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Daily Fantasy Sports and Taxes
Posted on 1/6/16 at 3:16 pm
Posted on 1/6/16 at 3:16 pm
Maybe reaching here considering it is illegal in LA, but does anyone know how this works? Started playing this year and if anything broke even. Draftkings site states:
So, I have probably won $600, however once you factor in contest fees, like I stated earlier, it is a breakeven deal. My first question, will they offer me a 1099-MISC?
If not, it states "Declaration and payment of all income taxes associated contest winnings are the sole responsibility of the contest winner.", so should I have been keeping up all along with what I was entering and winning/losing?
I am going to ask my accountant this, just trying to get an idea if this is some stuff I need to be getting together before that time comes.
TIA!
quote:
Declaration and payment of all income taxes associated contest winnings are the sole responsibility of the contest winner. DraftKings collects W-9s from customers in order to comply with state and federal tax laws. DraftKings issues form 1099-MISC to customers with reportable income of at least $600 in any calendar year
So, I have probably won $600, however once you factor in contest fees, like I stated earlier, it is a breakeven deal. My first question, will they offer me a 1099-MISC?
If not, it states "Declaration and payment of all income taxes associated contest winnings are the sole responsibility of the contest winner.", so should I have been keeping up all along with what I was entering and winning/losing?
I am going to ask my accountant this, just trying to get an idea if this is some stuff I need to be getting together before that time comes.
TIA!
1
Posted on 1/6/16 at 4:16 pm to OnTheBrink
If you "won" $600 or more in the year they should send you a Form 1099.
I'm not very familiar with draft kings and their ilk, but I'm guessing it's a form of gambling?
Gambling winnings are taxable as other income. Gambling losses are a miscellaneous itemized deduction.
I'm not very familiar with draft kings and their ilk, but I'm guessing it's a form of gambling?
Gambling winnings are taxable as other income. Gambling losses are a miscellaneous itemized deduction.
Posted on 1/6/16 at 4:26 pm to LSUFanHouston
I believe the other question he is asking whether or not he will be able to deduct his "entry fees" to offset his income since he is illegally participating in this activity in the state of Louisiana. It is legal in 38 states or so.
I am assuming you should be capable of offsetting this income on your federal return if you are itemizing and not taking the standard deduction.
I think I also would assume that you will be responsible for the full $600 of income on your state.
Disclaimer: I'm no tax accountant.
I am assuming you should be capable of offsetting this income on your federal return if you are itemizing and not taking the standard deduction.
I think I also would assume that you will be responsible for the full $600 of income on your state.
Disclaimer: I'm no tax accountant.
This post was edited on 1/6/16 at 4:27 pm
Posted on 1/6/16 at 4:51 pm to LSUAfro
I am in Tennessee where it is currently legal. Meant by that statement that I might not get much response seeing as it is illegal in LA.
And you are right about entry fees, do I deduct that from winnings to get true gain?
And you are right about entry fees, do I deduct that from winnings to get true gain?
This post was edited on 1/6/16 at 4:52 pm
Posted on 1/6/16 at 5:05 pm to LSUAfro
quote:
since he is illegally participating in this activity in the state of Louisiana. It is legal in 38 states or so.
He said in his state it is legal, but if it were illegal, he would have to report the income but he could not take any deductions.
Posted on 1/6/16 at 5:21 pm to LSUFanHouston
For example, I entered a contest that cost me $1. I won $10. I then entered 10 more contests and won nothing. Did I still "win" $10? Or would you say I broke even?
Posted on 1/6/16 at 5:49 pm to OnTheBrink
I'd say that you had a net loss of $1.
Posted on 1/6/16 at 6:04 pm to Jag_Warrior
Semantics. 
But that does help me. Thanks!
But that does help me. Thanks!
Posted on 1/6/16 at 8:29 pm to OnTheBrink
Sorry, I couldn't resist.
Financially, there's a break even (or net loss), but for tax purposes, I have no idea.
Financially, there's a break even (or net loss), but for tax purposes, I have no idea.
Posted on 1/6/16 at 8:43 pm to OnTheBrink
I would say you have taxable gambling income of $10 and an itemized deduction of $10.
Yes, you spent $11. However, for tax purposes, you can't claim deductions greater than your winnings (i.e. you can't claim a gambling loss).
The one exception is if you are a professional gambler, in which case you use Schedule C. I actually have a client that is a professional gambler, he beat the IRS on an audit.
Yes, you spent $11. However, for tax purposes, you can't claim deductions greater than your winnings (i.e. you can't claim a gambling loss).
The one exception is if you are a professional gambler, in which case you use Schedule C. I actually have a client that is a professional gambler, he beat the IRS on an audit.
Posted on 1/6/16 at 11:02 pm to LSUFanHouston
How will the income be reported on the 1099-Misc? I would imagine it will be reported in Box 3 as Other Income. However, one could argue that reporting the income in Box 7 as Nonemployee Compensation is appropriate since the income is a prize for an activity that required some effort by the recipient. The requirement would be that the effort qualifies as performance of services.
This would allow you to report a loss from a Sch. C activity, but it would also open you to self-employment tax should you actually win.
This would allow you to report a loss from a Sch. C activity, but it would also open you to self-employment tax should you actually win.
Posted on 1/7/16 at 7:26 am to Poodlebrain
Poodle and LSUfan, if you guys were me, would you even worry about it? Considering my total "winnings" is around $600 but my after entry fees and what not it is around break even.
Posted on 1/7/16 at 7:58 am to OnTheBrink
I'd report the amount on the 1099-Misc on Line 21 as other income - gambling, and I would report a corresponding deduction for gambling losses. That is as close to break even as you can come for taxes if you are subject to any of the phase outs due to AGI. And there is near zero risk that the reporting will be challenged for appropriateness. All that is likely is substantiating amounts of losses, your entry fees, in the event of an audit.
Posted on 1/7/16 at 8:00 am to Poodlebrain
Thanks Poodle! In the event I do not receive a 1099, would you do anything?
If I do not receive one I would have to go I manually and figure out my gains/losses for the year.
If I do not receive one I would have to go I manually and figure out my gains/losses for the year.
Posted on 1/7/16 at 9:51 am to LSUFanHouston
quote:
but if it were illegal, he would have to report the income but he could not take any deductions.
I disagree. Who's to say he didn't drive to a state where it is legal and place the wager? State law prevents the wager from being placed inside the state, it does not prevent the resident from participating in other states.
Look at it as if it were a casino. It may be illegal to gamble in one state, but it is perfectly legal for the person to travel to Vegas, win money and deduct gambling losses.
Posted on 1/7/16 at 3:46 pm to SippyCup
If you were going to make that argument, wouldn't you have to file a tax return in another state?
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