Gambling Taxes in Ohio: How They Work

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

Here, we’ll provide all the information you need about taxes on sports betting. Continue reading to learn more.

Note: Tax laws can change every year, so always be aware of any changes within Ohio.

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Does Ohio Tax winnings from sports gambling?

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

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

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 out 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 you have not yet paid tax, you should include that information here.

Line 8b is where the magic happens regarding your sports betting winnings. 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 annual taxable income. And you’ll 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 but also for your good. Did you know that bookmakers hold a part of your winnings? So, if you’re missing a W-2G form, don’t wait! To avoid any future issues, you should contact the entities responsible for the missing information and submit the necessary forms.

Ohio’s state-approved online sports betting sites are ready to help you file your forms correctly and pay your taxes hassle-free. 

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

Yes, you can deduct sports betting losses. Simply itemize your deductions on IRS Form Schedule A, Line 16, and 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.

However, One thing to remember 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 Ohio, a 4% state and 25% federal taxes apply to 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 and state governments. The Ohio Department of Taxation says that the person or group running the lottery must pay taxes on the winner’s behalf.

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

Ohio State withholds a 4% tax on winnings exceeding $600. At the same time, 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. You should list all your income sources on your tax returns, including gambling winnings. If you don’t, you could run into legal and financial problems. This could sometimes lead to fines, penalties, or even criminal charges.

Remember, revealing every winning is crucial so you can receive a credit or a refund. The betting site has already taken out a slice of your winnings, but you can avoid any extra deductions by reporting them properly. 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 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. Suppose you win over $600 or 300 times your initial wager in a sports wager. In that case, 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. The bookmaker will give you a W-2G form that lists your bet and payout. Just fill out the form and send it.