Gambling Taxes in Ohio: How They Work

Ohio made sports betting legal in January 2023. The state passed House Bill HB 29, making mobile and retail sports betting legal. Therefore, now people have to learn and follow the state’s tax laws. Whether you bet on sports for fun or for a living, you need to know how taxes work in Ohio. Also, it is crucial to know how to report your winnings to stay out of any legal issues.

In this article, we will provide all the information you need about taxes on sports betting. Continue reading to learn more.

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Does Ohio Tax winnings from sports gambling?

The Internal Revenue Service (IRS) considers sports betting winnings as taxable income. Thus, you must report it on your filing of federal income taxes. This includes winnings from in-person or online sports betting. Additionally, the betting tax also applies to money won at winnings from racetracks, lotteries, and game shows.

The IRS also requires entities that pay out more than $600 in sports betting winnings to send a W-2G form to the winner and to the IRS. We recommend consulting a professional before submitting your tax returns. Moreover, keeping a spreadsheet database for your losses and wins can simplify the process.

Ohio State Tax Rates on gambling

The state levies a gaming tax at a progressive rate based on a gambler’s annual ordinary income. Profits from sports betting are considered “Other Income” for tax purposes. But, these are still counted toward your total taxable income. If you make less than $22,150 per year, you won’t owe any taxes.

The good news is the withholding tax rate is a low 4%. Ohio sportsbooks might withhold this money at the time of payout, or you can expect to pay them when you file your taxes. If you incurred losses while sports betting, you can deduct them on your state income tax return, but only to the extent of your winnings.

How to report and claim winnings from sports betting for taxes in Ohio

Ready to document your sports betting earnings to the IRS? The first step is to fill a Schedule 1 form. This is where you’ll record all the income you received in a year that’s not from your main job. So, if you have any earnings on which you have not yet paid tax, you should include that information here.

When it comes to your sports betting winnings, Line 8b is where the magic happens! This is where you’ll document your total winnings for the year. Once you’ve filled out Line 8b, you’ll move on to Line 8 of the 1040 form to complete the information from Schedule 1.

The sports betting winnings will now become part of your income that is taxable for the year. And you’ll be able to see that reflected on the remnant of the form. Don’t forget to keep a record of all your wins and losses, so you can easily report them to the IRS!

If you didn’t receive a W-2G form in Ohio, do this

Submitting your W-2G forms is not just a requirement; this is also for your own good.! Did you know that bookmakers hold a part of your winnings? So, if you’re missing aW-2G form, don’t wait! If you want to avoid problems in the future, you should contact the entities that are responsible for the missing information and submit the necessary forms.

The state-approved online sports betting sites in Ohio are ready to help you file your forms correctly and pay your taxes hassle-free. However, be wary of illegal sportsbooks; the temptation may be great, but the troubles you’ll get into with taxes aren’t worth it. Stick to the trusted, state-licensed options for a seamless experience.

When filing my taxes in Ohio, can I deduct money I lost on a sports bet?

Did you know that the federal government allows you to write off your gambling losses? Simply itemize your deductions on IRS Form Schedule A, Line 16, and make sure to keep a detailed record of all your sessions, including the dates, outcomes, and times. This way, you can easily prove and back up the claimed loss.

One thing to keep in mind, however, is that these deductions are not applicable to state taxes. So be sure to keep that in mind while you’re filling out your forms. With the right documentation and record-keeping, you’ll have a smoother time making the most of your tax deductions.

Ohio Lottery Taxes

In the state of Ohio, a 4% state tax and a 25% federal tax applies on your winnings. Your entire payment is calculated according to your income, and the charges vary depending on the specifics.

The Ohio Lottery is required to withhold these taxes from prize payments of $5,000 or more. If a winner chooses to receive their prize as an annuity, the taxes will be deducted from each payment. Prizes under $5,000 are not subject to withholding, but winners still have to report their winnings on their tax returns and pay taxes owed.

Taxes on Group lottery wins in Ohio

In Ohio, lottery wins are treated as income and taxed as such. Even group lottery wins are taxable by the federal government and the state government. The Ohio Department of Taxation says that the person or group running the lottery must take taxes out on behalf of the winner.

The amount withheld is based on the total prize amount and the tax bracket of each winner. When they file their annual tax return, prize winners may also have to pay more taxes.

Ohio State withholds 4% tax on winnings exceeding $600. While the federal government takes out a tax rate ranging from 24% to 28% based on individual details. Finally, the winner’s total income determines the exact tax payable.

In case of not reporting gambling winnings

Tax evasion is a serious crime with serious consequences, which can happen if you don’t report gambling winnings. On your tax returns, you should list all your income sources, including gambling winnings. If you don’t, you could run into legal and financial problems. In some cases, this could lead to fines, penalties, or even criminal charges.

Remember, it’s crucial to reveal every winning, so you can receive a credit or a refund. The betting site has already taken out a slice of your winnings, but by reporting them properly, you can avoid any extra deductions. Don’t let the government take more than they need to! If you fail to report, they might increase the withholding amount from 24% to a staggering 28%. Stay ahead of the game and report your wins.

FAQs Ohio gambling taxes

Are my winnings from online sports betting taxable in Ohio?

You must comply with Ohio’s tax laws. In Ohio, any money you make from gambling is subject to state tax. If you win more than $600 or 300 times your initial wager in a sports wager, the excess is considered income and must be reported and taxed. Keep detailed records of your wagers to simplify tax time.

In Ohio, what age do you have to be to bet on sports?

The legal age for online sports betting in Ohio is 21 years.

What is the tax on sports betting in Ohio?

There is a 4% tax on all gambling winnings. A vigorish charge of 24–28% is also added to qualifying parlays and single bets. The bookmaker will give you a W-2G form that lists your bet and payout. Just fill out the form and send it.