Filing Taxes on Your Betting Income
Sports’ betting has really taken off over the last few years as a source of income for people who have lost money during the economic recession.
The person who makes educated bets on sporting events, such as Super Bowl betting, can easily earn $500 or more per month on their bets but the biggest mistake that betters make is when tax time comes. Many people who under report their income from gambling and will most likely be audited by the IRS sometime in the near future.
How to Manage Your Sports Betting Career
Every gambler, from the professional who earns a nice income from their bets, to the gambler who only bets on a few games per week should be keeping a diary to record their wins and losses. The key to success with any audit is being able to back up everything in writing and show a “money trail” to keep the IRS off your back and avoid paying a lot of money in taxes.
Hobby or Professional?
One of the most important things that the IRS will want to know is are your sports betting activities a hobby or are you betting professionally? There are big differences between gambling as a hobby and gambling professionally.
Professional:
You will be able to write off any of your expenses. Aside from this benefit there are downsides of declaring yourself as a gambling professional like having to pay self-employment taxes and risking an IRS audit.
Hobby:
If you declare your gambling as a hobby you are less likely to face an IRS audit and will enjoy other benefits like being able to write off your losses plus you will not have to pay self-employment taxes.
Keep Written Records of Everything
Regardless if you choose to view yourself as a gambling professional or not, it’s important to keep written records of all of your activities, receipts and copies of winning or losing tickets from your online sportsbook because the more records that you have to back up your activities the better off you will be.