Before you go betting on your favorite NFL teams you might want to consider how much of your winnings will be going to the IRS. All gambling winnings are included in taxable income according to Section 61 of the IRS code. If you are a recreational gambler and only like to gamble during football season then you are going to report your winnings on Line 21: Other income.
Just incase you and your favorite football team are not so lucky you can still deduct your losses although not without a few caveats. Unless you are a professional gambler your losses are only deductible as “other miscellaneous itemized deductions” on Schedule A. This is a downside because if your itemized deductions don’t exceed the standard deduction, then you won’t get any tax benefit.
According to Tony Nitti at Forbes, you may only deduct losses to the extent of your winnings; you cannot generate a net loss from your gambling activities. There is a upside however. Unlike most “other miscellaneous itemized deductions,” gambling losses are not subject to the 2% of adjusted gross income floor. Gambling losses are also not subject to the PEASE limitation, which generally causes a taxpayer to lose 3% of itemized deductions for every dollar adjusted gross income exceeds $300,000 ( $250.000 if single). So if you love betting on your favorite team, go for it! Just remember to pay your taxes on any winnings!