Fall and sports gambling are in the air with fantasy football players working on their teams about nine hours per week according to the Fantasy Sports and Trade Association.
Are you feeling lucky? If so, you may be headed to the racetrack, casino or to make your sports bet, hoping to win big. But you might be surprised 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.
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 your bet at the track and the payoff is $600 or more, you will be asked for your social security number, and the gambling facility will send a form to the Internal Revenue Service.
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-togethers with your buddies, but win $5,000 or more in a poker tournament and the sponsor will be reporting your winnings to the IRS.
The bad news about taxes on gambling winnings doesn’t end there. The government also requires that 25% of your winnings be withheld by the gambling institution as federal withholding tax. If you get sassy and refuse to give your social security number, that percentage increases to 28%.
At tax time, for all reported winnings you’ll receive Form W-2G 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.
You can’t directly offset your gambling winnings with your gambling losses, but you can include the losses as miscellaneous deductions on your tax return. If your losses exceeded your winnings, the amount you deduct cannot exceed the total amount of your winnings.
Keep records of your 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.
Have fun, and I hope that Lady Luck showers you with wealth!