North Carolina Governor Roy Cooper has urged the General Assembly to tackle a tax issue that could potentially burden sports bettors with taxes even if they end up losing money.
The call to action comes after an article penned by Nathan Goldman, a CPA and accounting professor at North Carolina State University, and Christina Lewellen, an associate professor of accounting at NC State, caught the governor’s attention.
“When it comes to sports wagering, it’s not fair to have to pay taxes on your winnings without being able to deduct your losses. Legislators should fix this,” Cooper stated in a social media post.
Goldman highlighted that North Carolina currently disallows taxpayers from deducting gambling losses from their winnings for tax purposes. This means individuals who either break even or incur losses could still find themselves liable for taxes.
Illustrating the issue with an example, Goldman pointed out that if a person wins $9,000 through betting but subsequently loses the entire amount, they would still be taxed on the initial $9,000 as income, resulting in a $405 state income tax obligation.
When it comes to sports wagering, it’s not fair to have to pay taxes on your winnings without being able to deduct your losses. Legislators should fix this. https://t.co/JkDc90W0Zl
— Governor Roy Cooper (@NC_Governor) April 26, 2024
Goldman said: “The state actually has the power to address this immediately. Most notably, what would really help, is it would eliminate these tax surprises. And, it would really help connect the North Carolina tax system with what many people perceive to be a just tax system.”
He further explained that if a person’s winnings reach at least $600, a sports betting company will generate a W-2G form, which is reported to the IRS the following winter. While federal income tax is applicable, individuals can deduct gambling losses if they itemize deductions, although the standard deduction increase under the 2017 tax law makes this less common.
“It’s really important that taxpayers understand what they’re getting into when they gamble, that this is going to be income,” Goldman said. “These apps track every single bet that you make. They track every single winner. They track every single loser. They know exactly where you made that bet too, whether you’re in North Carolina or Virginia or New York. And, they’re keeping very careful track of your gambling activity.”
North Carolina’s foray into sports betting commenced on March 11, with the North Carolina Education Lottery reporting about $659.3 million in wagers from March 11 to March 31. Of this, players won $590.8 million, resulting in $66.5 million in gross wagering revenue.
Original article: https://www.yogonet.com/international/noticias/2024/04/30/71960-north-carolina-governor-pushes-for-tax-deduction-of-betting-losses
