NORFOLK, Va. — Virginia likes betting on sports…a lot.
The state became the fastest one in the nation to hit the one-billion-dollar mark, with $1.1 billion in sports wagers placed in a little more than four months.
Sportsbooks launched legal betting in Virginia at the end of January, right before the Super Bowl. That means the state reached that billion-dollar threshold without the benefit of most of the the NFL season. Also, there are specific rules that don’t allow wagers on in-state college teams.
There's one caveat for the people who are placing the bets: taxes on winnings. The winnings from sites including FanDuel are considered income, which means you have to report them to the Internal Revenue Service.
In certain cases, federal income taxes will be withheld from your winnings. What is withheld depends on the type of gambling. In most cases, winnings greater than $600 will be taxed at the standard withholding rate of 24%. Those taxes can come either at the time they are paid out by a casino/sportsbook in the form of withholding or when you file your taxes. However, the amount withheld isn't necessarily the amount you owe - if you owe less in taxes, for example, the difference will be refunded when you file your return.
If you did win more than $600, you will automatically receive a form to include in your tax return. That same form is sent to the IRS too, which means they now know about your winnings.
Even if you win less than $600, you still are expected to pay state taxes. In Virginia, that varies from 2% to almost 5.75%. You’ll have to keep your own records and report them under “other income” on Form 1040.
If you’re interested in sports betting, and you aren’t sure what you’ll need to pay in taxes, it’s recommended that you reach out to a certified public accountant.