How to report sports bet winnings correctly

The reports show that 62% of Americans don’t know how to report sports bet winnings. Jackson Hewitt Tax Services survey has found that 62% of US taxpayers are unsure how to report winnings from sports bets and other gambling. This is worrying as, for example, according to American Gaming Association, 68 million adults said they plan to place sports bets and wager up to $15.5bn this year during March Madness.

Do you have to report income over $600? Almost 50% believe that cash won from sports bets is only taxable if sports betting has been legalized in that state. This is incorrect! As a reminder, you have to report winnings over $600. In accordance with IRS reporting rules, all earnings and winnings are fully taxable. Additionally, you report them on Form 1040 (in both state and Federal tax returns) as ‘other income.’

Why report your winnings?

Chief Tax Information Officer at Jackson Hewitt, Mark Steber, commented, “As sports betting becomes more available and accessible to Americans, it is important for taxpayers to know the intricacies of federal and state tax law. If these earnings are reported incorrectly or not at all, there is a major risk for the taxpayer. IRS or their state can penalize the taxpayer.”

Tax Services also suggests keeping track of your winnings and losses. Gambling losses may be deducted if the taxpayer itemizes the deductions on Form 1040. The losses deducted cannot exceed the winnings.

Additionally, you may receive a W-2G if you bet through an official sports betting organization. However, the burden of proof is on the taxpayer, whether they receive this form or not. Your income tax bracket will ultimately determine if you will owe more. Not to forget, taxpayers who win in a state they don’t live in may have to file a tax return for their winnings to that state.

Source: gamingamerica.com 

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Liga Tarasova

Liga Tarasova has a history of quality assurance and leading teams in an outsourcing company. Currently, she is working remotely as an Editor in Chief for Onlinegamblers.com. She stands for fair and safe gambling for people in the USA. Not long ago, she lived in Malta, the global iGaming hub, and worked at an iGaming company offering cloud-based product and platform services to B2B partners. Liga’s passion is visual arts and interior design.

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