What to do with your winnings this tax season?!
Below are some options on what you can do with your sports betting winnings.
According to the Internal Revenue Services, IF YOU...
Have additional income, such as unemployment compensation, prize or award money, gambling winnings. Have any deductions to claim, such as student loan interest deduction, self-employment tax, educator expenses.
THEN USE: SCHEDULE 1 (Form 1040 Additional Income and Adjustments to Income)
Based off of H&R Block information, you do pay percentage of taxes on gambling winnings:
Winnings are reported on Form W-2G. Federal taxes are withheld at a flat rate of 24%. If you didn't give the payer your tax ID number, the withholding rate is also 24%.
Avoid taxes on gambling winnings:
The IRS states, you are able to deduct gambling losses only if you itemize your deductions on Schedule A (Form 1040 Itemized Deductions) and kept a record of your winnings and losses. The amount of losses you deduct can't be more than the amount of gambling income you reported on your return.
In order for the IRS find out about gambling winnings:
You must report the full amount of your gambling winnings for the year. To itemize your deductions, you can deduct your gambling losses for the year. Your gambling loss deduction cannot be more than the amount of gambling winnings.
(If your losses do end up exceeding your winnings then, you won’t have to pay any taxes on your winnings.)
DraftKings winnings according to Intuit Turbo Tax:
Fantasy sports winnings of $600 or more are reported to the IRS. If you take home a net profit of $600 or more for the year playing on websites such as DraftKings and FanDuel, the organizers have a legal obligation to send both you and the IRS a Form 1099-MISC.
H&R Block taxes with online gambling:
Online winnings are fully taxable so you must report gambling winnings, even those that didn't have tax withheld. You might be able to deduct gambling losses. Try to keep records so you are able to report gambling winnings and deduct gambling losses with accuracy.
IRS tracks cash:
Cash transactions are legitimate, but the government can often trace illegal activities through payments reported on complete, accurate Forms 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business PDF.
IRS audits:
The IRS are able to include returns filed within the last three years in an audit. If they identify a substantial error, they may add additional years. They usually don't go back more than the last six years. The IRS tries to audit tax returns as soon as possible after they are filed.
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