March Madness: Play by the rules on your tax return
Does March Madness bring April taxes? The Sweet 16 NCAA men’s basketball tournament is upon us. Whether or not your bracket is busted, there are some important things to know about your taxes if you wagered money or prizes in a March Madness pool. That means anything from legal sports betting sites to an office bracket pool.
According to the Internal Revenue Code, you must report the full amount of your gambling winnings as income. That’s right – report any amount whether it is $5 or $5,000 on Form 1040, line 21. Not so lucky? Your gambling losses for the year are deductible (use Schedule A, line 28) as long as they don’t exceed your winnings. Take note, you can’t reduce your winnings by subtracting your losses and reporting the difference.
If you like to gamble, you should like keeping a diary, too. The IRS requires you to keep an accurate diary or similar record of losses and winnings. It must include the following:
Date and type of your specific wager or wagering activity
Name and address or location of the gambling establishment
Names of other people present with you at the gambling establishment
Amount won or lost
You must also have documentation proving your winnings and losses. In most cases, Form W-2G, Form 5754, wagering tickets, payment slips or other transaction documents are suitable. Even if you don’t receive a form reporting your winnings, you are still required to report it.