It’s now been well over a week since the official launch of New York sports betting. Since January 8, New Yorkers have been able to legally place online and mobile wagers on their favorite sports.
If you haven’t heard the news, four sportsbooks are now legally available to sports fans and gamblers aged over 21 in the Empire State. You can find out exactly which sportsbooks are legal in NY right here.
That, of course, is the fun part, but what we’re here to do for you today is cover the legal nitty-gritty surrounding betting tax and how it works in NY. It might not be the most exciting part of your overall betting experience, but it’s definitely one of the most important parts.
If you’re total winnings from sports wagers in a year pass a certain threshold, then the IRS will be informed and you will have to pay tax on your winnings. These will need to be included in your tax return. As well as sports wagering the same rules apply for other forms of gambling, including poker tournaments, casino slots machines, bingo, lottery and daily fantasy sports.
For the purposes of this article we’ll be focussing solely on sports wagering.
In New York, you are allowed up to $600 in sports betting winnings tax-free.
Once you pass that threshold, you will have to pay both federal and state tax on your winnings from sports betting.
The federal tax rate on winnings is a flat 24%, while the New York State tax ranges from 4% - 8.82% depending on how much you’ve won.
Winnings up to $8,500 is subjected to the minimum 4%, which should cover most NY sports bettors, save for the high rollers.
Thereafter, the tax rate increases steadily. Your winnings won’t be subjected to the maximum 8.82% tax rate until they exceed $1,077,550.
If your sports betting winnings exceed the threshold, then the IRS will be notified and a W-2G form will be sent out. If you are paid out more than the $600 threshold in one go, then it’s the sportsbook (the payor) who must fill out the form. If you accumulate more than $600 in sports betting winnings throughout, then you can expect to receive the W-2G form.
When declaring your sports betting winnings on your tax return, you can subtract your losses from sports betting over the year. You can find gambling tax calculators online or consult a professional, such as a tax accountant - we recommend doing so f you’re having any trouble.
Things are slightly different for New York residents who have gambling winnings in New Jersey. You can check out our information on holding sports betting accounts in New York and New Jersey here.
Players must be 21 years of age or older or reach the minimum age for gambling in their respective state and located in jurisdictions where online gambling is legal. Please play responsibly. Bet with your head, not over it. If you or someone you know has a gambling problem, and wants help, call or visit: (a) the Council on Compulsive Gambling of New Jersey at 1-800-Gambler or www.800gambler.org; or (b) Gamblers Anonymous at 855-2-CALL-GA or www.gamblersanonymous.org.
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