Ask any sports fan and they will likely tell you that we currently are in the middle of one of the most exciting times of the year. That's because the official start of the MLB season is right around the corner, the NFL draft is only weeks away and, of course, the NCAA basketball tournament is going on right now.
The excitement over the NCAA tournament is not just limited to die-hard sports enthusiasts, however, as even more casual basketball bans are apt to watch the games. In fact, the excitement over the Big Dance even carries over to the employment setting, where a recent survey found that as many as one in seven employees -- 15 percent -- will take part in an office pool.
While many of these office pools play only for bragging rights or trivial prizes, others actually present the opportunity for participants to win a cash prize.
As exciting as the prospect of winning the office NCAA tournament is, it also begs the question as to the possibility of tax ramifications for the winning employee.
While certainly not considered wages, legal experts indicate that NCAA office pool jackpots are considered gambling winnings, and, aside from questions about the legality of gambling in a particular state, must technically be reported to the Internal Revenue Service.
Indeed, in its Publication 525, the IRS expressly states "you must include your gambling winnings in your income."
However, many legal experts also indicate that in the overwhelming majority of circumstances, the winnings from NCAA office pools are so small as to not even register on the radar of the IRS.
This makes sense when you consider that 1) casinos generally don't report winnings under $1,000 to the IRS and 2) there is no record of the agency ever prosecuting someone for failing to report their NCAA office pool winnings.
If you have questions about your rights under the state's wage and hour law or other employment law concerns, consider speaking with an experienced legal professional as soon as possible.
Source: The Knoxville News Sentinel, "When do NCAA, gambling winnings become taxable?" John Matarese, March 19, 2015