IRS Bitcoin Inquiry & Its Impact On Sports Betting Winnings

Report your cryptocurrency sports betting winnings to the IRS

Report your cryptocurrency sports betting winnings to the IRS

The Internal Revenue Service is currently stepping up efforts to collect records of cryptocurrency transactions as it expects nearly $30 billion in tax revenues to emerge from the investigation.

Customers who have used popular tax filing software like TurboTax in the past have likely seen the following question on their most recent tax returns:

“Have you sold, received, traded or otherwise disposed of any financial interest in any virtual currency at any time during 2021?”

The IRS believes many didn’t answer that question honestly over the past year and plans to investigate Americans who appear in reports of crypto transactions.

Part of the appeal of cryptocurrency is that transactions are not regulated by any government or nation. This is also the reason why sports betting with Bitcoin has become so popular. Offshore sportsbooks favor crypto transactions over USD transactions for many reasons, not the least of which is a perceived early investment of their part in altcoins across the board.

So where does the IRS plan to get this information?

One cryptocurrency broker that is in the crosshairs of the IRS is SFOX, which is affiliated with MY Safra Bank. Over $12 billion in crypto transactions have been made with SFOX over the past 7 years, and investigators have reportedly already uncovered criminals who misreported profits in 2021.

“Based on its recent experience with cryptocurrencies, the IRS has good reason to believe that many virtual currency transactions are not properly reported on tax returns.”

Press release from the US Attorney’s Office in the Southern District of New York

One element that might prove difficult to calculate is when deposited cryptocurrency funds appreciate or depreciate on the sites that populate our offshore sportsbook reviews.

Online sports betting sites act as an exchange when they hold cryptocurrencies in their members’ accounts. When the price of BTC, Ethereum, Dogecoin and other accepted altcoins fluctuates, those wins and losses are reflected in your sports betting account.

Appreciation should be reported as income based on cryptocurrency gains, but only if assets are sold to another investor for a profit. What happens if you place a bet with estimated funds and then get a payout?

This is where reporting can get tricky as there are taxes that need to be levied on cryptocurrency winnings as well as gambling winnings.

Sports bettors earning over $5,000 in a given year are subject to a tax rate of up to 28%. It is recommended that bettors retain at least this portion of their winnings when it comes time to file their income taxes in April. There are also state income taxes that must be reported locally on gambling winnings, even in regions where domestic sports betting has yet to be regulated.

Federal agencies are now armed with additional help in prosecuting would-be criminals thanks to measures recently signed into law by President Joe Biden.

Cryptocurrency investors who have not reported earnings in 2021 can expect a check letter from the US government in the next few months asking for further clarification.

Source – New York Post,

Dave Gallo

Dave Gallo is a pioneering sports analytics expert, renowned for his revolutionary work in AI-driven sports simulations, projections, and advanced statistical analysis. With a profound passion for sports and technology, he crafts cutting-edge computer models that accurately predict outcomes. Dave's game-changing insights have reshaped strategy, player evaluation, and decision-making across various sports. His dynamic presentations make complex analytics accessible and inspiring, ensuring his legacy as a visionary in sports analytics. Check out Dave's Pick Record.

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