June 25, 1984
You inquire as to the Massachusetts income tax consequences of winnings and losses from bingo games.
Massachusetts gross income is federal gross income with certain modifications not relevant here. (G.L. c. 62, § 2(a)). Federal gross income is all income from whatever source derived, including gains from gambling, betting, and lotteries. (I.R.C. § 61).
Losses from wagering transactions are allowed as a deduction from federal gross income, but only to the extent of the taxpayer's gains from similar transactions. (I.R.C. § 165(d)). Massachusetts law does not provide for such a deduction from gross income (G.L. c. C2, § 2(d)).
Every person making any payment of winnings, except winnings from horse and dog racing, which are subject to the Massachusetts income tax and which are subject to withholding under the Internal Revenue Code, must deduct and withhold five percent of the payment. (G.L. c. 62B, § 2). Winnings from slot machines, keno, and bingo are not subject to federal income tax withholding. (I.R.C. § 3402(q)(5)).
Non-residents must pay Massachusetts income taxes on lottery and wagering winnings derived in Massachusetts. (G.L. c. 62, § 5A(a).
Based upon the foregoing, it is ruled:
1. All winnings from bingo games, regardless of the sponsor of the game, must be included in Massachusetts gross income. You may exclude only the cost of the winning cards when reporting your winnings. You may not offset losses against winnings and report the difference.
2. You may not deduct your losses.
3. Bingo winnings are not subject to Massachusetts income tax withholding.
4. Both residents and non-residents must report and pay income tax on their winnings.
Very truly yours,
/s/Ira A. Jackson
Ira A. Jackson
Commissioner of Revenue