Q: How are gambling winnings taxed? Specifically sports betting. Is it a cumulative total or is each bet handled seaparatel
I use about 6 different sportsbooks and win quite frequently. Are winnings throughout the year totaled up and taxed totally? Or does each bet have to be over a certain amount? Also, are you able to deduct losses from taxable winnings?
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A:
In Tennessee, as in other states, gambling winnings are generally considered taxable income. This includes winnings from sports betting. The IRS requires all gambling winnings to be reported on your tax return.
The taxation of your winnings depends on the total amount you win over the year, not on each individual bet. All winnings from the various sportsbooks should be totaled and reported.
Regarding the deduction of losses, you are allowed to deduct gambling losses to the extent of your winnings. This means you can't deduct more in losses than you report in winnings. However, to do this, you must itemize your deductions on your tax return, which is a different approach than taking the standard deduction.
It's important to keep detailed records of both your winnings and losses, including dates, types of betting, amounts, and the names of the gambling establishments. This documentation is crucial for accurate tax reporting and for validating your deductions if audited.
Given the complexity of tax laws and the potential for significant financial impact, you might consider consulting with a tax professional. They can provide specific advice and help ensure your tax filings are accurate and optimized for your situation.
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