Top 5 Tax Rules for March Madness Betting

Source: AccountingWEB

March 14, 2016

With the NCAA men’s basketball tournament starting in earnest on March 17, you only have a few days left to fill out your brackets to decide which team will be cutting down the nets in Houston on April 4. 
 
If you have some money riding on this year’s college basketball tournament, you’re not alone. According to the American Gaming Association, nearly 40 million Americans filled out brackets for last year’s tournament and wagered an estimated $2 billion. Beyond bracket bets, total wagering on the games runs as high as $9 billion.

With all that cash trading hands in official and nonofficial betting, there are several tax considerations involved for both winners and losers.

The Illinois CPA Society put together this graphic on the five key federal tax rules that college hoops fans should keep in mind during March Madness and for all types of gaming. 

Gambling winnings should be reported to the IRS on Form W-2G, Certain Gambling Winnings, but if you’re sharing a cash prize with a group, you’ll also need Form 5754, Statement by Person(s) Receiving Gambling Winnings, to file your taxes, according to the Illinois CPA Society. 

If you don’t want federal withholding taxes taken out of a lesser cash prize before receiving a payout, winners need to provide Form W-9, Request for Taxpayer Identification Number and Certification, to the payer to prevent mandatory withholding on amounts of $600 or more.