January 14, 2022
Sports Betting Guru
Sports Betting Guru
Sports betting is now legal in New York, and that opens up a whole new world of possibilities. You have some great platforms to bet with, like FanDuel and BetMGM, and the opportunity to enhance your betting experience.
But, with everything you win in life, you have a legal obligation to pay tax on your winnings as soon as you sign up with a sportsbook.
Taxing gambling winnings often fall into a bracket of its own, and so you have to take certain measures to separate your gambling winnings from your regular income and household tax. But, there are many new questions about tax rates in New York. How much of my winnings will be taxed? When do I have to pay for it?
It depends on your annual income. The state tax can range from anywhere between 4% to 8.82%. If you live in New York City, you’ll also have to pay an additional 3.786% in tax. But, just know that 4% will be your minimum tax rate. However, take heart, as a sportsbook operator, like Resorts World NY, you’d be paying 51% tax on your profit!
So, to separate these from your regular taxes, you need to get a hold of a form called a W-2G. The IRS will automatically issue you this form if they have records of you gaining gambling winnings, and it essentially acts as a record for your gambling winnings. Once you fill out your W-2G, it should estimate how much tax you’ll have to pay on your gambling winnings.
The W-2G will ask you how many gambling winnings you earned, but the primary deciding factor will be your annual income. Depending on how much you make a year, that will decide the percentage of your gambling taxes. If you make anything under $8,500, for example, you will be taxed a minimum of 4%.
But, if you make anywhere in the range of $21,401-$80,650, which is a wide ballpark for the majority of your average working person, you’ll have to pay 6.09%. You’d have to make over $1,077,550 to pay the maximum tax rate of 8.82%.
But, you may be asking, what is the bar for gambling winnings being taxed? Don’t worry, if sign up with WynnBet New York and you win $50 on an NFL game over the weekend, we highly doubt you’d have to pay tax on that. There is a threshold that has to be met before you will start being taxed on your gambling winnings.
For most sports betting activities, if you make $600 or more in a calendar year, you’ll be subject to paying tax on that. If you win a prize or a bonus, like a trip, a car, or any kind of prize, the fair market value should be reported on the W-2G.
If you’re betting outside of New York also, in New Jersey, there is a return you’ll have to submit to tax your winnings. If any out-of-state gambling winnings exceed $5,000, you’ll have to file a non-residential return reporting your winnings.