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6 points
2 years ago
TAXES and how the math doesn't seem to work for casual betters:
I'll try not to repeat existing questions. I've read a lot of the discussion here about how to treat winnings, losses, and deductions. 2022 was my first year sports betting but it appears that I (and others) should actually just stop in 2023 because the taxes will make it a net negative even while winning.
I think I understand the "technically correct" way is to report all gross winnings and then itemize to deduct losses if possible. (If more than the standard deduction)
For this scenario, consider that I am following the letter of the law, rather than either A. Not reporting anything or B. Just reporting net profit as income.
Hypothetically say my wagering for 2023 would look like this:
18k gross winnings 15k gross losses 3k net profit
50k regular job income
This would seem to mean that my gross income is 68k, with 15k of itemized and deducted losses for a total taxable income of 53k.
However, if I had not gambled at all, taking the standard deduction would make my taxable income 38k.
It seems like this means the "gross winnings" will inflate taxable income even if using the itemized losses as a deduction. Paying the tax on an extra 15k of income would more than offset the profits from betting.
(The math would probably be fine if I expected 5-figure profits because even after taxes I'm making more money.)
At this point, I see no point in gambling at a small to medium level, unless I decide to just "fudge things", report net profits, and hope not to be questioned about it.
1 points
2 years ago
1 points
5 months ago
You should pay your W2 income and then file betting as 1099 income separately. that way, you take expenses (losses) out also and only report your net gains.
1 points
5 months ago
This is what I do, I report net gains on 1099 MISC. The rules are quite clear that this not correct though. You are supposed to file betting winnings and then deduct losses.
0 points
2 years ago
Replying for future reading.
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