Tax Liability - SportsBook Win of $85,000.00

Thank you for letting me ask an important question to those with more knowledge than me as it relates to paying taxes on a Sports Book win in Las Vegas. This past year I had the good fortune to win a Sports Futures bet at a large casino in Las Vegas. The odds were 85/1. After winning I gave the casino my SS# upon request and received a check for the full amount of $85,000.00 which I immediately deposited in the bank (My need for this money forced me to think outside the box so I placed this wager). I am uninsured and have a serious health condition that I need continuous treatment for. 16 months ago I was unable to work because of treatment I needed. A sizable part of the 85k has been used for health related expenses. The only amount I have left would be enough to pay a 25% tax on the 85k won (which could really be used for my health expenses). Without going into all the specifics about my insurance issues and my ability or inability to work right now due to health concerns/treatments....I wanted to know if possible what my obligations are to the IRS.

I have read conflicting information on this subject. On the one hand some have said ALL gambling winnings are taxable. The only question is whether a W2-G is issued by the casino. My understanding is I may not have received the W2-G from the casino because my wager did not trigger the casino to give me such document. The rule seems to be that reporting a win on a W2-G are pretty clear. $1,200.00 on a slot or bingo machine, $1,500.00 for Keno, $5,000.00 for poker tournaments, and $600 or more AND 300-1 on table games and other bets. I am thinking my sports wager falls under the category of "Other bets".

So the question then becomes.....what do I owe the IRS if anything right now as the tax deadline approaches from this ONE wager????? Although my future is unknown because of my health I have always prided myself on doing the right thing and being honest. I wanted to sincerely thank anyone/everyone who may be kind enough to lend a helping hand and provide me with some guidance. I wish everyone here good luck and most importantly only the best of health now and in the future.

Your Friend

 

Not an expert, but I don't think the casino will be reporting it o the IRS. That said, the casino probably generated a CTR and guaranteed your bank did when you deposited the check. The taxes are due on your winnings whether the casino reports it or not. So keep that in mind.

Curious, what was the wager that paid 85 to 1? I'm trying to remember what long shot hit in the past year....

 

CTRs go to the treasury and not IRS if that's helpful...also don't you have the option of deducting medical expenses for tax purposes if it's > certain % of your income? Id talk to a tax attorney as it may be possible to both declare and pay nothing if you're literally spending all your $ towards medical bills.
Good luck

 

Technically you must report all gambling winnings to the IRS whether or not you receive a W2G. Without knowing you age I do not know if which medical expense threshold is applicable to your situation, however if you have 25% of your winnings left, you would have spent about $64,000 on medical expenses, which if assuming your only income is really this gambling income, means that $55,250 is deductible for tax purposes. You then are able to deduct any other itemized deductions that you may have (real estate, personal property and state taxes paid, mortgage interest, charitable contributions, etc) and your personal exemption of $3,950. With these amounts you have a federal taxable income of about $26,000 and tax of less than $5,000. You'll also have the 1% penalty ($260) for not having health insurance for 2014. Then you also have state taxes to consider. This is all assuming that the only income you had was the $85,000 and that you've used the 75% so far just for medical expenses.

 

This is the sort of situation where I would try to get some real legal/tax advice rather than relying on a message board, but I can tell you definitively that you do, in fact, owe tax on that $85k. You're exactly right that it didn't generate a W2G because you didn't hit the 300:1 threshold (the rules for W2Gs vary depending on the type of wager in question), but it's indisputable that all gambling winnings are taxable. People differ on what to report and when, but regardless of whether you received a W2G, that $85k is taxable income. And, though I'm not your lawyer and this isn't legal advice, I think that the fact that your reportable income is far less than what you've been spending can raise a red flag. Like I said, this is something I'd talk to a professional about.

 

You need an accountant-CPA who is at least familiar with gaming income. And you need one yesterday.

 

Not to belabor my question above, but I am a bit skeptical of the OP because I cannot think of what futures bet paid 85 to 1 in 2014?? Seahawks were never that long to win the SB. Nor were the Spurs, Giants, Florida State, or UCONN. Those were the futures winners from last year where I knew the odds (and none were 85 to 1). So that got me thinking, what sport could it be? Hockey? I don't follow hockey closely enough, but I feel relatively safe guessing the Kings were never 85 to 1 last season. Golf? No idea, but were there any huge longshot winners last year at a big tournament? Tennis? I doubt it. I don't bet tennis often, but when I do, I cannot recall ever seeing any 85 to 1 shots to win a tournament. Not saying it has never happened, but I sure don't remember it happening last year. Soccer? Don't follow it, so I have no idea. Nascar?

So someone help me out here. What event am I forgetting? 85 to 1 is a serious longshot and I just don't remember any major upset like that last year where you could place a futures bet on it.

 

Did Ohio State ever get that low? I remember hearing they were 50:1 at some point but the exact moment escapes me. If they went to 50:1 after the Braxton Miller injury I guess they could've dropped even further after the Virginia Tech loss coupled with the Big Ten getting their teeth kicked in that day.

 

Thanks everyone! I received 1 PM but have not posted enough to respond. The question I have for UK is....why would I register here and put out a thoughtful post if it was not factually accurate? When you say you knew the odds that means you would have had to know the odds from all the books from the on each of the events mentioned. The only reason I didn't disclose in my post was I wasn't sure who frequents the board here and I value my privacy. if I am able to establish a friendship with you i would love to discuss the wager in more detail with you or anyone else. That would be something I would love to do! Kentucky had an amazing year this year. Congrats!

 

It wasn't Ohio State.

 

The law says you must claim all gambling income. Some do. Some just claim all the income from W-2Gs. You are legally obligated to claim the $85k. To not claim it and hope the IRS doesn't know about it could get you into a lot of trouble.

You can deduct medical expenses from your income so you won't have to pay taxes on the full amount. This doesn't seem that complicated; any competent tax preparer should be able to handle this for you. You have 8 days left to file.

 

Lots of good advice here, all pretty much saying the same thing. I think the question has been answered.