Even this Eagles girl had to admit that Super Bowl XLVI lived up to its hype… No wonder a record 166.7 million U.S. viewers tuned in to watch Eli Manning and his New York Giants stun defeat Tom Brady and his New England Patriots – and at halftime, they watched Madonna strut awkwardly around a self-indulgent stage with a Neil Simon look-alike wire dancer and rapper M.I.A. It was, according to the record books, the most-watched show in the history of television in the United States.
Viewers who tuned in early enough saw Tom Brady commit a massive sin by intentionally grounding the ball while in the end zone. The result was a safety which means that the Giants earned two points from Brady’s mistake. And it was a pretty rare mistake: it was the first safety in a championship game in three years. Despite the low odds, at least one sports fan predicted that a safety would be the first score of the game: Benjamin Lyons tweeted a photo of his winning bet in Vegas. He won $51,000 for his prediction.
What resulted in a bonus for Lyons was likely a bust for many others who played the odds. Two points on a play doesn’t happen very often in football so the final score probably didn’t match many predictions – and possibly screwed up a couple of under/overs. And since folks gamble on everything when it comes to Super Bowl (experts predict that nearly half of all American adults will make some sort of wager on the game), I’m guessing there were a few more losers than winners Sunday night.
What does all of that mean come tax time? The law requires you to report your gambling winnings no matter what the amount. Casual gamblers must report their winnings on line 21 (other income) of a federal form 1040 (the Form 1040-EZ isn’t equipped to handle gambling winnings or the forms W-2G). So easy, right?
But what if you lose? And trust me, being from Philadelphia, this is a reality for sports fans. Unfortunately, while you must claim all gambling winnings on your return, you can only deduct your losses if you itemize your deductions. It is a miscellaneous deduction, though, thankfully not subject to the 2% limit. If you do not file a Schedule A, you cannot deduct your gambling losses no matter how great.
If you do itemize your deductions, you can claim your losses if you meet some criteria. Specifically, you must be able to document your losses. This means that you need to substantiate the amount of the loss, the date of the loss, and the name and location of the gambling establishment. Be smart and keep a journal of your wins and losses. It will not only be great documentation for the IRS, it’ll be a great conversation piece someday – unless you’re an Eagles fan, in which case it will be just a sad, sad statement on your over-reliance on Andy Reid’s game management (or lack thereof).
What if you lose more than you win? Sadly, you’re out of luck: not only does it stink, but you also cannot deduct more in losses than you report in winnings.
Assuming that it’s just occasionally, playing the odds whether at the casino or as part of the office pool can be fun. There are also real tax and financial consequences (and depending on the nature of the bets, also legal) to making wagers. Make sure you understand how bets, no matter how big or small, may affect you.
And as for this wild ride that was the NFC this season, as I tweeted on Sunday night, “You’re welcome, Giants. Love, the Eagles.”
