Record Your Superbowl Betting and Get a Jump on Your Taxes
There's much to be said about free lunches, windfalls and "found money" - a discussion that often takes place across the desk from an extremely stoic Internal Revenue Service agent. One of the most common sources of money-for-nothing, increasingly, has been the cash that is acquired in the process of gaming. Whether one pulls slots at a local casino, plays cards online or cavorts with sports books, the Tax Man cometh shortly thereafter, looking for his end.
Render Unto Caesar...
When you win the kind of money that is subject to the federal income tax, the payer is required to also give you a form W-2G, which you must include along with that year's form 1040. The winnings must be declared as income. For those who place regular bets on sports betting or who win more than their fair share of poker tournaments, it only makes sense to keep meticulously record your bets - even if it's just one per year, as so many people do when the Superbowl rolls around.
Planning Pays Off (After the Playoffs)
Recording your winnings, and setting aside a portion of them to satisfy Uncle Sam, is the best way to avoid that gut-punched feeling that comes around for so many gamblers on April 15th each year. If that set-aside amount is substantial enough, and you win it early enough in the year, it will even yield some extra money for you in the form of interest (but don't forget that you have to declare that, too).
Superbowl betting, at sites like bmaker, can take place just before kickoff, or as many in the wagering public understand, even in the preseason. Pro golfer Phil Mickelson famously put a $20,000 bet on the Baltimore Ravens to win it all before the 2000 season, which they did, at 22 to 1 odds, making Mickelson yet a richer man. "Lefty" has an accountant on retainer, though, to navigate the tax aspects of such a payday... Do you?
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.