How to handle sports betting income and losses for the April 15 tax deadline


Every year, just when you thought you had hit the big time betting on sports, Uncle Sam comes knocking on the door to claim his share.

So if you made a lot or a little money from post-action betting tips, April 15 is your deadline to report it as taxable income.

Maybe you hit my prediction of Jon Jones at +700 in March 2023 or are preparing for a bigger tax return next year on Michael Leboff's 80/1 overall pick on Hideki Matsuyama in February; The post office has protected you with the help of a tax expert.

FanDuel, DraftKings and other online gambling apps appear on a phone.
FanDuel, DraftKings and other online gambling apps appear on a phone. AP

Alison Flores, Manager at the Tax Institute at H&R Block, answered some basic questions about sports betting tax ahead of the tax deadline.

As with all income, tax rates can range between 10 and 37 percent, depending on the tax bracket.

Use this as a solid foundation of knowledge as you place your bets throughout the year. However, if you need more detailed answers about your sports betting tax liability, consult a tax advisor.

Flores' answers are in italics.

What is the minimum amount you need to win from sports betting to be able to pay taxes?

  • There is no minimum amount you must win to pay taxes. If you have profits, they will be included in your gross income. One limitation is that you can deduct your betting losses to the extent that you have made any winnings. However, you must itemize your deductions to claim the losses.

How high is the tax rate?

  • “Your winnings from sports betting are considered taxable income – specifically, they are considered ordinary income on your tax return. If you won money by placing bets, the tax rate can be between 10% and 37%, depending on your income tax bracket.”

A tax form is pictured at the main post office in New York on April 15, 2009, tax deadline day.
A tax form is pictured at the main post office in New York on April 15, 2009, tax deadline day. REUTERS

If I make $5,000 on DraftKings but lose $5,000 on FanDuel, does the difference balance out for tax purposes?

  • “Unfortunately, you cannot combine your bets when you report them for tax purposes. Each betting transaction must be reported separately.”

Do sports betting providers archive my winnings for me or is it my responsibility to manage them?

  • Typically, the betting organization or platform will send you a Form W-2G or a Form 1099-MISC, depending on the activity. For sports betting activities, the platform should issue IRS Form W-2G if you win $600 or more and the odds are 300/1 or more. Although you should provide the form, you must submit it with your tax return. If you don't receive the form, you still need to report your winnings for tax purposes.
  • If you have a profit of $5,000 or more, the company may withhold 24% of the profit for federal income tax. If this is the case, it will appear in Box 4 of your W-2G. In certain situations you may also be subject to a security withholding, which is also 24%.

Find out about the best sports betting sites and apps in the USA

A note for daily fantasy players…

  • “If you play fantasy sports, the platform will issue Form 1099-MISC if your annual net income is more than $600. In fantasy sports activities, the cost of betting is usually deducted from your winnings.
  • “To complete your tax return, report your winnings as “gambling income” on Form 1040, Schedule 1. If you have losses, report them on Schedule A when you itemize deductions.

Do I have to pay taxes if I keep gaming winnings in the betting account and don't pay them out?

  • “Individuals will report income that is within their control. In this example, the income is in their control, meaning they receive it constructively and can choose to transfer it. If the bettor has unpaid winnings in an account, the winnings are subject to tax. Depending on the type and amount of the gain, the taxpayer may or may not receive a 1099.”
  • “We recommend that they keep very good records – income should not be taxed twice. If they kept everything they won in 2023 in FanDuels or DraftKings and then transferred everything to PayPal in 2024, they could get some double 1099s with a later possibility of a 1099-K. Therefore, they must keep good records to show what is being transferred. These websites provide complete summaries of player transactions which should substantiate the transactions.”