If you’re a basketball fan, the biggest tournament of the year is here: March Madness. This epic tournament involves filling out brackets, betting with friends, celebrating when your team wins and lamenting when they lose. According to the American Gaming Association, there was an estimated $10 billion bet on March Madness in 2018. Only about 3% of this was legal. If you are among the 24 million people who participate in NCAA college basketball bracket pools, then you should know what the tax implications are.
What are the gambling laws in my state?
Prior to May 2018, there was a bill, PASPA, that prevented gambling in many states. However, it was ruled unconstitutional in a 6-3 decision. This allowed states to write their own laws.
Since PASPA was ruled unconstitutional, several states have passed their own laws. See the information below to see how your state stands for March Madness 2019:
States where it’s legal: Nevada, Delaware, New Jersey, Mississippi, West Virginia, New Mexico, Pennsylvania, and Rhode Island.
A recent bill was passed: New York, Arkansas
Bill introduced but not passed: Connecticut, Illinois, Kentucky, Michigan, Indiana, Massachusetts, Maryland, Minnesota, Missouri, Kansas, Iowa, Louisiana, Oklahoma, South Carolina, California, Oregon, Montana, Ohio, Washington DC, Tennessee, Virginia, New Hampshire, North Dakota, Maine, Arizona, Hawaii, South Dakota, Texas, Washington
No legislation introduced: Alabama, Alaska, Colorado, Florida, Georgia, Idaho, Nebraska, North Carolina, Vermont, Wisconsin, Wyoming, Utah
Do I have to report my winnings to the IRS?
According to the Internal Revenue Code, you must report the full amount of your gambling winnings as income. That’s right – report any amount whether it is $5 or $5,000 on Form 1040, line 21.
Do I have to report my losses to the IRS?
Your gambling losses for the year are deductible (use Schedule A, line 28) as long as they don’t exceed your winnings. Take note: you can’t reduce your winnings by subtracting your losses and reporting the difference.
What information do I need to report my gambling winnings/losses?
The IRS requires you to keep an accurate diary or similar record of losses and winnings. It must include the following:
- Date and type of your specific wager or wagering activity
- Name and address or location of the gambling establishment
- Names of other people present with you at the gambling establishment
- Amount won or lost
You must also have documentation proving your winnings and losses. In most cases, Form W-2G, Form 5754, wagering tickets, payment slips or other transaction documents are suitable. Even if you don’t receive a form reporting your winnings, you are still required to report it.
Curious if you should receive a W-2G? Read more here.
March Madness runs from March 19th, 2019 to April 8th, 2019. While you’re busy watching basketball, don’t forget to slay your taxes with TaxSlayer by Monday April 15th.