Do You Have To Pay Tax on Matched Betting Income in the USA?

You must declare and pay taxes on the money earned from Matched Betting. The government classifies profits from your matched betting activities as taxable income. This is similar to how you report your regular income on your tax form.

How much tax am I required to pay taxes on my earnings from Matched Betting?

The tax rate on your matched betting income can vary from 0% to 37%. This depends on factors such as your total income, filing status, and other details on your tax return. Essentially, the government taxes the winnings at the same rate as they would tax additional wages. You can find out more here.

It's highly recommended to maintain a log of all your matched betting transactions.

Do I have to report matched betting profits if sports gambling is illegal in my state of residence?

Yes. You must report the income from that activity, even if betting is illegal in your state.

How do I report my matched betting profits on my tax return? 

Taxpayers report matched betting profits on their tax return, due around April 15 each year. Tax authorities treat matched betting profits as regular income, so make sure to inform your tax professional about this additional money you've earned.

Tax authorities treat Matched Betting profits as regular income, therefore, you should inform your tax professional about your winnings and losses.

Remember, with Matched Betting you will make a guaranteed profit. You will win with some sportsbooks and lose with others. In every matched bet sequence, you will always make a guaranteed profit from your qualifying bet. Additionally, you will also make a profit from the conversion of your free bet.

This risk-free process means you will be in profit and will need to pay taxes on these sports betting activities.

Most taxpayers can only subtract their losses from sports betting up to the amount they win from sports betting and gambling. For example, if you win $10,000 and have $5,000 in losses, you can deduct $5,000 of losses.

To deduct your sports betting losses, you must itemize your deductions. Additionally, there is a limit on the amount you can deduct. Individuals opting for the standard deduction typically can't write off their losses from sports betting.

ProfitDuel Premium members can easily itemize every bet placed with our Profit Tracker tool. 

What occurs if I neglect to declare my matched betting profits on my tax returns?

Not reporting your earnings from matched betting can lead to a tax investigation, fines, interest, and even criminal prosecution in serious cases. When a betting firm or sportsbook gives you a tax form, it also sends a duplicate to the IRS.

If you fail to incorporate this tax document in your tax return, it's probable that the IRS will flag it. You need to report your gambling winnings on your tax return. Even if the sportsbook  doesn't provide you with a tax form, this still holds true.

If I engage in matched betting across various states, what's the procedure for taxing my profits?

Most states tax all income earned within their borders, regardless of residency. Usually, you must also report your matched betting profits on the tax return for your state of residency. Your home state may provide a tax break for the taxes you paid to another state. This means that you won't have to pay taxes on your winnings to both states. 

The rules vary in each state. Consulting a tax professional is highly recommended. They can ensure that you accurately report your out-of-state winnings. Additionally, certain states might not permit a taxpayer to subtract gambling losses to balance out gambling winnings.

What should I do if I get a tax document from a sportsbook or betting firm?

If you get a tax form from a sportsbook or gambling company, first check if the winnings amount is accurate.

Sometimes, the tax document you get might show an inaccurate sum of earnings. If this happens, contact the sportsbook or betting company and request a new tax document that shows the accurate earnings. Once you've verified the accuracy of the earnings, make sure to hand over the tax document to your tax expert.

This piece includes basic legal knowledge and doesn't provide legal counsel. ProfitDuel is neither a legal firm nor a replacement for a lawyer or legal firm. Legal matters are intricate and frequently undergo changes. For legal advice and tax advice please consult with professional advisors.