As of September 28, 2017, TVG began following new regulations for IRS reporting. The previous reporting rules were based on the base wager amount and not the total cost of the ticket. Many customers will benefit from this update, as winnings that were once required to be reported are no longer required, based on the IRS's change in reporting criteria.
The new IRS rules are as follows:
You will be required to report earnings when a wager pays more than $600 at odds of 300 to 1 or greater, based on the total of all wagers placed into a particular pool of wagers.
When this occurs:
▶TVG will mail an IRS form W-2G to the subscribers for each qualifying wager.
▶W-2G forms are generated automatically when the subscriber meets the reporting criteria.
▶Copies are sent to the IRS and to each subscribers’ state of residence.
You will also be required to report earnings when a wager pays out $5,000 or more with odds of 300 to 1 or greater based on the total of all wagers placed into a particular pool of wagers.
When this occurs:
▶25% of the total payout is withheld and remitted to the IRS in the subscribers’ name.
▶W-2G forms are generated automatically when the subscriber meets the reporting criteria.
▶Copies are sent to the IRS and to each subscribers’ state of residence.
Example: If you create a $1 P6 ticket where the total cost of the ticket is $50 with all of the horses they have selected. The race goes off and you WIN!! You make out big and win $1000 on the wager. The Winnings are only 20:1 based on the cost of the ticket, there would not be reporting to the IRS therefore you do not receive a W2G.
If the Example wager were to make $50,000 in winnings that is 1000:1 you would see that 25% of the winnings would be remitted to the IRS and you would receive a W2G form to report on their taxes
Please note, that some states apply additional state-specific taxes on qualifying winning wagers:
- Illinois - The state of Illinois collects a 0.38% surcharges on winnings wagers. This is charged on the "Raw Price," which is the "raw" split of the pool, rounded to an appropriate amount. The amount the state takes is rounded up, so if the "raw price" of the Win pool is $5.50, you would receive $5.30 or $5.35.
As of July 9th, 2017 the Illinois personal income tax rate is 4.95%. Any wager which results in proceeds of more than $5,000.00, is subject to reporting and withholding if the amount of such proceeds is at least 300 times as large as the amount wagered.
- Iowa - The state of Iowa withholds 5% from wagers winnings more than $1,000 at odds of 300:1 or greater.
- Massachusetts - The state of Massachusetts withholds 5% from wagers winning $600 or more.
- New Jersey - The state of New Jersey withholds 3% from wagers winning $5,000 or more at odds of 300:1 or greater.
If you require additional copies of any generated W2Gs or Year-End Reports you can find them available for download on the TVG desktop site. See this link for instructions: W2-Gs & Year End Reports
DISCLAIMER - We strongly recommend that you consult with a professional tax consultant when preparing your taxes as you may need to report your winnings even if you do not receive a W-2G and no winnings were withheld. Please note, TVG does not provide tax or accounting advice. This material has been prepared for informational purposes only. This information is not intended to provide, or be relied upon for, tax or accounting advice. You should always consult your own tax or accounting advisors regarding your tax or accounting needs.