Sports gambling has become a popular year-long hobby. Are you feeling lucky? If so, you may be headed to the racetrack, casino, or sports bar to make your bet, hoping to win big. However, you might be surprised to learn that Uncle Sam has his fingers crossed for your good fortune as well. That’s because you have to pay taxes on all gambling winnings.
Whether you bet on the big games, Super Bowl, Stanley Cup, NBA Playoffs, or World Series on the games during March Madness, here’s what you need to know about how sports gambling impacts your upcoming taxes.
Here are the rules.
Win at fantasy football or any other sports pool, and your winnings will be considered income by the IRS. If you win at least 300 times and/or the payoff is $600 or above, the gambling facility will ask for your social security number so they can report your winnings to the IRS.
You’ll also be subject to this reporting if you win $1,200 at slots or bingo or $1,500 at keno. Uncle Sam doesn’t have a place at the table during your weekly poker get-together with your buddies, but if you win $5,000 or more in a poker tournament, the sponsor will be reporting your winnings to the IRS.
The news about taxes on gambling winnings doesn’t end there. The gambling institution is required to withhold 24% of your winnings as federal withholding tax, down from the previous 25% under the tax reform law. At tax time, you’ll receive Form W-2G for all reported winnings showing the amount you won and the taxes withheld. But even if you don’t receive a form reporting your winnings, you are still required to report all gambling winnings. In addition to gambling proceeds, you must report all other prizes you receive, including lottery winnings.
On the deductions front, you can’t directly offset your gambling winnings with your gambling losses, but you can include the losses as miscellaneous tax deductions on your tax return in if you itemize your tax deductions. If your losses exceed your winnings, the amount you deduct cannot exceed the total amount of your winnings.
Keep records of the gambling losses you claim on your tax return. You can do this by keeping a gambling log or hanging onto losing bet tickets, lottery tickets, and bingo cards.
Don’t worry about knowing these tax rules. TurboTax asks you simple questions about you and gives you the tax deductions and credits your eligible for based on your answers. Meet with a TurboTax Full Service expert who can prepare, sign and file your taxes, so you can be 100% confident your taxes are done right. Start TurboTax Live Full Service today, in English or Spanish, and get your taxes done and off your mind.
Have fun, and I hope that Lady Luck showers you with wealth!
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