March Madness begins this month! Our televisions shift from football to basketball, and we fill out our NCAA brackets in hopes of winning big money and fancy prizes.
Did you know the odds of a perfect March Madness bracket are one in billions? That’s right, billions! It’s a good thing the odds of filing your taxes correctly are much higher. If you won last year, keep the following tips in mind as you e-file your tax return.
Are my March Madness winnings taxable?
Yes, all money and prizes won from gambling ARE fully taxable and are subject to income tax withholding. Certain gambling winnings may require the payer to issue you a Form W-2G if you received the following:
- $600 or more in gambling winnings and payout is at least 300 times the amount of the wager
- Any other gambling winnings subject to federal income tax withholding, which are reported on Form 1040 on Line 21, “Other Income.” This includes $1,200 or more from bingo or slot machines, $1,500 or more in proceeds from keno, or $5,000 or more from poker tournaments.
What should I know when I e-file?
- If you don’t receive a Form W-2G, the IRS still says you should report this income on your tax return.
- You can deduct gambling losses as an itemized deduction, but be sure not to deduct more than what you won.
- Keep records of your winnings and losses by hanging on to those receipts, tickets, statements, or similar items.
How do I know if I need to claim gambling winnings?