This past Sunday, millions tuned into the Super Bowl, and many viewers placed bets on their NFL team and won.
Sports gambling and playing numbers in the lottery actually has become a major part of American culture. Our country has a long history of permitting legal gambling, and tolerating illegal gambling. Throughout the last century, the popularity of gambling has grown by the decade.
Today, nearly every state in the union allows certain types of gambling. The explanation is that most states want to earn more money for education and state projects, so the gambling industry is entrenched in most state economies. Furthermore, states charge extreme taxes on a portion of their citizens’ winnings.
State taxes are followed by IRS taxes. The federal government collects money from winners in the form of income tax each April. Surprisingly, what the IRS earns from gambling is still only a fraction of what it would be if it weren’t for illegal, and unreported betting.
Here is some interesting information about unreported gambling earnings each year.
Last Sunday the Seattle Seahawks and the Denver Broncos went head to head in Super Bowl XLVIII, and many gamblers around the world saw the occasion as a prime opportunity to make some quick cash.
“In the United States, legal sports books in Nevada account for part of that money. In 2013, the Nevada Gaming Control Board reported that a record $98.9 million was bet on the Super Bowl at Nevada casinos.
Legal sports betting in Nevada, however is just a fraction of the domestic wagering picture. The Silver State’s legal sports wagering represents less than 1 percent of all sports betting nationwide, according to the American Gaming Association. Meanwhile, millions in illegal bets are placed with bookies or made online as Super Bowl Sunday nears. In 1999, the National Gambling Impact Study Commission estimated that illegal sports wagers amounted to as much as $380 billion a year, states Nasdaq.com.
This type of illegal gambling doesn’t stop on Super Bowl Sunday. Betting of this magnitude is also seen during March Madness and the Kentucky Derby annually.
All winnings, little or small, in the office, or on the casino floor in Vegas, are considered taxable income.
If you gamble occasionally, you should report any earnings as “other income.” In some cases you and the IRS will receive Form W-2G from the casino or racetrack, which will outline winnings and the amount of withholding.
It is important to remember that you can deduct gambling losses from your taxes, depending on the amount of your winnings. You will add up losses and list them on the “miscellaneous deductions” section of Schedule A.
If you have any questions about gambling earnings that you may owe on your taxes, contact a tax resolution lawyer today. The specialists at Federal Tax Management Inc. have years of customer service experience and industry knowledge. Our attorneys are ready to help you resolve tax debt today.