Whether you’re cheering on Baylor or Kansas, Houston or Gonzaga, call up the crew and hunker down: It’s officially bracket season. Your favorite schools are facing off — both on the court and in spreadsheets across the country — as college basketball brackets become our newly-minted form of social currency.
But remember: More than bragging rights are at stake. Depending on what’s in the pot, the IRS might have your winnings in its sites. Don’t worry, TaxAct is here to help you sink every shot on your tax return. Here’s what you need to know about gambling, your basketball brackets, and your taxes.
Will the IRS even know if I score big?
This depends. Remember, it’s always recommended that you report your gambling winnings. But if you’re in a small office pool, or placing $5 bets with 10 friends, it’s unlikely Uncle Sam knows about you.
However, if you win more than $600 through an organization or online site, that should trigger a 1099-MISC form — a cash or prize winnings report that arrives by mail. And if you get a copy, so does the IRS.
How does a bracket victory count on my tax return?
Even though your bracket is partially based on chance — star players get benched, an underdog takes it all — there’s often a great deal of research guiding your path to the playoffs. For that reason, sport brackets fall under “hobby income” on your taxes, and not “gambling winnings.”
Don’t get benched by the taxman: Report your winnings. TaxAct is here to help you every step of the way, from crunching the numbers on itemized deductions to walking you through your hobby income filing. You just keep doing what you do best: picking winners.
Source : TaxAct Blog