From Small to Substantial Wins: The Obligation to Pay Taxes on Gambling Winnings in North Carolina”.

In North Carolina, gambling winnings are subject to taxation, regardless of the amount won. Many individuals believe that they can offset gambling wins and losses on their taxes, similar to capital gains or cryptocurrency. However, this is not the case in North Carolina. If you win anything, you are required to pay taxes on it under state law, and you may also owe taxes to the federal government.

While some may think that only significant wins require tax reporting, even small wins are subject to taxation in the state. For instance, Cherie Franklin and Gene Washington, who enjoy betting on sports but do not win substantial amounts, may still owe taxes on their winnings. Although it may be tempting to ignore reporting smaller wins, it is crucial to adhere to tax regulations to avoid legal consequences.

Gambling losses in North Carolina are not deductible from winnings. Even if an individual loses more money than they win, they are still required to pay taxes on any amount won. Sportsbook apps have made it easier for tax authorities to track winnings as individuals may receive official tax forms if they exceed a certain threshold.

NC State economist Nathan Goldman emphasizes that gambling winnings have always been seen as taxable income. Sportsbook apps make it easier for users to track their gambling activity and income, leading to increased tax compliance. If an individual does not receive a tax form due to not reaching the $600 threshold with any one sportsbook, they are still obligated to report their winnings and pay taxes on them.

It is essential for individuals to understand their tax obligations related to gambling activities in North Carolina and at the federal level. Failing to report gambling income can lead to penalties and legal consequences. Therefore, it is crucial for individuals to be transparent about their gambling activities and comply with all relevant tax regulations.