Yes, there’s the Republican plan to replace Obamacare.
And, yes, a serious winter storm is pounding the Northeast.
But today, March 14, attention turns to the men’s college basketball championship. The quest for that title is known as March Madness and it kicks off with two games later today in Dayton, Ohio.
Place your bets: I’m not a basketball fan, college or pro, but long-time readers know what this month means to me — gambling and taxes.
While the Super Bowl is the year’s single biggest betting day — we’re waiting for the final tally, but last February’s 51st NFL championship was expected to draw $4.7 billion in bets — the month of games played during the annual NCAA basketball tournament attracts the most wagers.
Thousands of folks will drop a few bucks into their offices pools. The more hard-core sports and gambling fans will put even more money on the games hoping for a big payoff.
Whatever the betting method, the American Gaming Association (AGA) expects about $10.4 billion to be wagered on this year’s college hoops tournament games.
That betting number marks a 13 percent increase over last year’s estimated $9.2 billion wagered, according to the AGA.
Most bets will be illegal: More notable is that of the $10.4 billion that will be bet on the 2017 tournament, the AGA says only about $295 million – or 3 percent – will be wagered legally through Nevada sports books. Remember, the Silver State is the only place where you can legally bet on sporting events.
The remaining $10.1 billion will be spent on illegal offshore websites or through bookies, says the AGA.
In addition to the overall bets placed legally or not, the AGA offers a few other March Madness gambling tidbits:
- 40 million people fill out roughly 70 million brackets;
- the average person completes nearly two brackets; and
- the average bet per bracket totals $29.
The under-the-table March Madness bets are part of at least $150 billion a year that’s illegally bet on sports, according to the AGA.
Illegal, but taxable: The Internal Revenue Service is painfully aware of all the winning bets that slip through its collection fingers. Still, the agency reminds us that all gambling winnings, be they paid out at a Vegas, baby, casino or by a street corner mook, are taxable income.
So does Wolters Kluwer Tax & Accounting. That’s the first point made by the global information and services company in its March Madness bracket-styled infographic of the top 10 need-to-know tax rules when it comes to wagering.
In case you’re checking in between games on your mobile device — Nielsen research says that mobile March Madness bracket players are the most avid — and can’t quite make out the image of Wolters Kluwer’s gambling tax tips, here’s a quick print overview:
- Cash and non-cash gambling winnings are taxable.
- Special tax reporting is required for winnings of more than $600 or those that are 300 times the wager.
- Gambling losses may be deductible against gambling winnings.
- Winning payouts of more than $5,000 may require withholding.
- Regular gamblers face special reporting rules.
- Winnings are reported on line 21 of the long Form 1040.
- Gambling losses are reported on Schedule A.
- You can’t use gambling losses to create a tax loss.
- Group betting winners who split a grand prize must file Form 5754.
- Fantasy sports are treated by some states as gambling.
Prop, not proper bet fan: If you’re like me and not a hoops fan, then you’ll probably enjoy watching the prop bets more than the game.
These are the wagers on some goofy and only tangentially game related possibilities, such as whether the new president, who’s more a golf than basketball fan, will Tweet about any of the match-ups.
If you’re interested in following the games and their outcomes, even if you’re not betting (it happens!), you can download a bracket sheet to help you keep track.
And if you are betting, you also might want to jot down your wagers and what you won or lost.
As the Wolters Kluwer infographic above notes, all your winnings are taxable income. You can get more info in the Daily Tax Tip that ran following New England’s historic Super Bowl comeback on reporting your gambling take to Uncle Sam.
Good luck and enjoy the games.
You also might find these items of interest: