Out of state buying and income taxes - Posted by Steve

Posted by SuperCat (IL, KY) on July 18, 2003 at 16:01:41:

Anybody that blindly follows tax advice on this site deserves the troubles that are sure to come. We currently operate in 17 states and have researched the law extensively with our CPA. Just a quick yahoo search turned up the following conflicting statements from the state lotteries:

If you are not a resident of Minnesota, the 7.25 percent Minnesota income tax is still deducted from your check. A professional tax adviser can help you determine the best way to handle your federal and state tax obligations.

Yes, as of July 1, 2002, the Hoosier Lottery is required by law to withhold 3.4% for Indiana state income taxes on prizes over $1200 and to withhold 27% for federal income taxes on all prizes over $5,000. Additional income taxes may be owed depending on the individual winner’s tax bracket. If a player wins a Hoosier Lottery prize but resides in another state, taxes for player’s state of residence also may apply…


If you are not a resident of Iowa, you are required to file an Iowa return if your Iowa source income is $1,000 or more and your gross income (from all sources, not just Iowa) is $9,000 or more if you’re single or $13,500 or more for married filers.

Even if your Iowa source income is less than the amount required to file a return, you may want to file an Iowa return if Iowa tax has been withheld from your winnings. You may be eligible for a refund of the tax withheld on your winnings. You cannot receive a refund unless you file a return.

Failure to file an Iowa individual income tax return, if required, may subject you to penalty and interest in addition to the tax owed.

Out of state buying and income taxes - Posted by Steve

Posted by Steve on July 18, 2003 at 11:37:42:

If I own a house in another state, do I have to pay taxes or do a tax return in that state?

Re: Out of state buying and income taxes - Posted by Tim

Posted by Tim on July 19, 2003 at 07:33:39:

Years ago I used to live in one state & work in another. My memory isn’t what it used to be, but I do remember having to file state tax forms for both states. However, I did get credit on one form for the taxes paid on the other. I think the net effect was that I paid tax at the higher states rate. Also, when I worked overseas I got some sort of credit on my federal form for taxes paid to foreign governments. Than again, I’m not a tax advisor, so I could be full of it.

SuperCat is Right - Posted by Diane (TX)

Posted by Diane (TX) on July 18, 2003 at 20:17:47:

As SuperCat points out, state laws vary. Income from real property is almost always sourced to the state where it’s located. That means that rental income is taxable in the state where the property’s located.

However, you may have net income from the property that’s below that particular state’s filing requirement. So you may not have to file in that state after all. If that’s the case, you may or may not be able to deduct the out-of-state income on your home state return.

Bottom line is it depends what states. Check with a CPA or the state tax departments.

Re: Out of state buying and income taxes - Posted by Clarence

Posted by Clarence on July 18, 2003 at 14:54:06:

Well now Supercat is not absolutely correct! If you win the powerball lottery out of your state (what if you have to go out of state to buy the tickets?) the state you win it in is obligated to deduct the federal taxes on it and you pay income tax ONLY in your state of residence. Rental property is a state by state situation…CA is one of the exceptions…they are broke and tax EVERYTHING they can including income generated there…check the state laws for the state the property is in.

Absolutely, yes!! - Posted by SuperCat (IL, KY)

Posted by SuperCat (IL, KY) on July 18, 2003 at 13:54:08:

Absolutely yes, you pay income taxes on where the income was earned. If you have a rental house or flip income in another state, then technically that income is earned in the other state and is subject to their tax laws. If they have no income tax then you don’t have to pay income tax there or in your state.

The previous reply is absolutely absurd as if that was the case everyone that owned investemnt real estate in California or other high tax states would have their residence in a tax free state like Nevada.

Re: Out of state buying and income taxes - Posted by Peter_MD

Posted by Peter_MD on July 18, 2003 at 12:08:32:


No, you record the income and related expenses on Schedule E of your Personal Individual Income Tax Return Form 1040 and file the related respective Personal Individual State Income Tax Return claiming the income with your resident State (as you have always done in the past).

No State tax return needs to be filed with the State the property is located.