New York CNN  —  If you won big on bets you made for the March Madness men’s and women’s NCAA tournaments, enjoy the money. Just know that some chunk of it may need to go to the IRS, and possibly your state, too. And if you lost big, there’s a possible silver lining. Those losses may help lower your tax bill, but only if you normally itemize your deductions and also have a lot of other gambling winnings. More on that in a minute. This photograph taken on April 26, 2021 in Paris shows a physical imitation of the Bitcoin crypto currency. Martin Bureau/AFP/Getty Images Related article Made (or lost) money on bitcoin or other crypto last year? The IRS wants details Tens of millions of Americans bet billions of dollars every year on the NCAA tournament, according to the American Gaming Association. An estimated 68 million people bet $15.5 billion on the men’s division alone last year. That includes bets placed with legal sportsbooks, friendly wagers, office pools and illegal offshore betting. (A comparable number for this year isn’t yet available but will include for the first time the wagers placed on the women’s tournament.) So if you made bets last year, here’s what you need to do on your 2023 tax return, which is due for most people on April 15. And if you placed bets this year, file this information in your 2024 tax folder for quick reference when the next filing season starts in January 2025. You won… All gambling winnings have to be reported to the IRS and are subject to federal income tax. Your winnings also may be subject to state tax, unless you live in the dozen or so states that exempt gambling winnings. Cropped shot of a couple using their laptop and going through paperwork at home PeopleImages/iStockphoto/Getty Images Related article The average tax refund is over $3,000. Here are 7 ways to put it to good use If your March Madness winnings — minus how much you bet — are at least $600, and if you placed your wager at a retail sportsbook or legal sports betting site online, you and the IRS should receive a tax form W-2G from the entity that paid you. “If taxpayers are dealing with legal gambling through casinos, lotteries or approved state sports books, winnings are more likely to be reported to the IRS on Form W-2G,” said Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting. But, Luscombe added, “gambling winnings are required to be reported on the tax return whether there is an associated Form W-2G or not.” Also note: If your winnings top $5,000, the entity where you placed your bet may be obligated to withhold 28% for federal taxes. It will then be up to you on your tax return to square whether you owe more or less on your winnings. You lost… For starters, don’t feel bad. Most people lose when they place a bet. March Madness is no exception. If it’s a big sum that slipped through your fingers, you may be able to use the loss to offset any gambling winnings you had in the same tax year. The IRS notes that “gambling losses include the actual cost of wagers plus expenses incurred in connection with the conduct of the gambling activity, such as travel to and from a casino.” Preparing your taxes will be less stressful if you collect all the documents you'll need first, including the tax reporting forms sent to you electronically. pixdeluxe/E+/Getty Images Related article Tax season has started: 8 things to do before you file But you can only use your losses if you itemize your deductions on your federal return. And that only makes financial sense if all your itemized deductions combined exceed the standard deduction. “Losses may only be used to offset gambling winnings if the taxpayer itemizes deductions and keeps accurate records. Only about 10 percent of taxpayers normally itemize deductions,” Luscombe said. But you can never deduct more than the amount of your gambling winnings, and if your losses exceed your winnings, you can’t carry forward the surplus losses for use in future tax years, said Daniel Rahill, managing director of Wintrust Wealth Management and the former chair of the Illinois CPA Society. So say you won $1,000 in 2023 at the tables in Vegas, but you lost $1,500 betting on last year’s March Madness tournament. You can fully offset your $1,000 in winnings if you itemize your deductions and you won’t owe anything to the IRS for those. But you will have to eat the extra $500 in losses.