Is There A Tax On Winnings From Online Sports Betting?
Gambling has always been taxed, especially in legal brick-and-mortar casinos. But the growth of online casinos and sports betting has made it more difficult for the government to track and tax gamblers’ winnings. And the surge in online sports betting has led to an increase in winnings that should be taxed, but may not be.
Bettors like before are required to pay state and federal taxes if the threshold has been met. Given this, there is not much difference on the tax rulings on gambling when done online and when done live. So generally, the same rules apply.
Paying Taxes on Winnings
Winnings on gambling are considered income, and it includes sports betting, whether done online or done live. It falls under gambling income which also includes but is not limited to winnings from raffles, lotteries, horse races and casinos. So everyone who practices to report their income, are legally obliged to report the amount of money won through legalized online sports betting.
Different areas require different amounts of taxes but in America, a person needs to pay only federal taxes if the winning exceed $600. There is no use in fabricating the amount because the bureau will have the sports books report to them all players who have won.
So it also won’t matter if the taxpayer in concern is a professional bettor whose main source of income is betting on sports, or someone who occasionally plays sports betting, all winnings are required to be reported.
As for the losses, it can be deducted to the amount of winnings, but it cannot be exceed its amount and be a tax refund to other sources of income. But if it is less than the amount of winnings, the balance will be taxed. It is also important to note that the said computation is on an aggregated basis. So a year’s total winnings versus a year’s total losses, and not based on a certain bet.
If a person wins non cash prizes like cars and trips, its current fair market value should be declared. The law is not limited to only cash winnings. But if the threshold has been hit, a different rate shall be used. It will be taxed at 24% in the US. Taxes on sports betting can be paid either through withholding taxes from sports books or casinos, or when that player’s taxes are filed.