In North Carolina, gambling winnings are subject to state and federal taxes, regardless of the amount won. Many people who bet on sports, like Cherie Franklin and Gene Washington, often don’t think they win enough to owe taxes on their winnings. However, under state law, any amount won is taxable, even if there are losses.
For example, if you bet and win $20 on a sports event, but then bet and lose $40 on another event, you still owe income tax on the $20 you won. Even if you don’t cash out your winnings, they are still considered taxable income. At the federal level, you can only deduct losses up to the amount of your winnings, and this is only if you itemize your deductions.
NC State economist Nathan Goldman explains that gambling winnings have always been taxable income, and with sports betting apps, it is easier for the tax authorities to track your winnings. If you win more than $600 in a year from a sportsbook, you will receive a W-2G tax form in the mail. However, even if you don’t receive a tax form, you are still required to self-report your winnings and pay taxes on them.
While some taxpayers may choose not to report their gambling winnings, it is important to abide by the law and pay the appropriate taxes on any winnings. Failure to do so can result in penalties and legal consequences down the line. So, it’s essential to be aware of the tax implications of gambling and ensure that you comply with the tax laws in your state.