Making a Super Bowl Bet? You Might Owe Tax

Betting on the Super Bowl has become as much of a ritual as picking the right beer and getting the best view of the TV. But an even older American ritual is confronting the outstretched hand of Uncle Sam. And if you end up winning some money when the Carolina Panthers take on the Denver Broncos in Super Bowl 50 at Levi's Stadium on February 7, the IRS is going to want its cut.

That means you'll need to include your winnings from your Super Bowl bet as income on line 21 of your IRS Form 1040. For any winnings subject to federal income-tax withholdings, you should provide IRS Form W-2G, Certain Gambling Winnings.

That said, tax experts we spoke with noted that only a casino or legitimate sports betting establishment is going to issue you a Form W-2G. And those venues don't have to give you that form at all unless you net $600 or more on your bet, or your winnings are at least 300 times your wager. (The dollar thresholds for Form W-2G differ depending on the type of betting: $1,200 in net winnings from bingo or slot machines, $1,500 from a keno game, and $5,000 from a poker tournament.)

Rob Seltzer, a CPA and principal of Seltzer Business Management, says he rarely sees clients bring in Form W2-Gs from sports bets. More often, it's for keno winnings or big slot payouts. The IRS withholds 25 percent upfront, or 28 percent if the player doesn't have a Social Security number, he says.

Honor Code for Your Super Bowl Bet

When it comes to reporting winnings from an informal pool, you're on your honor.

"If you read the tax law, all income is taxable," says Steven Duben, a partner at Duben and Associates, an Encino, California-based CPA firm. "If you won $300 in an office pool, you’re supposed to report it to the IRS. But chances are nobody’s going to report it." Especially you made a small win during a Super Bowl bet.

If you're feeling virtuous and report your gains, you'll also want to list gambling losses, since they can help to offset income when you itemize deductions. The amount needs to be reported on Schedule A of your IRS 1040, line 28.

You can't report total losses that exceed your total winnings. If you have $1,000 in winnings, and $2,000 in losses, you can report only up to $1,000 in losses. You'll also need to maintain a clear record of everything you lost and won over the course of the year.

And if you ever happen to win big as part of a group or win a large contest payout you will need IRS Form 5754, which is for any person in a group of two or more who split a grand prize.

Keep in mind that if you have a major gain during the year from gambling winnings, the sale of stock or property, a taxable inheritance, or even a Super Bowl bet, your taxes for next year could be far higher than anticipated. So you should pay estimated taxes on that income to avoid a huge tax surprise next tax season. Social Security beneficiaries with income from other sources, including pensions, might also have to pay.

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