Gotcha, thanks! I was super confused because this article basically says that you can't subtract the wager cost from the winnings:
https://turbotax.intuit.com/tax-tips/jobs-and-career/how-to-pay-taxes-on-gambling-winnings-and-losses/L7JNH7mjn
It sounds like these sports betting sites may be handled differently than traditional gambling?
Thanks, I'm less concerned with state taxes and more concerned with federal taxes. Everything I'm seeing online says that your initial wager is taxed as part of winnings. As an example, you spend $100 real money on back bet 2 and it wins let's say $10. You now owe taxes on $110. My tax bracket is 22%, so now I owe $24.20 in taxes. This would put me net negative instead of making a profit (I won $10 and owed the US government $24.20). Given that The Dutcher seems to put all free bets on the "underdog" and all real money on the likely winner, your tax burden could be quite high.
It seems to me that federal income taxes will consume a majority of any profit (if not all of it). I'm hoping that I'm missing something here, so let me know if that's the case. Otherwise, I can't continue based on my research.
Hello! I have a couple of additional questions.
Having placed all bets for DraftKings, I'm waiting for my bets to play out to withdraw the money. There are various stipulations in some of these withdrawal rules about playthrough requirements or in DraftKings it says "Withdrawals may be canceled due to limited gameplay.". Will I have any trouble withdrawing my winnings?
I'm a little confused on taxes. I've been spending the morning reading about the tax implications of gambling. It sounds like we have to pay for winnings that include the initial wager too. As an example, I just spent 200 in bonus cash on one bet, then 600 of my own money on another with total profit of 147 when the bet concludes. If the 600 wins (and it's most likely to win), then I'm on the hook for the 600 + winnings in terms of taxes. This eats up all of my profit between federal and Michigan taxes. Additionally, I'd have to itemize my taxes to offset gambling losses (currently the standard deduction always works better for us). How do people make this work and actually make money on it when we're essentially double-taxed on gambling in the US? Can someone clarify this? Am I missing something or is this just a bad deal?
On another note, do these gambling sites send an annual report of winnings and losses for tax purposes?
Got it, thanks! I could tell when placing the bet that it wouldn't pay out like real cash, so I ended up using free bet and that sounds like the right call.
I'm relatively new to this and I don't fully understand the difference between Bonus and Free Bet in the Dutcher. Can someone explain how these are different? I've been going under the assumption that the money on DraftKings is Free Bet when trying to use the Dutcher. I should also clarify that the promo said "Bonus" in it.
Thanks!