It's all Fun and Games Until Taxes are Due
While March Madness brackets may be virtual, taxes on winnings are still real. Placing a bet of any kind (yes, even the office pool) is considered gambling. Any income earned from gambling whether that be $5 or $500 is considered taxable income and must be reported to the IRS. On the flip side, your gambling losses for the year are also deductible as long as they don’t exceed your winnings. When reporting your gambling winnings and losses you should keep accurate records including date and type of wager, name, and address of the gambling establishment, note the other people present, and the amount won or lost. These earnings can be reported on a Form W-G2 or the “other income” line of your Form 1040. Gambling losses can be reported on Schedule A as an itemized deduction. When brackets are won, taxes are due! The professionals at The Center for Financial Legal and Tax Planning are more than knowledgeable with regards to reporting income to the IRS, please call us at (618) 997-3436.