Algerina Perna | The Baltimore Sun | MCT | Getty Images
Americans definitely seem ready to bet on football.
For the 102nd season of the National Football League — Started last week — According to a survey by the American Gaming Association, about 45.2 million Americans are planning to bet on games, an increase of about 36% over a year ago. Growth is expected as half of the states now offer legalized sports betting and more states are preparing for it.
In other words, winning bets may be taxable even before they arrive, depending on their size. And if you earn money through unregulated channels, you’re expected to make a fuss about the IRS at the time of taxation.
“Even if you enjoy betting on races, participating in fantasy football leagues, joining friends in Bingo, or having other gambling hobbies, your prizes are fully taxable and report your income. is needed. [tax] “Return”. Susan Allen, senior manager of tax policy and advocacy at the American Institute of Certified Public Accountants, said.
According to the Games Association, the Supreme Court overturned federal law that banned sports betting almost everywhere in 2018, bringing the number of states that have legalized this activity to 32, of which 26 and Washington, DC are betting. Is now available. Systems in the other five states may be up and running by the end of the season.
Generally speaking, if you win a sports bet of $ 600 or more and the amount is 300 times the original bet, the payer must withhold 24% of the federal tax prize, according to the IRS.
There is also Form W-2G that you may receive from the payer, depending on the amount you win. Fantasy athletes who earn $ 600 or more will typically receive Form 1099-MISC or 1099-K, depending on the payment method.
Remember that these forms will also be sent to the IRS. You can also rely on the tax office to contact you if you fail to report your income.
Also, keep in mind that the final tax amount may be higher or lower than the amount withheld by the casino or other payers, depending on various factors, including other income. And even if the tax is not withheld, you are not off-hook to claim income on your tax return.
One way to reduce your obligation to pay prizes is to cancel your gambling losses, if possible.
“You can deduct those losses within your winnings range,” Allen said. “But you need to itemize your deductions.”
However, the vast majority of taxpayers do not categorize it as a standard deduction, which is nearly doubled under the new tax law that came into force in 2018.
If you can categorize your items and pay the gambling costs to deduct them from your prize, and if the IRS has questioned your tax return, make sure you can back up your claim in writing.
If you win big, you need to talk to your tax accountant before doing much. In addition to making sure you can afford to cover the additional money at the IRS or state level, it is worth getting guidance not to overlook strategies that may reduce your overall tax burden. ..
Soccer betting is in full swing.Don’t forget the tax collector if you win
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