March 2022 Question and Answer


How do I report my fantasy sports league winnings?


With the Super Bowl over and March Madness in full swing, winning the betting pool means paying taxes. Gamblers must report all winnings as taxable income. That includes the fair market value of any prizes won, such as cars or trips. Generally, you’ll receive an IRS Form W-2G if your winnings are at least $600 and the payout is at least 300 times the amount of your wager.

If you itemize deductions on your taxes, you can deduct any gambling losses incurred during the year on Schedule A. But you are limited to deducting only to the extent you have winnings. So if you won $1,000 from your fantasy football team but lost $1,500 on your basketball brackets, you’ll only be able to deduct $1,000 of those losses.

Understanding Capital Gains and Losses

How you manage the sale of your investments impacts your overall tax picture. And to get the most out of the current tax law, you’ll need to understand capital gains and losses.


Capital gains or losses are generated when you sell capital assets, which are generally any property you own. Your house, car, stocks, bonds, jewelry and collectibles are all capital assets.


These are two classifications of gains and losses, based on how long you owned the asset. Short term means you held the investment for one year or less, and long term applies to anything you owned for more than a year.


Generally, the amount of your gain or loss is the difference between how much you paid to purchase the asset and the amount you sold it for. Your basis in the asset also includes your costs to acquire it like sales tax, shipping and installation or set up fees. There are special rules for assets acquired by inheritance. You’ll want to consult your tax professional if this applies to you.


The tax rate you’ll pay depends on whether your gain is short or long term. Tax rates for short term gains are the same as what you owe on your ordinary income. Long term gains have lower preferential tax rates.


If you sell a capital asset for less than your basis, which your total investment in it, you’ll have a capital loss. You can generally offset these losses against gains of the same type (e.g. short term losses cann offset short term gains). But only losses on the sale of financial investments are tax-deductible. Selling your home, car or other personal-use property for a loss won’t trigger a tax deduction.

And if your losses exceed your gains you can offset up to $3,000 against other types of income (e.g. W-2 wages) each year and carry forward the rest to future years.

But beware of the wash sale rules. If you sell a security and buy it, or a substantially similar one, within 30 days, any loss you incurred isn’t tax-deductible.

Tax-Loss Harvesting

If you’ve traded stocks or other capital assets in 2021 for a gain, you can offset your profits by selling securities that have lost value. This is called tax-loss harvesting.


You can deduct capital losses to the extent you have capital gains. And if your losses exceed your capital gains, you can offset up to $3,000 against your ordinary income. You can carry forward any leftover losses to future tax years.


When tax-loss harvesting, be aware of the wash sale rules. If you sell a security at a loss and buy the same or substantially identical security within 30 days of the sale, the loss generally can’t be taken in the current tax year.


Some investing work, such as opening and funding an IRA, can be made until the tax-filing deadline. However, with tax-loss harvesting, there is no such grace period. You’ll need to complete all of your sales no later than December 31.