Sports Betting & Taxes

nikossf · 07-23-12, 11:41 PM

Nothing "BAD" will ever happen. Except the fact your going to end up paying taxes on your winnings. Its considered "OTHER" income as far as the IRS is concerned. They will tax all your INCOME. Including gambling winnings. Other than this..what would you expect to happen?

Ryeskernatorr · 07-23-12, 11:43 PM

Originally posted by nikossf

Nothing "BAD" will ever happen. Except the fact your going to end up paying taxes on your winnings. Its considered "OTHER" income as far as the IRS is concerned. They will tax all your INCOME. Including gambling winnings. Other than this..what would you expect to happen?

I was more so asking that if you report it on your taxes, then online gambling is 100% legal, right?

Sorry for the confusion.

nikossf · 07-24-12, 02:10 AM

ehhh..not really..kinda a grey area involved here...almost like the "Dont ask, dont tell" policy. It is reported as gambling income and as I stated above..but as "Other income" more importantly!
Of course,.Never say anything about online gambling or how/where you got the cash. If it happens to be larger amounts.. Just try to go to vegas and play a couple plays every so often for larger amounts.. That way you can always have a few "old" tickets from vegas just for safe keeping. Of course these larger amounts will always be tracked anyways through Vegas paperwork. So all reported income for big tickets from vegas should be ok.
On a side note: you shouldn't be pulling in large amounts from online anyways.. Always keep online to a minimum, people..Dont deal with the headaches.. If you have to though..well, you can always just withdraw in small increments.

jjgold · 07-24-12, 06:06 AM

You do not report any gambling wins or loses

Man be smart

milwaukee mike · 07-24-12, 06:19 AM

in a state like wisconsin the tax laws are terrible

you have to report every single win as a taxable event, irs allows you to claim the losses (up to winnings) but only if you itemize deductions on schedule a. to make matters worse, the state of wisconsin doesn't allow any deduction for losses.

so if you don't own a home and have deductions like mortgage interest and property taxes, and win 40k worth of bets and lose 40k worth of bets in a year, it costs you $2k in federal taxes (because you essentially lose the standard deduction) and another 3k in wisconsin taxes.

a gift to the government of 5k in my example for being an honest citizen and reporting gambling winnings. i am pretty sure almost nobody reports every single win like they are supposed to.

milwaukee mike · 07-24-12, 06:22 AM

and check with the STATE governments, almost all states have explicit laws saying it is illegal to gamble on sports online.
so even if you think it's legal it almost certainly isn't.

nobody has ever been prosecuted for gambling online however, and nobody probably ever will. casinos don't have the lobbyist/government protection like the music industry did when they sued poor college students for using napster

CarpeDime · 07-24-12, 02:42 PM

bump cause no gnu taxes newest thread bumped this to second page so bumping it back up

good thread

hockey216 · 07-24-12, 03:16 PM

Originally posted by Ryeskernatorr

From my understanding, betting on sports online is NOT illegal in the US. Correct? What's illegal is not reporting any winnings on your taxes. So my question is this... if a bettor makes more than he loses and has multiple cashouts throughout the year and reports everything on their taxes.... nothing "bad" can or will happen, right?

Just looking for some clarifications on what makes it legal vs illegal and the taxes around it. I'm assuming it'd be pretty easy to not report all or any of it but assuming someone was honest and did what would the outcome be?

you should consult with a local attorney to discuss all applicable laws in your jurisdiction.

Regarding taxes, you are required by law to include all winnings, not just net winning, in your taxes.

You then make an itemized deduction for your losses, which cannot exceed your winnings, and your 1040 should be appropriately adjusted to reflect any positive net profits.

TheCentaur · 07-24-12, 03:36 PM

The thing I wonder about, well one of the things, is how can you claim winnings if you haven't withdrawn them. Say you win 5k but it's still in the sportsbook. You won, but do you have constructive receipt of these winnings? Constructive receipt is when you may not have the cash in hand but you have access to it, so people can't say to the IRS, "I don't have the income because I don't actually have it".

Until you have withdrawn your winnings and the check/payment has cleared how can you have constructive receipt? Rollover requirements, books going belly up, etc. these funds are far from money in hand. If you claim these winnings before withdrawing, and the book goes out of business or doesn't want to pay, have fun trying to deduct that the next year from what you previously claimed. Not going to happen

Ryeskernatorr · 07-24-12, 05:51 PM

Originally posted by jjgold

You do not report any gambling wins or loses

Man be smart

I don't think that's too smart...

Ryeskernatorr · 07-24-12, 05:52 PM

Originally posted by milwaukee mike

in a state like wisconsin the tax laws are terrible

you have to report every single win as a taxable event, irs allows you to claim the losses (up to winnings) but only if you itemize deductions on schedule a. to make matters worse, the state of wisconsin doesn't allow any deduction for losses.

so if you don't own a home and have deductions like mortgage interest and property taxes, and win 40k worth of bets and lose 40k worth of bets in a year, it costs you $2k in federal taxes (because you essentially lose the standard deduction) and another 3k in wisconsin taxes.

a gift to the government of 5k in my example for being an honest citizen and reporting gambling winnings. i am pretty sure almost nobody reports every single win like they are supposed to.

Thanks! I actually live in WI too so this helped a lot.

str · 07-24-12, 06:02 PM

Originally posted by TheCentaur

The think I wonder about, well one of the things, is how can you claim winnings if you haven't withdrawn them. Say you win 5k but it's still in the sportsbook. You won, but do you have constructive receipt of these winnings? Constructive receipt is when you may not have the cash in hand but you have access to it, so people can't say I don't have the income because I don't actually have it.

Until you have withdrawn your winnings and the check/payment has cleared how can you have constructive receipt? Rollover requirements, books going belly up, etc. these funds are far from money in hand. If you claim these winnings before withdrawing, and the book goes out of business or doesn't want to pay, have fun trying to deduct that the next year from what you previously claimed. Not going to happen

Absolutely.