Win Money March Madness

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March Madness Bracket: Do You Need to Claim Winnings on Your Taxes?

If you win big during March Madness, you have to pay Uncle Sam
Win Money March Madness

PredragImages via Getty Images

Whether they’re picking brackets based on mascots or are die-hard basketball fans, 1 in 5 Americans fill out and place a bet on their March Madness brackets every year, according to the American Gaming Association. In fact, an estimated 47 million Americans wagered $8.5 billion on 149 million March Madness brackets in 2019.

Colleges With the Most School Spirit

Millions of Americans make casual, but technically illegal, bets between friends, family or co-workers during the tournament. There are only eight states with legal, regulated sports betting. Any March Madness pool with a payout at the end in any other state is considered illegal. 

All gambling winnings are considered taxable income. Even if your March Madness money is passed under the table, the IRS still expects winners of March Madness bets to voluntarily report that income on the following year’s tax return. 

There’s no minimum threshold either. Even if you only win $10, you are expected to report it on Form 1040, line 21. The same goes for winnings in the form of a prize. The value of the prize is still taxable, even if you didn’t win any cash to cover that expense. 

If you gamble through racetracks, casinos or betting websites, you will likely receive a RS Form W-2G or a Form 1099-MISC to report your winnings. Copies of these forms will be sent to the IRS as well. Even if you don’t receive these forms, your gambling winnings are still reportable income that should be documented. 

Related

For the majority of Americans, these winnings would also be reported on their state personal income taxes. However, you get to keep more of your winnings if you live in a state with low or even no state personal income tax. Here are the states with the highest and lowest income tax rates.