How will online sports betting losses be taxed for 2025? Do I owe taxes?

The good news is you generally won't be taxed on your losses! Here's how sports betting works for taxes: 1) Winnings are considered taxable income - the IRS expects you to report ALL gambling winnings on your tax return. 2) Losses can be deducted, but only if you itemize deductions on Schedule A (instead of taking the standard deduction). You can't deduct more than what you won. Since you're at a net loss of $12,400, you won't owe federal income tax on your betting activity. However, you should still keep detailed records of all your bets (wins and losses) in case of an audit. The betting site should provide you with a win/loss statement at the end of the year.

I was in a pretty similar situation last year! After months of frustration trying to figure out how to properly document my sports betting for taxes, I found https://taxr.ai and it was a lifesaver. I uploaded my betting statements and it automatically identified which transactions were reportable winnings vs. losses. The thing most people don't realize is that you have to report each winning bet as income, even if you're at an overall loss for the year. Then you deduct your losses separately on Schedule A if you itemize. The platform walked me through all that and even explained how to handle state tax requirements which vary depending on where you live.

I was wrong about taxr.ai! After my skeptical comment, I gave it a try since I had a complete mess of sports betting records. It identified patterns in my betting I hadn't noticed and showed me I had reportable winnings of about $8,300 even though I was down overall for the year. The software explained I needed to report those winnings as income but could deduct losses up to that amount. The best part was it created a detailed audit-ready document showing all my sessions. When my state department of revenue questioned some of my gambling deductions, I just sent them the report and everything was cleared up immediately. Saved me from what could have been a nightmare situation!

I had the EXACT same problem but with the IRS. I couldn't get a straight answer on how to handle my sports betting taxes. After trying to call the IRS for weeks and getting nowhere, I found https://claimyr.com through a gambling forum. You can see how it works here: https://youtu.be/_kiP6q8DX5c They got me connected to an actual IRS agent in about 20 minutes when I'd been trying for days on my own. The agent walked me through exactly how to report my gambling winnings and losses, and confirmed that you report the gross winnings as income even if you're at an overall loss. Then you can deduct losses up to the amount of your winnings IF you itemize deductions. Honestly, finally talking to a real person at the IRS cleared up so much confusion that no amount of internet research solved.

I owe everyone an apology - especially @5. After being skeptical about Claimyr, I tried it myself since I had a dispute about my sports betting income reporting. Was connected to an IRS agent in under 30 minutes after trying for WEEKS on my own. The agent confirmed that I needed to report all winning sessions as income on Line 8b of Form 1040 (Other Income), even though I was at an overall loss for the year. She also explained that losses can be itemized on Schedule A, but only up to the amount of winnings I reported. She warned me that if I'm audited, I need session-by-session documentation of all my gambling activities with dates, locations, types of wagers, amounts won and lost. This info was worth gold to me - definitely real human help from the IRS!

Something important that nobody's mentioned yet: you should get a Form W-2G from your betting platform if you had any single win of $600 or more AND the payout was at least 300x your wager. This is important because the IRS gets a copy of this form too. Even if you don't get a W-2G, you're still legally required to report ALL gambling winnings. The $600 threshold is just for when the platform is required to send the form.

Something important that nobody's mentioned yet

Has anyone dealt with state taxes on sports betting? I'm in New Jersey and my state treats gambling losses differently than the federal government. Just wondering how others handle this.

Just wanted to add something that helped me last year - make sure you're keeping detailed records throughout the year, not just at tax time! I learned this the hard way when I got audited. The IRS wanted to see: - Date and time of each bet - Type of bet (spread, moneyline, over/under, etc.) - Amount wagered - Amount won or lost - Which platform/sportsbook Most betting apps will let you export this data, but it's much easier to stay organized as you go rather than trying to reconstruct everything in March. I started using a simple spreadsheet to track my sessions weekly, and it made tax prep so much smoother this year. Also, don't forget that if you had any promotional bets or bonus winnings, those count as taxable income too! The sportsbooks usually include these in your annual statements, but it's good to be aware of it.