In January 2023, Ohio launched betting on sports, just in time for all the exciting games after the New Year. After years of fighting, the state legislature quickly passed HB 29, which will allow retail and mobile betting across the whole state.
Naturally, the objective is to have fun and win. But unfortunately, Ohio gambling winnings come with tax obligations. In this article, we’ll answer some questions about the taxes on gambling in Ohio and about federal taxes. Use a regulated and legal platform in our list of all Ohio sportsbooks.
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Are sports betting winnings taxable in Ohio?
If your Ohio sports betting profits are included in your adjusted gross income, you must pay Ohio individual income tax on them. This means that your personal income tax return for the year would need to include the ‘Net Payout.
The IRS considers sports betting or any other gambling winnings to be taxable income. Therefore, you should always get expert advice before filing any tax returns. Keep a spreadsheet for all of your gambling activities to make things easier. You can use this to keep track of all your wins and losses. In addition, you need to disclose all gambling earnings on your federal income tax returns, as required by law. Winnings from lotteries, game shows, and racetracks are also subject to betting tax.
What are the sports betting tax rates in Ohio?
The scale of Ohio gaming taxes depends on your total yearly ordinary income. Ohio sports betting profits are taxed as “Other Income” but are included in your overall taxable income. You won’t have to pay any taxes if your overall annual income is below $22,150.
There is a 4% withholding rate tax on sports wagering earnings. Sportsbooks may deduct these taxes from your winnings at the time of pay-out, or they may be due when you submit your taxes.
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How to claim and report Ohio sports betting winnings for taxes
When you go to the IRS to report your sports betting winnings, the first thing you need to do is complete a Schedule 1. You record any income you get throughout the year from sources other than your primary place of employment on the Schedule 1 form, which is labeled Additional Income and Adjustments to Income. In other words, you should record any income that you received but have not yet paid taxes on.
If you have gambling winnings, Line 8b — Gambling Income should be where you enter your total for the year. You must fill out Line 8 of your primary1040 Form to reflect the outcomes from Schedule 1. Your gambling wins subsequently become a component of your taxable base income for the year, as you may infer from the rest of the form.
What to do if you do not receive a W-2G form in Ohio?
The fact that you must submit thew-2G forms and that doing so is actually in your best interests should not be overlooked. You should keep in mind that sportsbooks withhold a portion of your winnings. If some W-2G forms are missing, you can and should get in touch with the locations that owe you the data to ensure that you get and submit them.
It’s important to know that state-licensed online sportsbooks have everything set up to make sure you fill out the right forms correctly. If you use illegal offshore sportsbooks, you will have trouble paying your taxes, which is not worth it.
Can I deduct sports betting losses in Ohio?
Yes, you can deduct your gambling losses from your federal taxes. However, you can not deduct these losses on state taxes.
You can deduct your gambling losses as itemized deductions on your primary return. The IRS Form Schedule A’s Line 16 — Other Deductions must then be completed. The relevant part of your 1040 can then be filled up using the total from Schedule A.
Then, you must maintain a precise record of the dates, times, and outcomes of your sessions in order to demonstrate that you actually lost the amount you claim to have lost.
Ohio Lottery Taxes
Lottery winners in Ohio and the federal government must pay tax on their winnings. Any winnings, no matter how small or great, are subject to a 25% federal tax and a 4% state tax in Ohio. The charges vary according to specifics, and your total obligation is based on your income. You can check how the Ohio lottery works here.
Group lottery wins taxed in Ohio
Taxes on the Ohio Lottery are almost the same as taxes on sports betting or any other form of gambling. If you win more than $600, Ohio State will take out 4% in taxes, and the federal government will take out somewhere between 24% and 28% in taxes. The rates change based on the details, and the amount you have to pay depends on your total income.
What happens if I don’t report my gambling winnings
The fundamental rule is that you have to disclose every win. Since the sportsbook has already deducted a portion of your wins, properly reporting them will allow you to get a refund or a credit against other income. If you don’t report, the federal government may impose higher levels of withholding. The amount of federal income tax withheld could increase from 24-25% to 28%.
FAQs
Yes, follow the chart for how your betting winnings are taxable.
You need to be 21 years old to legally bet on sports in Ohio.
Yes. Winnings from sports betting are taxed just like any other income. You have to keep track of your winnings and report them on your tax return. If you win at least 300 times what you bet and that amount is more than $600, the sportsbooks have to report it as well.