As mobile betting begins to roll out, albeit gradually, MD online sports betting will soon be a reality Meanwhile, the existing six commercial casinos still come in handy for sports bettors. Moreover, Video Lottery Terminals (VLTs) and the Maryland Lottery are also available for bettors.
One thing remains a constant though. All income gained from Maryland gambling, be it online or in-person gambling is subject to state and federal taxes. It does not matter how or where you win, you will still pay. Onlinebettingmd.com will continue to help you understand how to calculate taxes.
- MD sports betting tax rates depend on many factors
- Are Gambling Winnings Taxable In Maryland?
- What Are The Gambling Tax Rates in Maryland?
- Taxable net income for sports betting in MD
- Claiming and reporting gambling winnings for taxes in Maryland
- What To Do If You Don’t Receive A Form W-2G In Maryland
- Can I Deduct Gambling Losses On My Taxes?
- Maryland Lottery Taxes for winning $500 or $5000
- FAQs Maryland sports betting taxes
MD sports betting tax rates depend on many factors
Maryland sports betting tax rates depend on a number of factors that you should know about. These factors apply to both state and federal taxes. So, what are the taxes on MD sports betting? They are the same as those of any other form of gambling. You should familiarize yourself with them. They are discussed below.
- Your annual income and tax bracket
Your annual income includes your wages plus other existing sources of income. You are taxed based on this income. Your tax bracket is determined by issues such as your marital status. You will pay less if your spouse is also paying.
- Marginal tax rate
This is the additional tax paid for additional income. The effective tax rate is the percentage you pay after standard deductions. It operates on a sliding scale that depends on your filing status and the total taxable income. The Maryland sports betting tax rate ranges between 2% and 5.75%.
- Whether you factor winnings into state income tax
Your gambling winnings and annual income put together may push you to a higher tax bracket. To avoid this, you should factor winnings into your state income tax before commencing your Maryland tax preparation.
Are Gambling Winnings Taxable In Maryland?
Yes, tax applies to all Maryland gambling winnings.
Is there a tax on sports betting in MD?
Yes again. Sports betting is just another form of gambling. In the state, gambling winnings constitute income just like any other and are therefore subject to tax. Winnings above a specified threshold set off a notification to the IRS and a W-2G Form is generated. Usually, the IRS automatically withholds federal taxes before you receive your gambling winnings. You receive notification from your operator of this tax. The IRS also gets a copy. This only applies if your winnings are above a stated threshold.
What Are The Gambling Tax Rates in Maryland?
The federal withholding federal tax on gambling winnings is a standard of 24%. Maryland’s gambling tax rate ranges between 2% and 5.75% in state taxes, including gambling winnings. The tax structure works as shown in the diagram.
Taxable net income for sports betting in MD
|TAXABLE NET INCOME||TAX RATE|
|Up to $1,000||2%|
|$1,000-$2,000||$20 + 3% of everything over $1,000|
|$2,000-$3,000||$50 + 4% of everything over $2,000|
|$3,000-$100,000||$90 + 4.75% of everything over $3,000|
|$100,000-$125,000||$4,697.50 + 5% of everything over $100,000|
|$125,000-$150,000||$5,947.50 + 5.25% of everything over $125,000|
|$150,000-$250,000||$7,260 + 5.50% of everything over $150,000|
|$250,000+||$12,760 + 5.75% of everything over $250,000|
Claiming and reporting gambling winnings for taxes in Maryland
When you receive a W-2G Form from the gaming facility, it shows the amount of the winnings and withheld taxes. A copy of the form goes to the IRS.
If your winnings exceeded any of the thresholds below in the preceding year, they will trigger an automatic W-2G.
- $1,200 and over from slot machines or bingo.
- $1,500 and above from a keno game.
- More than $5,000 from poker tournaments.
- $600 and over from events in which the payout is 300 times the wager amount.
What To Do If You Don’t Receive A Form W-2G In Maryland
As stated above, not all winnings will trigger a Form W-2G in Maryland. Still, you will have to report all your winnings. It is, therefore, advisable to keep accurate records of your wagering activity. Remember to retain all the applicable betting records and receipts.
This is easier to declare taxes on sports betting in Maryland when gambling online. That is because the mobile betting operator(s) can avail an electronic record of all your betting activity for the year before. This makes it easy to track profits and losses.
Can I Deduct Gambling Losses On My Taxes?
Yes, but only if you indicate deductions on your federal income tax return. That has become easier said than done after the 2017 Tax Cuts and Job Act passed. You will likely use the standard deduction for your tax return and cannot deduct gambling losses.
The IRS rules may dictate that you substantiate your wins and losses. In such as case, you should keep the following documents ready for presentation to them.
- Form(s) W-2G
- Wagering tickets with dates and locations. The names of people who were gambling with you at the time.
- Amounts won and lost.
- Canceled checks and casino credit records
- Relevant bank statements
Maryland Lottery Taxes for winning $500 or $5000
If a state resident wins between $500 and $5000 on the Maryland Lottery, the tax process is simple. The resident files a Maryland Payment Voucher Form and pays the taxes within 60 days of claiming the prize.
Why is it good to pay taxes on your winnings?
Because if you do need to pay taxes, it means you’ve won! Congratulations. And, of course, you contribute to the society in the state.
FAQs Maryland sports betting taxes
Yes, you have to pay taxes on sports betting in MD. This is just another form of gambling. The Maryland sports betting tax rate is the same as those for other types of gambling. You have to pay a tax on all forms of gambling.
Yes, you will be subject to both state and federal penalties if you don’t pay taxes on your gambling income. It is illegal not to pay these taxes.
If you win a large amount of money that is more than the set threshold, you will be taxed immediately by the sportsbook. However, if you earn below the threshold, then you declare your total earnings for the year and pay tax once.
You will incur penalties and interest payments on those unreported winnings. The IRS could tell you to report the winnings, or add interest and penalties to your tax bill.