If you have losses from other gambling activities during the year-for example, you’ve made several trips to casinos and racetracks-you can use losses from those activities to offset gambling income if you are able to deduct those expenses. (State laws vary, so check this out for the state where you reside.)īut the tax news isn’t all bad. Assuming you’re in the 24% tax bracket, that will set you back $2,160 in federal income tax, plus you may also have state income tax liability. If you can deduct the $1,000, your net profit is $9,000. For instance, say you win $10,000 in a big stakes league and your entry fee was $1,000. If that is the case, your net profit for tax purposes is the amount of your winnings minus any entry fee. If you are eligible to itemize deductions above the standard deduction, you can deduct your gambling expenses to the extent of your winnings. If the IRS computers flag your return for closer inspection, however, it can come back to haunt you. They think that it’s small potatoes to the IRS or that it doesn’t matter because the activity is recreational in nature. This is where many Fantasy sports players get in trouble. Of course, the same information is sent to the IRS. Typically, you’ll receive a Form 1099-MISC or a 1099-K for payment from a third party source like PayPal or Venmo. Starting point: If you play Fantasy sports online for money and win $600 or more, the sponsoring website is legally obligated to report the winnings.
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