CHARLOTTE, N.C. — With many North Carolinians dipping their toes into sports gambling for the first time, there are going to be some wins and losses.
But what are the tax implications of sports gambling? How much do you have to win before the IRS is notified and can you deduct gambling losses on your federal taxes?
THE QUESTION
Are gambling losses tax deductible?
THE ANSWER
Yes, you can deduct gambling losses on your taxes. However, there are rules you must follow so that those deductions pass the muster with the IRS.
OUR SOURCES
WHAT WE FOUND
According to the IRS, winnings from any gambling are taxable. Steber says anyone who wins more than $600 will receive a form to fill out to report their winnings with the IRS. This isn't limited to sports betting. If you go to a casino and win big playing slot machines or table games, anything over $600 must be reported.
"If you win more than $600, you're going to get a W-2 with the amount you won and where you won," Steber explained. "If you win $5,000 or more, the government will take 24% upfront and then you certainly have to pay for that."
What if you lose? The good news is you may be able to take a tax deduction to Steber. May is the key word here, because there are certain conditions you must meet for the IRS to approve it.
According to TurboTax, you can deduct your gambling losses but only if they're used to offset income from your wins. You can't simply deduct losses without reporting your winnings. The dollar amount of losses you're allowed to deduct can never exceed reported winnings.
Anyone reporting gambling losses to the IRS must itemize income tax deductions on a Schedule A form. Also, the IRS doesn't allow people to subtract their losses from winnings and only report the difference on their tax returns.
"Overall, if you have winnings, you can deduct the same day, the same type of loss that you have winnings, but not a net loss and not all different types of bets," Steber said.
If you are concerned about your gambling or worried about a friend, you can call the NC Problem Gambling Helpline at 1-877-718-5543. You can also contact the National Helpline at 1-800-522-4700.
Contact Meghan Bragg at mbragg@wcnc.com and follow her on Facebook, X and Instagram.
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