Are you looking for a new way to spend your money? Do you enjoy betting on sports? Maybe you’re considering giving it a try, but you’re not sure how much taxes you have to pay on winning or losing bets. What is the tax picture on sports betting, and how does it vary by state? Let’s take a look!
How To Calculate Your Taxes For Sports Betting
It’s not difficult to figure out how much taxes you have to pay on sports betting. The IRS publishes a helpful table, known as Form 1040, which will show you the various deductions you are eligible for. Since this form is used to compute your federal income tax, it is a must that you file it each year. However, if you are looking to file Form 1040-ES, which is an extension for single-employee proprietors, you only have to complete and return this form if you sold $600 or more of sporting goods, such as basketballs or footballs, in the previous year. If you meet the criteria described above, you can take the following deductions when computing your taxes on sports betting:
Home Office
The first deduction you have is a home office. You can claim this deduction even if you don’t have a corner of your house dedicated to your business. You only need to have a home office space that is separate from your living room so that you can conduct business there without being distracted by family and friends. If your employer doesn’t already provide you with a desk, you can get an inexpensive one from IKEA or Home Depot. You also need to have a chair and a lamp or two to give the office a professional atmosphere. You can’t claim this deduction if the space is used for leisure activities, such as watching TV or gaming. Even if it’s only temporarily used for business, you can still claim it as a home office.
Depreciation
As a business owner, you probably want to save as much as possible for future expenses. One way to do that is by taking a depreciation deduction. When you buy a building or a piece of equipment used in your business, you have to prove that it was worth more than the purchase price before you can deduct the loss from your income. You can’t claim this deduction if the asset was paid for in cash or with a credit card. You also have to take a look at your books and records to figure out how much you can actually depreciate each year. Think about the assets you have that are worth money, like land or buildings, and figure out how much you can actually deduct each year. It’s also a good idea to talk to your CPA about this to make sure you are taking the most of what you can on this front.
Trade-In Allowance
If you are buying a new car, you can get a trade-in allowance. When you get a new car, you have to estimate what the value of the used car is and then reduce that amount by what you’re receiving. You can’t take a trade-in allowance on a boat or a recreational vehicle because those are considered property purchases. Most new cars have a value guidance tool on the manufacturer’s website that will help you figure out how much you can actually deduct for a trade-in. It’s best to estimate the value of your car before you start the trade-in process so that you don’t end up paying more than you should for the allowance. You also need to get a receipt from the dealership to prove what you paid for the car.
Mortgage Payments
If you bought a house or an apartment building used as your home, you can deduct the payments you make on your mortgage each month. Just make sure you keep good records of these expenses so that you can prove to the IRS that you paid for the house in full. You can also include other expenses related to your mortgage, like property insurance and homeowner’s association dues, in this amount.
Selling Your House
If you are planning on selling your house, you can include the amount you get from the sale in your income. You also need to take into account any losses you have from your house sales. You can’t deduct your costs of selling your house, such as realtor fees and mortgage paperwork, from your income, but you can claim them as business expenses. Make sure you keep good records of all the money you made and spent related to the sale of your house.
Utilities
If you operate a business out of your house, you can deduct the electricity, gas, and water you use in connection with your trade or business. You also have the option to claim this as a charitable contribution. If you sell your goods to customers and friends, you can deduct the postage you use to mail these goods, as long as you send them to people who are not eligible for a refund on their taxes. If you run a business out of your home and you can prove that you had at least 500 customers during the year, you can claim this as a deduction. Keep good records of these expenses so that you can file a proper claim with the IRS.
Travel
If you are an out-of-state worker and you travel to other states to conduct business, you can deduct the expenses you have while there, such as gas, parking costs, and meals. If you are an in-state worker and you travel to other states for business, you can deduct the expenses you have while there, such as gas, parking costs, and meals. You also need to keep good records of these expenses so that you can prove to the IRS that you have made a proper claim. Traveling for business is generally considered to be a part of the job, so you don’t need to include it in your income. However, if you are able to get a tax credit for employing a certain number of people outside your state, you may want to consider taking a vacation to see your family instead of traveling for work.
Home Furnishings
If you are a business owner and you have a specific area in your house that is used for business, you can include the furnishing in that space in your income. You can also include other areas of your house that are not used for business, like your kitchen, in your income if they are furnished for business. You need to keep good records of these expenses so that you can prove to the IRS that you have made a proper claim. Keeping good records is also important so that you don’t forget any details about your expenses when it is time to file your taxes. It is also a good idea to ask friends and family to help you keep track of your expenses. Keeping good records will also make them proud to help you out with your taxes in the future.
There are various other items you can deduct as business expenses, like advertising and rent, but these are the most common ones. It’s a good idea to consult with your CPA or tax attorney to see what else you can deduct from your income. They will be able to tell you what expenses are eligible and which ones you have to avoid so that you don’t end up owing more than you should on your taxes. Keep good records of all your expenses so that you can get your money back when it is time to file your taxes. Additionally, if you are struggling with your taxes, you can call the IRS for help at 800-829-1040. All taxpayers are expected to pay their fair share of taxes, but some may be able to get help with paying the more than their fair share due to financial hardship.