With the Super Bowl right around the corner, I started thinking about sports betting and taxes. (Remember: we are still in the middle of tax season)
If you win big on Sunday, it won't have an impact on your taxes this year — but, you'll want to keep a record for next year. I wanted to go over the process of tax filing for sports betting, what forms to look out for, and what happens if you do not report your winnings.
We'll start with the straightforward rules from the IRS. Though this is the first tax season that sports betting has been legal in North Carolina, the IRS says that everything you earn is taxable.
Watch: 2025 Tax season is here: What you need to know before you file
If you have placed bets on sporting events or gambled, you will need a W-2G form.
The W-2G form allows filers to report gambling winnings and any federal income tax withheld on those winnings.
According to the IRS, the requirements for reporting and withholding depend on:
- The type of gambling,
- The amount of the gambling winnings, and
- The ratio of the winnings to the wager
Watch related coverage: Are balance transfers the best way to pay off debt? We looked into it
The IRS says to report gambling winnings on Form W-2G if:
- The winnings (not reduced by the wager) are $1,200 or more from a bingo game or slot machine;
- The winnings (reduced by the wager) are $1,500 or more from a keno game;
- The winnings (reduced by the wager or buy-in) are more than $5,000 from a poker tournament;
- The winnings (except winnings from bingo, slot machines, keno, and poker tournaments) reduced, at the option of the payer, by the wager are:
- $600 or more, and
- At least 300 times the amount of the wager; or
- The winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding).
Businesses are required to send this form by Jan. 31 so expectant filers should get it soon.
Watch related coverage: What to buy in February, for some of the best savings of the year
I recently talked to LuSunda Everett of Everett Tax Solutions. Generally speaking, she said, “I think people have an overall inherent fear of taxes and the government. But if you take some time to get to know some things, it takes a little bit of that fear away -- and if you take some time to prepare ahead of time, it also removes some of that fear and anxiety.”
One last thing — the IRS and North Carolina will know if you do not report winnings, you could expect to get hit with interest and penalties.
The key takeaway: keep documentation throughout the year so you are not scrambling at the last minute.
Click here for instructions regarding W-2G and 5754 forms.
