Jackson Hewitt Offers Taxpayers Helpful Tips
JERSEY CITY, N.J. , March 17, 2023 /PRNewswire/ — March Madness is sweeping across the country with 68 million adults planning to wager up to $15.5 billion dollars this year, according to the American Gaming Association. With the surge of bracket contests and office pools, Jackson Hewitt Tax Services found that 62 percent of taxpayers are unclear on how to report money won from sports bets and gambling, according to a recently fielded survey. Additionally, nearly half (48 percent) falsely believe cash winnings from sports bets are only taxable if their respective state has legalized sports betting; when in reality, all income must be reported.
In accordance with IRS reporting rules, earnings from sports bets or gambling are fully taxable and must be reported on Form 1040 as ‘other income’ on both federal and state income tax returns. Examples of ‘other income’ include, but are not limited to, money won from casinos, game shows, raffles and state lotteries. Winnings from foreign countries, including international gambling are also taxable and must be reported on federal tax returns.
“We saw in our survey that taxpayers are confused and need the guidance of a tax professional to help them correctly report additional sources of income like cash winnings from gambling. As sports betting becomes more available and accessible to Americans, it is important for taxpayers to know the intricacies of federal and state tax law,” said Mark Steber, Chief Tax Information Officer at Jackson Hewitt. “If these earnings are reported incorrectly, or not at all, there is major risk for the taxpayer: they could be penalized from the IRS, their state, or even audited.”
The experts at Jackson Hewitt offer taxpayers three reminders to help them avoid mistakes when filing gambling winnings on this year’s tax return:
- Report all gambling winnings as ‘other income.’ Any earnings over 600 dollars as well as the fair market value of items should be reported to the IRS as ‘other income’ on Form 1040. The payer may withhold 24 percent of taxpayers’ winnings but the income tax bracket will ultimately determine if the taxpayer will owe more.
- Keep organized records of winnings and losses. Gambling losses may be deducted if the taxpayer itemizes their deductions on Form 1040. The amount of losses that are deducted cannot exceed the amount of winnings. Taxpayers may receive a W-2G if they are betting through an official sports betting organization, but even if they don’t, the burden of proof is on the taxpayer.
- Each state treats gambling winnings differently. Similar to other tax-related issues, each state is different and might not have the same rules as the IRS on how to report income on the state return. Even if sports betting isn’t legal in the state that the taxpayer won money, it is still required to be reported. Additionally, taxpayers who win in a state they don’t live in, may have to file a tax return for their winnings to that state.
For more information on sports winnings, visit Jackson Hewitt. To file a tax return, visit jacksonhewitt.com/officelocator to find a Tax Pro at a local Jackson Hewitt office or a nearby Walmart location.
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc. is an innovator in the tax industry, with a mission to provide its hard-working clients access to simple, low-cost solutions to manage their taxes and tax refunds. Jackson Hewitt is devoted to helping clients get ahead and stands behind its work with its Maximum Refund Guarantee and Lifetime Accuracy Guarantee® (restrictions apply, see Jackson Hewitt’s website for more details). Jackson Hewitt has more than 5,600 franchise and company-owned locations nationwide, including 2,700 in Walmart stores as well as online tax prep services, making it easy and convenient for clients to file their taxes. For more information about products, services, and offers, or to locate a Jackson Hewitt office, visit www.jacksonhewitt.com or call 1 (800) 234-1040.
Methodology
This opt-in survey was commissioned by Jackson Hewitt between March 3 – 6, 2023, among 1,000 American adults aged 18 and older, and conducted online by Dynata. Respondents of the survey were selected from those who volunteered to participate in online surveys. One thousand complete surveys were collected using the sample framework based on U.S. Census data for age, ethnicity, gender, region, and income.
SOURCE Jackson Hewitt Tax Service Inc.
