Millions of Americans munched on snacks and watched the Kansas City Chiefs square off against the Philadelphia Eagles. As with any sporting event, especially with one of the most popular events of the year, the betting scene thrived.
But beware innocent gambling. Technically, your Super Bowl squares from the office pool are taxable.
Gambling winnings are expected to be reported as other income on your clients’ tax returns.
Now, it is not likely that the office manager is going to start issuing W-2G to everyone who made $100 on those squares, but clients who partake in online sports betting and other organized gambling events are going to need a tax plan for their additional income.
Gambling winnings doesn’t just include sports betting, lottery winnings, even scratch tickets are supposed to be reported. Federal returns allow for offsetting gambling losses to be taken. I often recommend to clients who enjoy a frequent casino trip, to faithfully track their expenses throughout the year. Losing lottery tickets, scratch cards, and slot machine fees can add up when you need to offset the income from a big win.
Be careful, though. You cannot take your gambling losses if you already take the standard deduction and not every state allows for gambling loss deductions on the state returns.
According to the American Gaming Association, more than 30 million Super Bowl bets were placed. While this certainly will not impact every tax client’s return, it doesn’t hurt to include questions on your tax organizers from year to year asking about any gambling winnings and reminding your clients of the rules.