Excellent work! You won your bet on the big game, and now your pockets feel a little heavy. Don’t forget that Uncle Sam wants his share before you go shopping during your holiday.
Ways Taxes Get a Bit of Your Winnings
Here’s a quick look at how taxes work when you win money from sports betting.
Winnings as Cash Flow
Winnings from sports betting are taxed by the IRS, just like your paycheck or financial gains. In this case, you’ll have to pay federal income tax depending on your tax bracket, which can be anywhere from 10% to 37%.
Reporting Your Big Win
The sportsbook will usually give you a Form W-2G if you win $600 or more from a single bet, which is $300 times the amount you bet. This form tells the IRS about your winnings. Even though this makes things easier, you’ll still need to include the money on your tax return.
Keeping Track of Lost Money
It’s fun to celebrate wins, but don’t forget to keep track of your loses all year long. You can subtract your gambling losses on your tax return if they are equal to or greater than the money you won that year. But the amount that is taken away is limited to the amount of money you won.
Taxes for the State and City
Some states and cities may tax gambling gains on top of the federal taxes that are already in place. Make sure to look at the tax rules in your state to know exactly what you need to do.
Conclusion
If you know how taxes work for wins from sports betting, you won’t be surprised when it’s time to file your taxes. Remember that having good records is very important. For a smooth tax filing process, keep track of your wins, loses, and any W-2G forms you get.
