DENVER – March Madness is well underway and people around the country are closely watching the NCAA Tournament to see if they’ll win any money for filling out the best bracket.
If you win – congratulations! Just know that the IRS expects you to report those winnings as extra income.
Depending on the kind of March Madness pool you’re participating in, you might receive a tax form at the end of the year declaring your winnings, just like you would if you won the lottery or some other kind of gambling. According to the IRS website, anyone paying out gambling winnings is required to issue a Form W-2G for winnings in the amount of $600 or more if the payout is at least 300 times the amount of the wager.
The IRS also gets a copy of that form, so they’ll check to make sure you declared those winnings as income, according to Maggie Edwards at H&R Block in Denver. If you don’t include the extra income on your tax returns, the IRS will come asking for any tax you owe on the winnings. They may even charge a penalty and/or interest, Edwards said.
Even if you paid into a small office pool and win cash, Edwards said any winnings are considered income and should be reported to the IRS. The difference in that scenario is that neither you nor the IRS will have a form documenting the amount.
For more information on reporting your winnings, log on to irs.gov.