It’s important to know that Uncle Sam will take a cut of your earnings if you’re one of the projected 38 million individuals who plan to wager on NFL games this season.
An increasing number of states have legalised sports betting, and the NFL’s 100th season will begin on Thursday night on NBC with a game between the Green Bay Packers and the Chicago Bears. Depending on the size of your prize, you may have to pay taxes on it before it reaches you. The IRS expects you to come clean if you win money in an unregulated manner regarding taxes.
“Any money from gaming is taxable income,” said Cari Weston, CPA and director of tax practice and ethics for the American Institute of CPAs. “Whatever you win, it’s taxed.”
According to the American Gaming Association, the number of states that have allowed sports betting since the Supreme Court invalidated a federal law in May 2018 has increased to 13, the American Gaming Association says. Five additional states and the District of Columbia will follow suit in the months ahead.
An additional 1.2 million customers plan to legally wager on NFL games at a casino sportsbook this season, bringing 7 million. The rest of us will wager with friends, participate in pool competitions, or place bets on the internet.
The IRS makes it a little easier for casual gamblers by placing reporting requirements on the payor (i.e., the casino) for states that allow regulated sports betting.
She did say, though, that you can’t deduct losses that are more than your gains. If the IRS ever questions your claims, you’ll need to be ready to provide paperwork to back them up.
In addition, if you itemise your deductions, you can only claim a tax benefit for your losses. Because the new tax legislation nearly increased the standard deduction in 2018, most taxpayers do not itemise their deductions.
The casino where you placed the wager may also issue you a W-2G tax form in addition to any withholdings. After winning at least $600 on a sports wager, you should be entitled to one of these (and at least 300 times your original bet).
Fantasy sports winnings are taxed differently: As a general rule, you should receive a Form 1099-MISC rather than a W-2G if your wins are more than $600.
Remember that the IRS receives those forms as well. If you don’t declare your income, you may be sure that they will contact you.
It’s important to note that professional gamblers are subject to different regulations. Instead of writing them off as a typical business cost, they must include their travel expenses (i.e. to and from the casino) when computing the deduction amount.
Weston advised that if you win a large amount of money, you should speak with experts before doing anything. If you don’t have enough money saved up for any additional taxes, seeking professional advice is good.
“Don’t immediately cash the check and spend it,” she advised against doing so. “Make a financial strategy with a CPA or financial advisor first.”
Maybe they’re looking for a big victory in New England. It is possible that the Tom Brady-led New England Patriots can relive their Super Bowl triumph. Make your bets now.