Just when you thought you hit your big score via sports betting, Uncle Sam comes knocking every year to get their cut.
So if you have made a lot or a little bit of money following Post-Action Betting picks, April 15 is your deadline to file that as taxable income.
Maybe you nailed my prediction of Jon Jones by submission +700 in March 2023 or are preparing for a bigger tax filing next year on Michael Leboff’s 80/1 outright winner on Hideki Matsuyama in February; the Post has you covered with some help from a tax professional.
Alison Flores, Manager at The Tax Institute at H&R Block, answered some basic sports betting tax-related questions ahead of the tax deadline.
As with all income, tax rates can be anywhere between 10 percent and 37 percent, depending on your tax bracket.
Use this as a solid base knowledge when placing your wagers throughout the year, but contact a tax professional for more intricate, detailed answers about your sports betting tax liability.
Flores’ answers are italicized.
What’s the minimum amount of money you need to win sports betting in order to pay taxes?
- “There is no minimum amount of money you need to win to pay taxes. If you have winnings, they are included in your gross income. One caveat to that is that you can deduct your betting losses to the extent you have winnings, but you have to itemize your deductions in order to claim the losses.“
What’s the tax rate?
- “Your sports betting winnings are considered taxable income—specifically, they are deemed ordinary income on your return. If you’ve won money placing bets, the tax rate can be anywhere from 10% to 37% based on your income tax bracket.”
If I make $5,000 at DraftKings but lose $5,000 at FanDuel, does the difference even out for tax purposes?
- “Unfortunately, you can’t combine your bets when reporting them on your taxes. Each wager transaction needs to be reported separately.”
Do sportsbooks file my winnings for me, or is that for me to handle?
- “Typically, the betting organization or platform will send you a Form W-2G or a Form 1099-MISC, depending on your activity. For sportsbook activity, the platform should issue IRS Form W-2G when you win $600 or more, and the odds are 300/1 or greater. While they should supply the form, you will need to file this with your taxes. If you don’t receive the form you will still need to report your winnings on your taxes.“
- “If you have winnings of $5,000 or more, the business may withhold 24% of the winnings for federal income tax. If this is the case, it will be shown on Box 4 of your W-2G. You may also be subject to backup withholding in certain situations, which is also 24%.“
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A note to Daily Fantasy players…
- “If you play fantasy sports, the platform will issue Form 1099-MISC if your net income for the year is more than $600. For fantasy sports activity, the cost of the wager will usually be netted from your winnings.“
- “To complete your tax return, you’ll report your winnings as ‘gambling income’ on Form 1040, Schedule 1. If you have losses, you’ll report them on Schedule A if you itemize deductions.“
if I keep gambling winnings in the betting account and don’t withdraw them, do I have to pay taxes on them?
- “Individuals will report income that is within their control. In this example, the income is within their control, meaning they constructively receive it and can choose to transfer it out. If the bettor has non-withdrawn winnings kept in an account, the winnings are subject to tax. Depending on the type and amount of winning, the taxpayer may or may not receive a 1099.”
- “We recommend they keep very good records—income shouldn’t be taxed twice. If they keep everything in FanDuels or DraftKings that they won in 2023 and then transfer everything to PayPal in 2024, they could get some duplicate 1099s with a later possibility of a 1099-K. So, they need to keep good records to show what is transferring. These sites can give you full-player transaction summaries, which should substantiate the transactions.”
