March Madness Tax Tips

It's in the air, and later this week, it will start infecting millions of Americans in their offices. The Centers for Disease Control doesn't even recognize it as an issue, or even study it. 

And yet, the result will be decreased productivity, increased chatter, and the passing of billions of dollars under and over the table between friends, family members, colleagues and a few shady characters.

It's March Madness, of course. If you're immune, good for you. For the rest of America, the NCAA Division I Basketball Championship is an annual rite that makes even non-sports and non-basketball fans get excited about the "Big Dance," "Bracketology," the "Court of Dreams," the Sweet 16, the Elite 8, the Final Four, and then of course, the Final for the right to claim the national title.

The three-week event also puts millions of Americans in the potential cross-hairs of the IRS and state tax agencies. Because during March Madness, betting is expected to pass $10 billion. While the IRS doesn't necessarily care if people gamble or whether it's legal where a particular person lives, they do have one request. Well, it's more than a request, it's the law. Report your gambling winnings.

While it is very unlikely that a taxpayer would be caught for not reporting winning a few dollars on the tournament (or a round of golf or other miscellaneous bets), but if the IRS or other financial investigators were to find such non-reported income, the taxpayer could face penalties, including back taxes, fines and interest. For big-baller tax evaders, those who bet the big bucks, they could even face jail time.

So, what's a regular Joe to do? The Illinois CPA Society doesn't take a position on gambling either, but they are tax experts, so they've offered the following tips. It's also a good tip to see a CPA if you have questions or concerns about your taxes.