Over the last week, basketball fans have endured both agony and ecstasy, as they bore witness to some incredible games — and some incredible upsets — that undoubtedly wreaked havoc on their brackets and other bets.
While all eyes will, of course, be glued to the television when the games resume later this week, those who have wagered a not insubstantial amount on the NCAA men’s basketball tournament will want to ensure that they don’t forget this fact when filing their tax returns.
How many people actually bet on the NCAA basketball tournament?
Estimates from the American Gaming Association indicate that over 70 million Americans will bet roughly $9.2 billion on this year’s NCAA tournament via office pools, Nevada-based sports betting, bookies and illegal offshore sites.
What stance does the IRS take concerning gambling income and losses?
The IRS views all gambling winnings — both legal and illegal — as taxable income that must be reported. Furthermore, it also allows people to deduct gambling losses both legal and illegal.
How do non-professional or “recreational” gamblers do this?
All gambling winnings — plus the value of any “comped” lodging, food or travel — are reported as “other income” on Line 21 of the Form 1040. Gambling losses, which do not have to exceed 2 percent of adjusted gross income in order to be claimed, must be itemized on Schedule A.
Do people actually report their gambling winnings and losses?
IRS data reveals that as recently as 2013, U.S. taxpayers deducted roughly $17 billion in gambling losses and claimed nearly $30 billion in gambling income on almost two million returns.
What all of this really underscores is that a person must not ignore this issue when filing their tax return, as the IRS takes it very seriously.
If you are experiencing any sort of problem with the IRS, please consider speaking with an experienced legal professional who can examine your situation and help you pursue viable solutions as soon as possible.