March Madness brings a tense air of competition and excitement with it to the office. With games in full swing throughout the normal workday, it’s the only topic of conversation amongst sports fans as games are decided by the hour and bracket predictions begin proving their worth.
Many offices capitalize on this opportunity to compete within themselves. One employee will create a group on ESPN or post large, hand drawn brackets on cubical walls to track everyone’s progress. When taken in the spirit of competition without bets, these tournament pools are often harmless fun that can bring an office closer together. The same is not always true when bets are placed, because you might be entering into an illegal gambling arena at the office if you do.
Betting on college sports is illegal
Betting on college sports is illegal in all states but Nevada. Although a small bet or two in an office pool tends to go unnoticed and unprosecuted by the government, the practice is still illegal in the eyes of state officials.
Brackets are banned in some states
As unbelievable as it may sound, participating in a bracket challenge is still considered a form of gambling, regardless of whether or not it is considered a form of gambling. Each state differs on this matter and you should check with them individually.
Brackets and taxes
Winnings are required to be reported to the IRS through your taxes every year. Recreational gamblers are required to report their winnings on their 1040 form under “other income” on line 21.
Should you experience any loses from gambling though, those can be offset on your Schedule A under “other miscellaneous deductions.”
With certain winnings or prizes you will be issued a W-2G form specifically for the proper taxing of your winnings (monetary or property). This makes the reporting a lot easier.
The rule of thumb with the IRS is if it is a form of increased wealth, it is taxable. In some cases, when you lose some of your money, that can be reported as a loss and you will not be held accountable for that.
Tread lightly when the brackets start getting passed around. Although the IRS isn’t looking through your office window at you, it’s best to be honest in all of your dealings with the government, especially since it exists for yours and other’s protection.