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How does NY sports betting taxing work?

betting tax

How do I have to tax my sports betting wins in New York City / NY?

It’s great news that online betting is finally legal in New York. But, with the good comes the bad, and one of the downsides of being a regular sports bettor is the taxes that come with it.

It doesn’t matter if you’ve only picked up a couple of $50 wagers, or hit gold on a huge parlay bet, your winnings will be subject to some kind of tax.

Gambling winnings need to be reported with the rest of your income, and it will be subjected to both federal and state tax rates. Unfortunately, New York (especially New York City) residents have some of the highest tax rates in the country, which you’ll have to take into consideration as well.

How do I calculate my annual betting tax rate?

The tax you pay on your betting winnings is dependent on how much winnings you have available, and your annual income. The higher your income, the more tax you’ll have to pay on your gambling winnings.

Another factor is the federal taxes you’ll likely have to pay. The federal rate of tax on gambling winnings is 24%, so you’ll have to pay that first.

Afterwards, the state rate depends on your income. It can range from 4% to 8.82%, all depending on how much you made in the tax year. Here’s a short list of the amount of tax you have to pay based on your annual income.

  •       Up to $8,500 - 4.00%
  •       $8,501-$11,700 - 4.50%
  •       $11,701-$13,900 - 5.25%
  •       $13,901-$21,400 - 5.90%
  •       $21,401-$80,650- 6.09%
  •       $80,651-$215,400 - 6.41%
  •       $215,401-$1,077,550 - 6.85%
  •       Above $1,077,550 - 8.82%

If you’re a resident of New York City, you’ll also have to pay an additional 3.078% to 3.876% depending on your annual income.

How do I claim and report my tax winnings?

If you were sports betting significantly over the last year, you should receive something called a W-2G Form. The W-2G form is designed to record all of your gambling winnings so you can calculate your tax winnings, and subsequently pay them. There is a threshold to be met with the W-2G form, however.

If you win $20 on one wager, you won’t be getting a W-2G Form in your mailbox! If you make $600 or more in sports betting or daily fantasy sports wagering, you’ll receive a W-2G form to pay your taxes with.

If you made any gambling winnings outside the state, in places like New Jersey or Pennsylvania, you might have to submit a non-residential return.

This is only if your winnings were to exceed $5,000, though, so be aware of that. On your regular tax form, remember to note that you are paying tax on your betting winnings as ‘Other Income’ on your regular tax forms.

Can I use my gambling losses as a tax return?

Gambling losses can be tax deductible, but only if you itemize deductions. It’s limited to how much you can deduct though, as it depends on your wagering winnings. If you won $2,000 on betting out of a $3,000 spent, you can only deduct the $2,000.

The $1,000 can’t be carried over, as this is considered a business expense by the government. You have to remember that gambling to this extent is considered by the government to be ‘self employed activity’, so it will be treated as such to an extent.

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