld no state tax per the W-2G. I figure TP owes WV tax on this money as a nonresident. Am I correct?

[Pacun]

I don't think so. They are neighbors and have reciprocal agreement.

 

[Gail in Virginia]

Don't Virginia's reciprocal agreements only apply to compensation?  I'm pretty sure if this were income from a Sub-S or partnership, reciprocity would not apply.  I don't know about gambling income.

[Abby Normal]

Yikes!

https://www.tax.virginia.gov/laws-rules-decisions/rulings-tax-commissioner/14-73

Of course, none of my gamblers ever have net winnings.

[TAXMAN]

OK, I understand about VA's law. Its WV that I am concerned about. I read on page 16 of their book that west Virginia source income of a non resident does not include gambling winnings except certain lotteries. Based on this I think maybe TP does not owe tax on the slot machine winnings that they have. Would this be a safe assumption?

[Gail in Virginia]

According to their instruction book for the WV state income tax, non-residents do not pay tax on gambling winnings except the lottery.  So I think they will only pay Federal and VA tax on their winnings.

[TAXMAN]

OK, I understand about VA's law. Its WV that I am concerned about. I read on page 16 of their book that west Virginia source income of a non resident does not include gambling winnings except certain lotteries. Based on this I think maybe TP does not owe tax on the slot machine winnings that they have. Would this be a safe assumption?

[TAXMAN]

I received an email from State of West VA stating that in this case TP would NOT owe WV tax. TP brought me a losses statement today showing losses at least 2 times what they won. Maybe this why they don't owe the tax?