Sports betting wins come with strings attached for tax season, says financial expert
FOX 2 (WJBK) - March Madness is one of the most popular events for sports betting - but if you win big it could impact your taxes.
Sports betting has become so popular ever since Michigan legalized it, as well as online sports betting. But do you realize the tax implications of it if you win? Michael Mazarin from the Retirement Education Foundation helps us figure it out.
FOX 2: "A lot of people during tax time they get those letters from the casino, and they're shocked."
"Absolutely," he said. "The casino, that online sports app they downloaded, they won a couple of hundred bucks, a couple of thousand bucks if they're lucky, and now all of a sudden, there's a tax letter in the mail, saying you owe some taxes."
FOX 2: "What do people do if they have spent that money, or they've lost that money?"
"So if they spent it, you've got to set up a payment plan with the IRS," said Mazarin. "Now, if you lost that money gambling, you can offset those losses against the winnings - but that gets a little tricky. So make sure you talk with a tax professional."
FOX 2: "Obviously with all this stuff we want to remind people don't bet more than you can afford."
"Always that is always number one, don't bet more than you can afford gambling is risky and that cannot be your strategy for generating income and retirement," Mazarin said.
As a financial expert, Mazarin has seen this problem emerge since the influx of sports gambling in the legalization and the financial problems that come with it.
During the pandemic shutdown, many people turned to the stock market which created more problems, in some cases.
"During the pandemic, there were no sports and people who were gamblers turn to the stock market - that was kind of their outlet for gambling," Mazarin said. "And we saw in the stock market people taking excessive risk in the stock market. And our fear for people as they win a couple early small ones, and they think they have a system. They think they're good at this and they make a few bigger bets and they lose it all.
"That's our fear for people."
The tax deadline is fast approaching but Mazarin has some advice for those who may feel behind schedule.
"It's not as it's not as daunting as people think it is. It doesn't take quite as long for most people," he said. "Now, if you have a complicated tech situation, you can always file an extension and talk with a tax professional."