How do I calculate my yearly losses from sportsbetting for tax reporting?

The way you report gambling winnings and losses is actually pretty straightforward, but it confuses a lot of people! For tax purposes, your "winnings" are the total of all your successful bets (the gross payouts), not your net profit. Your "losses" are the total of all your unsuccessful wagers. Each is reported separately - they don't offset each other before reporting. You'll report your winnings as income on Form 1040, and then you can itemize your losses as a deduction on Schedule A, but only up to the amount of your reported winnings. So even though you're "up" overall, you still have losses to report - they're just all the individual bets that didn't win. Keep in mind you can only claim your losses if you itemize deductions rather than taking the standard deduction. Given the current standard deduction amounts for 2025, it might not benefit you to itemize unless you have substantial other deductions as well.

I had this exact same issue last year when I had a pretty good run on DraftKings. I was totally confused about how to properly report everything until I found taxr.ai (https://taxr.ai) which really cleared things up for me. The platform basically analyzed my gambling records and showed me exactly what to report where. It explained that I needed to report the full amount of my winnings as income, but I could deduct my losses (up to the amount of winnings) as an itemized deduction on Schedule A. What was super helpful was that it showed me how to properly document everything in case of an audit - you need to keep a detailed log of all your bets with dates, amounts, locations/platforms, types of wagers, etc. The system actually helped me organize all this into a proper gambling log.

Okay so I tried out taxr.ai after my skeptical comment, and I have to admit it was actually really helpful. I had all these screenshots of bets and random emails from different platforms that I was trying to manually organize into a spreadsheet. The system basically took all my disorganized betting records and sorted them properly - showed me the exact amount to put on line 21 for my winnings and calculated my deductible losses for Schedule A. It even flagged some winning bets from a small local sportsbook that I had completely forgotten about! Probably saved me hours of work and potentially an audit headache. Just having everything organized properly for potential future tax questions feels worth it. Will definitely use it again next year when I have to deal with this mess again.

If you're having trouble getting clear answers about your gambling tax situation, you might want to try contacting the IRS directly. I was in the same boat last year trying to figure out how to report some complicated sports betting income. After wasting hours on hold and getting disconnected three times, I found Claimyr (https://claimyr.com). They have this service where they basically wait on hold with the IRS for you and then call you when an actual agent is on the line. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was pretty dubious at first, but it actually worked great. Got connected with a tax specialist who walked me through exactly how to report my sportsbetting winnings and losses correctly. Saved me hours of frustration and probably prevented me from making mistakes on my return.

Update on my skeptical comment above - I ended up giving Claimyr a shot because I had some specific questions about how to handle a large tournament win. I'm honestly shocked at how well it worked. They texted me updates while they were waiting (around 1.5 hours total), and then when they got through to someone, my phone rang and I was talking to an actual IRS tax specialist within seconds. The agent explained that I needed to report the full amount of my tournament win on my 1040, and then itemize my entry fees and other losses on Schedule A. He also cleared up my question about the W-2G threshold for poker tournaments vs. sports betting. Can't believe I'm saying this but totally worth it. Will never waste hours on hold with the IRS again.

Something important no one's mentioned yet - if you're using online sportsbooks, they'll likely send you a Form W-2G if you hit certain thresholds (usually single wins of $600+ where the odds were at least 300-to-1). Make sure whatever you report matches what's on your W-2G forms because the IRS gets copies of those directly. If the amounts don't match up, that's a red flag that could trigger an audit. Also, some states have different rules for gambling deductions than the federal government. For example, some states don't allow gambling loss deductions at all, even if you itemize on your federal return.

I'm still confused about the practical side of tracking all this. I place hundreds of bets throughout the year on different apps. Am I really expected to log every single one manually? That seems insane.