Americans will bet a record $23.1 billion on Super Bowl 58. The IRS is a 'silent accomplice' in any money you win, expert says

Travis Kelce of the Kansas City Chiefs, left, and George Kittle of the San Francisco 49ers stand on stage through the NFL’s Super Bowl Opening Night present at Allegiant Stadium in Las Vegas, Feb. 5, 2024.

Chris Unger | Getty Images Sport | Getty Images

Sunday’s Super Bowl between the NFL’s San Francisco 49ers and Kansas City Chiefs will happen in Las Vegas, the playing capital of the nation.

And a record 67.8 million Americans are anticipated to position an estimated $23.1 billion in bets on the sport, up from $16 billion in 2023, in accordance with the American Gaming Association.

But if you wager money, preserve in thoughts that the U.S. authorities expects to take part in your features, mentioned Mitchell Drossman, nationwide director of wealth planning methods at Bank of America.

“The IRS is your silent accomplice with regards to something that you win,” he mentioned.

This 12 months’s Super Bowl supplies many alternatives to bet on the sport, coin toss, half time and even Taylor Swift. Sportsbooks, for instance, are offering wagers on bets akin to what number of occasions the pop star, who is relationship Chiefs tight finish Travis Kelce, will be proven on digital camera through the recreation telecast or whether or not she will get a point out in the MVP speech.

Most Americans — 42.7 million — are anticipated to position a conventional sports activities wager on-line, whereas 36.5 million will bet with buddies or via a pool or squares contest.

Regardless of how you bet, the federal authorities will count on to see a minimize of any proceeds, Drossman mentioned.

All winnings have to be reported for tax functions

When you win a bet, there is not any quantity too small that you can say, “that does not should be reported,” Drossman mentioned.

For instance, if you wager $100 on the sport and win $1,000, the $900 distinction belongs on your tax return, he mentioned.

More from Smart Tax Planning:

Here’s a take a look at extra tax-planning information.

In some circumstances, you might obtain a Form W-2 G to report your playing winnings. That typically applies to quantities of greater than $600, in accordance with Drossman.

And if you bet a bigger sum, typically greater than $5,000, there could also be a necessary tax withholding, he mentioned.

Regardless of whether or not you obtain a formal discover of your features, you are obligated to reveal it to the IRS.

“Income is revenue,” Drossman mentioned.

It could also be doable to deduct losses

If you bet and lose, it might be doable to deduct these losses, Drossman mentioned.

But the catch is you can’t deduct losses in extra of your winnings, he mentioned. So whereas you can web your features and losses on bets you’ve made all year long, you can’t go under zero, he mentioned.

For informal gamblers to deduct their losses, they should itemize their deductions somewhat than take the usual deduction.

Most filers don’t itemize deductions as a result of the standard deduction is so massive. In 2024, it is $14,600 for single filers and $29,200 for married {couples} who file collectively.

When it involves state tax returns, it is essential to notice that some observe federal guidelines whereas others don’t, Drossman famous. If you’re submitting in a state that taxes solely gross revenue and doesn’t permit itemizing, solely your winnings will be taxed, he mentioned.

Professional gamblers face completely different guidelines

In that case, there is a broader array of bills which may be deducted, akin to journey and resort bills, Drossman mentioned.

Notably, you must have a sure degree of playing exercise to show that it rises to the extent of a commerce or enterprise, he mentioned.

Currently, 38 states and Washington, D.C., have authorized sports activities betting markets. The two states which might be house to the groups taking part in in this 12 months’s Super Bowl — California and Missouri — are among the many remaining states that have not approved such playing exercise.

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