NORTH CAROLINA (QUEEN CITY NEWS) — Tax season is officially here and if you gambled on sports in the last year, you will likely owe money.
Online sports gambling was legalized in North Carolina in March 2024. Since then, residents have waged more than $5 billion according to the North Carolina State Lottery Commission.
“You can bet on anything nowadays,” Charlotte sports bettor Tony Moore said.
The legalization of sports betting sparked a wave of people who may not have gambled much before to start instantly placing bets directly from their phones. It’s quick, easy, and led to $590 billion in winning last month alone.
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“They do spend a lot of money on betting and lose a lot of money on betting,” Moore said.
Losing isn’t the only drawback of online betting in North Carolina, it’s also what you might up owing when you win.
“This is creating this very unknown tax circumstance.. a tax circumstance that hits you so far down the road that it’s not really on your radar,” Associate Professor of Accounting at NC State Nathan Goldman said.
Goldman has been trying to warn bettors of what could be around the corner come tax season. He says unlike on the federal level or in other states, North Carolina does not offer bettors itemized deductions for their losses. That means those who bet on sports will face a 5.25% tax on their winnings even if they break even.
“So, we are just going to use a simple example… over the course of the year, you win $10,000 and lose $10,000. So, in your FanDuel account, you have zero dollars. Everything you bet; you lost. In our normal world, we would say, ‘You broke even. You can deduct your losses, and you don’t have to pay any taxes.’ But in North Carolina, you would actually owe $450 just because you won that $10,000 before you lost the $10,000,” Goldman said.
There has been an effort to change the tax law in North Carolina. As of Monday, the House of Representatives has not taken it up.