Online gambling has increased in recent years. The reason reaches back to a Supreme Court case from 2018. In that case, the highest court in the country decided that states could determine whether online betting, like sports wagers, was legal or not. Since that ruling, over thirty states have passed laws that allow some form of online betting, and more are taking similar actions into consideration.
New York is one such state. Online betting is legal in New York with the exception of certain collegiate games and events.
What are examples of online betting?
Sites like DraftKings, BetRivers, Unibet, TwinSpires are some top examples. DraftKings works by providing daily fantasy sports betting opportunities. Users deposit real money and can withdrawal real money. The user can connect their account to a PayPal, online banking, credit card, or wire transfer. The user can then make withdrawals through the same accounts.
Are winnings taxable?
In short, yes. The Internal Revenue Service (IRS) expects even casual gamblers report their winnings as taxable income on their returns. State taxing authorities also require taxpayers disclose their winnings.
In New York, Governor Kathy Hochul has stated that residents wagered more than $16 billion on online sports. From these wagers, the state collected more than $700 million in taxes. Gov. Hochul notes that the taxes will help to fund youth sport and education opportunities.
What if I do not report my earnings?
Those who fail to report earnings could find themselves the subject of a federal and/or state tax audit. This can result in allegations of criminal activity if the taxing authorities believe that you intentionally failed to report these earnings.
It is important for anyone who finds themselves the subject of an audit take the matter seriously. The attorneys at Goldburd McCone are experienced in tax audits and can provide guidance to help better ensure your rights are protected throughout the process.