Whether you just dropped a couple of bucks into the office Super Bowl pool, are in Vegas watching the game line (and your bank account) change all day, handed money over to a bookie or are bouncing between this blog and your online gambling account, the big money you make today when
The problem for the IRS, as detailed in this story, is that many people don't realize that Uncle Sam counts gambling winnings as taxable income. And even if they do, they tend to ignore the law.
Obviously, it's a hard law to police. Joe in the mail room isn't reporting his sideline betting activity and all its participants to the IRS. Neither is Big Jim the neighborhood bookie.
And online gambling is now more officially illegal in the United States than it was before. Late last year, the Unlawful Internet Gambling Enforcement Act was quietly passed and signed into law, making it a federal crime for U.S. banks and credit card companies to process Internet-bet payments.
To be sure, efforts to stop such crimes have historically run into trouble. Remember Prohibition? Back alley speakeasies thrived when the legal selling of booze was put on hold. Gambling and gaming experts say similar secret accommodations began as soon as the new anti-online gambling law took effect.
I'm not your mom, so I can't tell what you should or shouldn't do. Heck, I also enjoy an innocent game of chance now and then and have even pocketed a few lucky number dollars over the years.
But I did want you know that if you do nail your game pick (or picks, if you're wagering on all the various game activities that also are up for bet), your winnings are taxable income. So you'll want to let the IRS know on next year's return about this added income. Don't worry, you can reduce your winnings by any other gambling losses you'll have this year (details here).
And you also might want to be very nice to Joe and anyone else who knows you win, just in case you decide not to report it but your not-so-lucky betting buddies decide to share info about your good fortune with the IRS themselves.
In addition to my Bankrate story on gambling winnings, here are some other big game and gaming features you might enjoy:
- Bettors go wild on Super Sunday
- FBI watching online betting as well as the big game
- Local bookies make a comeback
- Friendly, but illegal, wagers
Enjoy the articles and the Super Bowl. Go Bears!