Bet on the big game? Here's what you need to know about paying taxes on sports bets

A record 67.8 million Americans are expected to have bet on football's biggest matchup, according to an American Gaming Association survey, a 35% increase from 2023. It's estimated that $23.1 billion is on the line, up from $16 billion last year.

But while winning that wager makes your pockets fatter, the cash you scored is considered taxable income — just like your salary.

Here's what you need to know about the tax implications of sports betting and gambling wins.

The money you win from placing bets on your favorite sports team is considered income, no matter how little. The IRS considers all winnings from gambling fully taxable, whether from a website, app, state lottery, casino, raffle, bingo game, horse race, fantasy football league, poker tournament or just a friendly wager.

That includes cash winnings and the fair market value of cars, trips and other prizes, too.

If you won at least $600 and 300 times the wager amount, casinos, gambling platforms and online sportsbooks should provide you with IRS Form W-2G (Certain Gambling Winnings). It might be issued on the spot or mailed later, depending on the venue and the amount.

Winnings of $5,000 or more may require gambling institutions to withhold federal income taxes, typically 24% of your total.

But regardless of what gambling platform you use, it's a good idea to always keep a record of the date and amount of your wins and losses, as well as hold onto any corresponding receipts and documentation. You're still on the hook even if you don't receive a tax form from the place you gambled.

Each wager must be reported separately and you can't deduct losses from your gambling income to lower how much you declare. For example, if you lost $600 on a college basketball game but, four months later, won $1,000 on another game, you can't just report the $400 difference. You'd need to report the full $1,000.

While you have to report any income from gambling, from $1 to $100,000, the bigger the winning the more attention it will likely attract from the IRS.

Gambling losses can only be deducted if you itemize your return, which can be more of a headache than just taking the standard deduction. If you think your gambling losses, plus other deductions combined, won't be more than the standard deduction for your tax bracket, it might not make sense to write off your gambling losses.

If you do decide to itemize your deductions, your gambling losses can't be greater than the sum of your winnings.

Gambling proceeds are considered income and federal income tax rates range from 10% to 37%. How much of your winnings you owe Uncle Sam depends on your tax bracket.

Because gambling facilities are required to withhold a flat percentage of your winnings if they're large enough, there may be a difference between the tax withheld and what you owe on your tax return.

In addition, depending on where you live and where you gambled, you may also owe state and local taxes. (Check your state's guidelines to find out.)

If you had any gambling wins in 2023, you should report the full winnings on your tax return in 2024, claiming it as "gambling income" on line 8 of Form 1040, Schedule 1. Itemized deductions can be reported on Schedule A of Form 1040.

The 2023 tax-filing season kicked off on Jan. 29, 2024, and most people's deadline to file is Apr. 15, 2024.

TurboTax® and H&R Block® are both among CNBC Select's top picks for tax-filing programs.

TurboTax offers step-by-step guidance for filers and can access prior returns to get you started, even if they were filed with a different service. If you're going to write off your gambling losses, you should opt for TurboTax Deluxe — the basic edition is only available for simple returns with standard deductions.

H&R Block's intuitive interface lets you file yourself or with one of its tax professionals. Users can also upload previous returns from other providers and they'll get an estimate of their tax refund in real time.

Any winnings from a sports bet must be reported as income on your tax return. You can deduct gambling losses, but only if you itemize your deductions and they don't add up to more than your winnings.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every tax article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of tax products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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