The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 tax deadline. Tax information below will change next year for your 2018 taxes, but won’t impact you this year. Learn more about tax reform here.
Sports gambling has become a popular year-long hobby. Are you feeling lucky? If so, you may be headed to the racetrack, casino or sports bar to make you bet, hoping to win big. However, you might be surprised to learn 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.
Whether you bet on the big game last year or on the games during March Madness here’s what you need to know about how sports gambling impacts your 2017 taxes.
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 and or the payoff is $600 or above, the gambling facility will ask for your social security number to 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 if you win $5,000 or more in a poker tournament the sponsor will be reporting your winnings to the IRS.
The news about taxes on gambling winnings doesn’t end there. The gambling institution is required to withhold 25% of your winnings as federal withholding tax. 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.
On the deductions front, you can’t directly offset your gambling winnings with your gambling losses, but you can include the losses as miscellaneous tax deductions on your tax return in 2017 if you itemize your tax deductions. If your losses exceed your winnings, the amount you deduct cannot exceed the total amount of your winnings.
Keep records of the 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.
Come tax filing time, don’t worry about knowing tax laws. TurboTax will ask you simple questions about you and give you the tax deductions and credit you’re eligible for based on your answers. If you have questions while doing your taxes you can connect to the TurboTax Live expansive network of credentialed CPAs and EAs live via one-way video to get your tax questions answered. You can even have your tax return reviewed, signed, and filed.
Have fun, and I hope that Lady Luck showers you with wealth!