Are you betting on the Super Bowl? Here's how it'll affect your taxes

If you win money wagering on the Super Bowl this weekend, you should only spend it some at a time, as you will be required to pay taxes of your winnings. 

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The Internal Revenue Service considers gambling winnings to be taxable income. This includes winnings from gambling sites or applications, casinos, raffles, and daily fantasy sports leagues. Additionally, tax is the fair market value of non-cash rewards.

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Generally, when you win $600 or more, gaming enterprises will give you and the IRS a W-2G or a 1099-MISC for raffle or sweepstakes winnings. The IRS can utilize these papers to verify your entire income while processing your tax return. According to the IRS, if your winnings exceed $5,000, the firm that handled your wager may withhold up to 31% of the revenues for federal income tax. This information will appear in Box 4 of your W-2G.

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Even if you did not get the tax forms, you are still liable. You are still responsible for keeping track of and reporting gaming winnings. Experts advise that you maintain a thorough record of your gambling throughout the year whether you win or lose.

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Fortunately, numerous gaming and casino websites have a downloaded log of your bets.

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Once you've gathered your documents, you'll need to declare your wins as "gambling income" on line 8 of the Form 1040, Schedule 1, which is used to report non-standard forms. This sum is then added on line 8 of Form 1040, under "other income,"

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Deducting gambling losses will not be easy.

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On your tax return, gambling wins and losses are recorded individually. It Includes the winnings you report as income, including the cost of gambling or the initial wager or bet.

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Gambling losses are deductible but cannot exceed the number of profits reported as income. Additionally, the cost of your wager might be subtracted as a loss. However, you may only claim gambling losses if you itemize your deductions on the Schedule A of the Form 1040.

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Romeo Razi, a certified public accountant in Las Vegas, explains, "Let's assume your bet is $1,000, and you win $3,000." As an itemized deduction, "you will record the $3,000 and $1,000 loss from wagers."

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However, most individuals need to itemize their deductions. Instead of itemizing their deductions, they opt for the standard deduction, which provides a substantial tax break of $12,950 for single taxpayers in 2022.

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Consequently, itemized deductions, such as gambling losses, may not be worth the effort, as the overall value of these deductions may not surpass the standard deduction.

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You face fines or imprisonment if you fail to disclose gaming gains.

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You are breaking the law if you fail to report all of your gambling gains. The IRS can determine this by comparing your income with the W-2 forms it receives or by analyzing your bank deposit activities.

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For more considerable sums, jail time is possible, although the IRS can apply extra fines and interest for lower amounts. If the total underreported amount exceeds $5,000 or 10% of your actual tax due, whichever is larger, a 20% penalty may be assessed.

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And that being said, the IRS is less likely to notice casual gambling that does not include W-2 forms, such as fantasy football pools amongst friends.

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However, a substantial cash deposit or having someone give you money portrayed as a win might still trigger an audit, even if the gambler is a casual player. In light of this, you must report everything.

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