While gambling is a popular activity virtually anywhere you go, sports betting is one of the most popular forms of gambling. Indeed, many sports betters will state that the opportunity sports betting gives them is the chance to place bets on an activity that will have a fixed outcome – determined by a sportsbook’s odds and various other statistics involved.
Indeed sports betting is popular in the US. But one of the questions that many rookie sports bettors, and those interested in engaging in such an activity, seem to ask is – do I pay taxes on my sports betting winnings? Is this form of gambling winnings taxed? How does taxes on winnings on gambling and taxes on winnings on sports betting work? For this reason, this article looks at the topic of what taxes to expect to pay and how paying taxes on sports betting works – in the context of the US, that is. Read on if you are interested.
First Things First, Am I Required To Pay Taxes On Sports Betting Winnings – Even If Online?
If you are a US citizen (or residing in the US) the answer is, unfortunately – YES. However, this does not automatically mean that you must pay gambling taxes or winnings taxes on every sport bet you win.
So When Do I Pay Taxes On My Sports Betting Winnings?
The answer here is quite simple. According to Captain Gambling, in the US: “Gamblers are expected to pay taxes on any of their gambling profits from throughout the year, but that doesn’t mean that a win automatically demands taxes paid on it.”
In other words, when residing in the US, you must keep a record of how much you have won or lost. So if you have profited from gambling or sports betting – whether online or at a casino, you must pay taxes (discussed shortly). If you have lost or broke even – you are not required to pay taxes. However, you still must declare your winnings on your tax returns if you wish to remain in compliance with the Internal Revenue Service or IRS.
Let’s now look at how much taxes you can expect to pay on your sports betting winnings or gambling winnings.
How Much Gambling Tax Can I Expect To Pay On My Sports Betting Winnings?
According to Captain Gambling, you can expect to pay roughly 24% on your overall gambling or sports betting winnings. The exact percentage might change – but the level of taxation is not the same as that you can expect to pay on your basic income. Bear this in mind. Secondly, according to Captain Gambling, winnings over $5,000 are taxed automatically.
Will A Sportsbook Keep Track Of My Sports Betting Winnings?
The answer here is definitely yes. A sportsbook, online or not, will keep track of your winnings. They are obliged to do this as they must declare such winnings to the IRS. Please bear this in mind. Always allocate enough money, or set aside the right proportion of your winnings to declare and pay the IRS during your tax returns. If you do not do this, you can incur penalties and might find yourself in a situation that you have not planned for – where you owe the IRS gambling or sports betting taxes and can not pay. This is, of course – an undesirable situation. Indeed, put aside at least a quarter of your overall winnings. Do this if you don’t want to get into trouble with the IRS. It will make your life and gambling career easier!
That is it for today. Hope you have enjoyed this post. If you found it interesting, be sure to read: Everything You need to know about Sports Betting