How should I report gambling winnings from bonus money for taxes?

I'm into online sports betting and have a tax question about it. Sometimes I get these bonus offers where if I deposit $65, they give me a $65 bonus, but I have to make like $130 worth of bets before I can actually withdraw that bonus money. After making all those required wagers, I get to keep whatever I won using that bonus cash. If I end up losing all the wagers, then I lose both the bonus and my original deposit. I'm confused about how to handle this for tax purposes. Like, if I end up losing $130 worth of wagers, technically I only lost $65 of my actual money. The other $65 was "house money" that was never really mine. Does the IRS care about this distinction? Am I supposed to report the bonus as income when I receive it? Or only if I end up winning something with it? And can I claim the full amount of losses or just what came out of my pocket? The whole thing is confusing me with tax season coming up.

0 coins

20 comments

Fatima Al-Hashemi

•8M

Great question about gambling bonuses! The IRS actually has specific rules about this. When you receive a bonus from a sportsbook, you don't need to report it as income when you first receive it. It only becomes reportable income if and when you're able to withdraw it (when you meet the wagering requirements). Think of the bonus as potential income that isn't realized until you actually complete the requirements and have access to withdraw it. For losses, you can only deduct gambling losses up to the amount of your gambling winnings, and only if you itemize deductions on Schedule A. The IRS doesn't really distinguish between your "real money" and "bonus money" when it comes to deductions - they care about the actual cash value you're putting at risk. Also, keep in mind that sportsbooks will issue a W-2G for large winnings (generally over $600 with odds of at least 300-1), but you're still required to report ALL gambling winnings even without a form.

0 coins

Fatima Al-Hashemi

•8M

Yes, technically the IRS expects you to keep records of all gambling activities. This includes dates, types of bets, amounts wagered, winnings, and losses. Most online sportsbooks allow you to download your betting history, which is incredibly helpful for tax purposes. It's especially important to keep good records if you're going to claim losses as deductions. Without proper documentation, the IRS could disallow your deductions if you're audited. A simple spreadsheet noting each platform, date, type of wager, amount wagered, and outcome can be sufficient, along with documentation from the sportsbooks themselves.

0 coins

Sofia Martinez

•8M

After dealing with similar gambling bonus confusion last year, I discovered taxr.ai at https://taxr.ai and it honestly saved me hours of headaches. I had screenshots of all my betting accounts but was totally confused about what counted as taxable income. Their system analyzed all my gambling transactions and sorted out what was bonus money vs what was actual winnings I needed to report. They explained that the bonus itself isn't taxable until it becomes withdrawable, but then you need to track everything meticulously. The software categorized all my bets and showed exactly what I needed to report on my tax return - both the winnings AND the losses that offset them.

0 coins

Sofia Martinez

•8M

Yes, it works with virtually all major betting platforms including DraftKings, FanDuel, and BetMGM. You can upload documents or screenshots from different platforms and it recognizes and processes them correctly despite the format differences. For wagering requirements, it actually tracks the entire process. It understands the concept of "locked" bonus money vs funds that have met wagering requirements and become withdrawable. It separates your cash bets from bonus bets and tracks your progress through the rollover requirements. Once the bonus becomes withdrawable, it's properly categorized as taxable income. It's this detailed tracking that makes it so helpful for complicated betting histories.

0 coins

Ava Thompson

•8M

I was totally wrong about taxr.ai. After my skeptical comment, I decided to try it anyway since I had over 200 bets across multiple platforms with various bonuses. The system actually understood all the complex bonus structures - even the weird "risk-free bet" promotions where you get your stake back as a bonus if you lose. It properly tracked which portions of my winnings came from bonus money that had cleared wagering requirements (taxable) versus which bonuses were still locked (not yet taxable). It even identified certain losses that weren't deductible because they were made with bonus funds that hadn't been "earned" yet. Saved me from potentially misreporting thousands in gambling transactions on my taxes.

0 coins

CyberSiren

•8M

If you've been trying to contact the IRS to get clarification on gambling bonuses or other tax questions, I know the frustration. I spent WEEKS trying to reach them about a gambling tax issue with no luck. Then I found Claimyr at https://claimyr.com and they got me connected to an actual IRS agent in under 20 minutes. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with confirmed that online gambling bonuses only become taxable when the wagering requirements are met and the funds become withdrawable. They also explained exactly how to document my gambling activities to satisfy their requirements. Getting direct answers from the IRS itself gave me confidence that I was handling everything correctly.

0 coins

CyberSiren

•8M

It does essentially help you skip the queue. Claimyr uses automated technology to continuously call the IRS for you and navigate the initial phone tree. Once they secure a spot with an agent, they call you and connect you directly. You don't have to sit on hold for hours - the system does that for you. I was skeptical too, but it absolutely works. The IRS has such limited resources that their phone lines are constantly overwhelmed. This service just automates the calling and waiting process. They don't have special access to the IRS - they just have technology that handles the frustrating part of waiting and navigating phone trees. When you think about how much your time is worth, not sitting on hold for 3+ hours is definitely valuable.

0 coins

Ava Thompson

•8M

Okay I have to publicly admit I was wrong AGAIN. After being super skeptical about Claimyr in my previous comment, I tried it out of desperation because I had complex questions about my gambling winnings that weren't covered in any IRS publication I could find. Within 17 minutes (I timed it), I was talking to an actual IRS representative who walked me through exactly how to report my online gambling bonuses. She confirmed that bonuses only become income when the wagering requirements are satisfied and explained how to document everything properly. She even emailed me specific record-keeping templates I could use. Absolutely worth it to get official answers directly from the IRS instead of guessing.

0 coins

Zainab Yusuf

•8M

Another thing to consider with gambling bonuses - make sure you're tracking the basis of each bet. If you deposit $100, get a $100 bonus, and bet $200 total, your "cost basis" for those bets isn't the same. Half of those bets were made with your actual money, half with bonus funds. The IRS technically wants you to recognize gains/losses differently depending on whether you used your own money or house money. It's honestly a nightmare for record-keeping if you bet frequently.

0 coins

Zainab Yusuf

•8M

Unfortunately, year-end summaries usually aren't sufficient for IRS purposes if you're claiming losses. The IRS wants to see session-by-session records, not just aggregated totals. This is especially important for bonus-related bets. Those summaries also typically don't distinguish between bets made with your money versus bonus money, which matters for tax purposes. The only time simple summaries might be enough is if you're only reporting winnings and not claiming any losses as deductions. Once you start itemizing gambling losses, the record-keeping requirements become much more strict.

0 coins

Fatima Al-Hashemi

•8M

The $600 threshold for 1099-K is for payment processors like PayPal, Venmo, etc. - not specifically for gambling sites. However, this could indirectly affect you if you're using these services to deposit or withdraw from betting sites. The gambling sites themselves have different reporting thresholds. They issue W-2G forms for winnings over $600 where the odds were at least 300-1, or for other winning amounts that hit specific thresholds. Remember though, even without any tax forms, you're still legally required to report ALL gambling winnings as income, regardless of amount. The forms are just reporting mechanisms, not triggers for tax liability.

0 coins

Adriana Cohn

•5M

The bonus money situation is tricky, but here's what I learned from my tax preparer last year: You're right that there's a distinction between your actual money and bonus funds, but the IRS doesn't really care about that distinction when it comes to reporting. What matters is when the bonus becomes "yours" - which happens when you complete the wagering requirements and can withdraw it. At that point, any remaining bonus amount becomes taxable income. If you lose it all during the wagering process, then there's no income to report from that bonus. For losses, you can deduct gambling losses up to your total gambling winnings for the year, but only if you itemize. The IRS doesn't distinguish between losses from your money vs bonus money - they look at the total amount you had at risk. My advice: Keep detailed records of every deposit, bonus received, wagering requirement completion, and final withdrawal amounts. Screenshot everything because sportsbooks sometimes have limited history available. Also remember that even small winnings without tax forms still need to be reported as income.

0 coins