Did you pull in some mad cash from this weekend’s NFL game? Congrats! Not to rain on your parade, but before you go spending all of your winnings or reinvesting it on another bet, be sure to set some aside for the tax man. Because you do, in fact, need to file taxes for sports betting.
Your future self will thank you for knowing how it works come tax time in the spring. We have the details.
Do you have to file taxes for sports betting?
Yes, you have to file taxes on winnings from DraftKings, FanDuel or any other sports betting apps. Don’t be fooled into thinking the authorities won’t notice – the IRS does care about sports betting winnings.
Can my sports betting losses offset my winnings?
You might have read that you’re only taxed on your profits rather than your winnings – but that’s not quite true as an individual taxpayer. Janet Berry-Johnson – CPA and Daily Money Manager at Firefly Financial Organizing – notes that while you can technically itemize your sports betting losses, it’s hard for most people to beat the standard deduction.
The standard deduction is quite high since the TCJA passed in 2017. For the 2024 tax year, the standard deduction is:
- Single or Married Filing Separately: $14,600
- Married Filing Jointly or Qualifying Surviving Spouse: $29,200
- Head of Household: $21,900
“Say you won a total of $10,000 on your sports wagering in 2024,” Berry-Johnson explains. “At the same time, you lost $10,000 betting on other games.
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“If your total itemized deductions – including things like home mortgage interest, state and local taxes, charitable deductions, out-of-pocket medical expenses, and gambling losses – are less than the standard deduction available for your filing status, you’ll claim the standard deduction, and you won’t benefit from deducting those losses at all.”
What triggers W-2 G paperwork for sports betting?
When you earn enough through sports betting, the casino (or in this case, app) will issue a W-2 G. This paperwork is akin to the W-2 you might be used to receiving every January from your 9-to-5 job. But this is explicitly made for gambling winnings. The app won’t just send this paperwork to you. The IRS will receive a copy, too, so don’t think about trying to skip out on reporting your winnings. They’ll know.
W-2 G reporting is triggered when you win either $5,000 or 300 times the amount wagered. If you meet this threshold, Berry-Johnson says the app will typically ask you to fill out a W-9 so they have all the information they need to get your W-2 G paperwork in order. Then they’ll release your winnings.
She also notes that whether you receive a W-2 G or not, the IRS requires you to report all gambling winnings. If you’ve won smaller amounts throughout the year, be sure to include them on your 1040 – even if they’re not included on your W-2 G.
How much should I set aside for taxes for sports betting?
If you’re issued a W-2 G, the casino or app will be required to withhold 24% of your winnings. However, if you’re in a situation where you have winnings but you’re not issued a W-2 G, saving a portion of that money to pay the IRS during tax season falls on your shoulders.
Berry-Johnson says setting aside 24% to 25% is a good guiding rule, but the amount you’ll need varies depending on your personal tax situation.
“If you’re a college student and have little to no other income, you might not owe anything when you file your tax return. On the other hand, if you have a lot of other income from investments, a full-time job, or a business, you might be in a higher tax bracket and need to set aside more.”
She recommends putting this money in a deposit account separate from your everyday checking. That way, it’ll be harder to spend throughout the year. You want to ensure you actually have that savings at the ready when your tax bill comes due in the spring.
Where do I put gambling winnings on my 1040?
When you have gambling winnings, you’ll have to file a Schedule 1 with your 1040. Look for the line on Schedule 1 that says “Other Income”. That’s where you’ll put your total winnings from your sports betting endeavors throughout the year.
Are taxes different for professional gamblers?
Yes. Professional gamblers can file their wins and losses as business profit and losses on a Schedule C. Berry-Johnson says the IRS doesn’t have hard-and-fast rules around who qualifies as a professional gambler, but they will examine your claims to make sure you’re not cheating the system just so you can deduct your losses dollar-for-dollar. Generally speaking, they’re looking to see if you:
- Have a high level of expertise.
- Put time and effort into improving your skills.
- Make all or most of your income from gambling and treat it like a business.
Berry-Johnson currently lives and works in Omaha, Nebraska, but she grew up and started her accounting career in Nevada. Her father was a casino cage manager in Las Vegas. She recounts some sage advice he gave her one night when she was young.
“We were looking out over the Las Vegas Strip with all of its lavish towers, lights and fountains. [He told me,] ‘Casinos don’t make all their money because their customers are winning.’”
As you’re coming off the high of a big win, you might think you could do this professionally. But before you sell the family farm to become a “professional gambler” for tax purposes, it’s important to remember that the house always wins.
Pittsburgh-based writer Brynne Conroy is the founder of the Femme Frugality blog, DISABILIFINANCE and the author of “The Feminist Financial Handbook.” She is a regular contributor to The SS.
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