In North Carolina, gambling winnings are considered taxable income, regardless of the amount won. Many individuals believe that they can offset gambling wins and losses on their taxes, similar to capital gains or cryptocurrency. However, this is not the case in North Carolina. If you win anything, you are required to pay taxes on it under state law, and you may also owe taxes to the federal government.
Despite the misconception that only significant wins require tax reporting, even small wins are subject to taxation in the state. Individuals such as Cherie Franklin and Gene Washington, who enjoy betting on sports but do not win substantial amounts, may still owe taxes on their winnings. Although it may be tempting to ignore reporting smaller wins, it is essential to adhere to tax regulations to avoid legal consequences.
When it comes to gambling losses, North Carolina does not allow taxpayers to deduct them from their winnings. This means that even if an individual loses more money than they win, they are still required to pay taxes on any amount won. The convenience of sports betting apps makes it easier for tax authorities to track winnings as individuals may receive official tax forms if they exceed a certain threshold.
NC State economist Nathan Goldman explains that gambling winnings have always been seen as taxable income in North Carolina. Sportsbook apps make it easier for users to track their gambling activity and income, leading to increased tax compliance. Even if an individual does not receive a tax form due to not reaching the $600 threshold with any one sportsbook, they are still obligated to report their winnings and pay taxes on them.
Accordingly, it is crucial for individuals who engage in gambling activities in North Carolina or at the federal level understand their legal obligations related to reporting their income and paying taxes accurately. Failure to comply with these regulations can lead penalties and legal consequences.