Gambling winnings and your Maryland tax obligations
Who must pay Maryland income taxes on their winnings?
Anyone who receives winnings from lottery games, racetrack betting or gambling must pay income tax on the prize money. Both residents and nonresidents of Maryland are subject to Maryland income tax on their winnings.
If I won more than $5,000 in the lottery, why was my check for less than that amount?
Income tax will automatically be withheld, just as it is from your paycheck, if your winnings total more than $5,000. According to Maryland law, prize winnings of more than $5,000 are subject to withholding for both federal and state income tax purposes.
If I won more than $5,000 from pari-mutuel wagering (horseracing), why was the payoff less?
Income tax will automatically be withheld if the proceeds from the wager exceed $5,000 and are at least 300 times as large as the amount of the original wager.
Do I have to file an extra state tax form if my winnings were more than $500?
Yes. If your winnings are more than $500, and you did not have Maryland tax withheld, you must file Form 502D, Declaration of Estimated Tax, and pay the tax on that income within 60 days of the time you receive the prize money. You can claim a credit for taxes paid with the 502D on your annual income tax return. Failure to pay the estimated tax due or report the income could result in penalty and interest charges.
Do I have to pay income tax if my winnings are less than $500?
Yes. If your winnings are less than $500, you still must report that amount on your annual state income tax return and pay tax on it. However, payment of estimated tax is not required.
How much tax do I have to pay with the 502D?
Maryland residents and nonresidents should calculate their tax according to the instructions included with Form 502D..
Can I subtract my losses from my winnings on my Maryland state income tax return?
No. For tax purposes, you cannot simply subtract your losses directly from your winnings. If you itemize deductions on your federal and state returns, your gambling losses may qualify as a deduction, but only to the extent of your winnings.
What forms should I use to report my winnings?
Taxpayers will report winnings on their federal income tax returns as part of their federal adjusted gross income. The federal adjusted gross income amount is transferred to line 1 of Maryland income tax Form 502. Nonresidents must report winnings on line 14 of the Nonresident Form 505. You must file Form 502D, Declaration of Estimated Tax, and pay the tax due within 60 days if your winnings are between $500 and $5,000. Failure to pay the tax or report the income could result in penalty and interest charges.
Where can I get help?
If you need assistance, please call or visit any taxpayer service office. You may also call 410-260-7980 in Central Maryland or toll-free 1-800-MDTAXES (1-800-638-2937). You can also e-mail your questions to us at taxhelp@comp.state.md.us.
