Good Question: Sports gambling and taxes
ROCHESTER, N.Y. (WHEC) — Did you get lucky with Super Bowl bets? Got some extra money coming your way?
You need to think about what you might owe the tax man.
PlayNY.com’s Mike Mazzeo took News10NBC’s Brennan Somers through the different scenarios. Mazzeo’s team caught our attention when Somers came across the article. Think of it as gambling and taxes 101.
SOMERS: Over the last year in person at the casinos, betting on sports, and now everyone on their phone because it’s so easy betting on games – if they win something – does Uncle Sam want a piece of that?
MAZZEO: Right, so the minimum threshold for online sports betting is $600 or 300 times what you’ve won. Let’s say you do a $5 parlay on the Super Bowl of 300-1 odds. It hits, you win $1,500. You need to report that right. It’s better to report and then get a huge refund vs. say underreport or not report and then potentially get audited.
We want to point out reporting winnings isn’t just sports specific. There are rules and amount cutoffs for bingo, slots, poker, horse racing, and more.
You need to factor those winnings with federal and state taxes tied to your overall income.
How do you know what to report to the IRS? A special form called W-2G. What helps is you don’t even have to fill it out. That falls on the sportsbook, casino, or racetrack. Most gambling companies automatically withhold a piece of your winnings for taxes. The standard is around 25%.
Something else to remember? These minimum thresholds for owing taxes on winnings are for the whole year.
MAZZEO: So you know, if you win right, $5 here and there, it does add up. If you win $600 over the course of the year you obviously need to report that.
Can you write off gambling losses? You can deduct losses to the extent of your winnings but you have to itemize everything. The majority of taxpayers don’t because they are better off with the standard deduction which nearly doubled under the new tax law from 2018.