Billions of dollars are passed around each year in casinos, race tracks, offices, and online as millions of Americans gamble on sports. From the Super Bowl to March Madness to every major sporting event down the line, Americans love the thrill of putting a little money on their favorite teams.
Despite the widespread popularity and acceptance of sports betting in American culture, gambling falls under different legal status in each state. Under federal law, gamblers must report their winnings as income, and may be able to deduct their losses.
Gambling winnings are considered a form of income under the IRS code, whether you hit big in the casino, bought a lucky lotto number, or won the office pool for March Madness or the Oscars. In any situation where you have money, the government wants to know.
All gambling is taxable, and reporting your gambling winnings to the IRS couldn’t be easier. Gambling proceeds fall under “Other Income”, as reported on Line 21 of the tax form. Of course a tax professional can help you report this, as well tax preparation software such as Turbo Tax. Gambling losses can be listed as itemized deductions on Schedule A.
If you are regularly making bets on sports, whether in person or on line, it is important to keep track of your wins and losses in order to properly report your income to the IRS. If for example you make a $1,000 wager and double your money, the $1,000 won is taxable. If you then go double or nothing and lose? Well, you may need to report that $1,000 you initially won, even though you ended up with nothing. This is why proper record keeping is essential.
If you have won enough money from sports betting in a single year that you are concerned about your tax liability, it may be in your best interest to discuss your situation with a tax professional.