BANKROLL FORUM

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  • rotokevin

    2014 RG Bowling Co-Champion, CPA & DFS Tax Guru

    • 2014 FanDuel WFBC Finalist

    DFS and Taxes

    Hey gang. We’ve had a lot of tax discussion in the forums lately, but I’m super excited to announce that there is now a Taxes in Daily Fantasy lesson available in GrindersU.

    The article is comprehensive and covers most common tax-related questions we’ve discussed. Of course, no article can cover everything, so I’ll monitor this thread to answer additional questions.

    To make this thread useful, let’s strive to keep it on topic and not simply regurgitate the content of the lesson. Also, please scan the thread to make sure your question hasn’t already been answered. Following these simple guidelines will make the experience better for everyone.

    So, with that, let’s talk taxes.

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    • Last Updated 1 year ago
  • StopAndDrop

    Hey rotokevin, I’ve heard FF doesn’t report taxes. Any risk involved with not filing on you’re own? I don’t play on FF, but this could be appealing if you don’t have to pay taxes.

  • rotokevin

    2014 RG Bowling Co-Champion, CPA & DFS Tax Guru

    • 2014 FanDuel WFBC Finalist

    @StopAndDrop said…

    Hey rotokevin, I’ve heard FF doesn’t report taxes. Any risk involved with not filing on you’re own? I don’t play on FF, but this could be appealing if you don’t have to pay taxes.

    This is covered in the lesson, but there is always risk when you don’t report earnings that should be included in gross income.

  • stevietpfl

    Morning Grind co-host, Lead NASCAR Analyst

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    Nice work RK!

  • ndirish416

    So from what I understand from the article, if you take the standard deduction you cannot deduct losses from one site against winnings from another. If this is the case, would you say it makes sense for someone planning on taking the standard deduction to restrict their play to a single site?

  • kaetorade

    • 2013 DraftStreet DSBBC Finalist

    Great job Kev! Do the sites have a specific date that as to when they will issue 1099s?

  • virgilecaine

    Kevin, (sorry I’m very long winded)

    Very good article. One thing I think should be noted, and correct me if I’m wrong, is that deducting losses from other sites would be subject to the 2% AGI limitation. If you are deducting losses to “Produce or collect taxable income that must be included in your gross income”(IRS), that the deductions are subject to a 2% AGI limitation. In your example the $300 losses might not necessarily be deductible due to a person’s AGI. Now if this was considered under the gambling rules then any losses wouldn’t be subject to the 2% floor. Then, again, we wouldn’t be able to play legally. Only three more months of hell. Good luck this busy season.
  • rotokevin

    2014 RG Bowling Co-Champion, CPA & DFS Tax Guru

    • 2014 FanDuel WFBC Finalist

    @ndirish416 said…

    So from what I understand from the article, if you take the standard deduction you cannot deduct losses from one site against winnings from another. If this is the case, would you say it makes sense for someone planning on taking the standard deduction to restrict their play to a single site?

    I get this type of question from many people throughout the year about all kinds of situations. My answer is the same – don’t let tax consequences be the driving force behind anything you do. Know and understand the tax consequences, but don’t directly do/avoid anything because of taxes.

    If it make sense to play on two sites (say, StarStreet for the pick 5 and FanDuel for the FFFC, as an example), do it. Ideally you’re profitable on both sites so the inability to deduct losses isn’t an issue.

  • rotokevin

    2014 RG Bowling Co-Champion, CPA & DFS Tax Guru

    • 2014 FanDuel WFBC Finalist

    @kaetorade said…

    Great job Kev! Do the sites have a specific date that as to when they will issue 1099s?

    Thanks kaetorade. 1099s must be mailed by January 31. You should have your docs shortly after the Super Bowl, at the latest.

  • rotokevin

    2014 RG Bowling Co-Champion, CPA & DFS Tax Guru

    • 2014 FanDuel WFBC Finalist

    @virgilecaine said…

    Kevin, (sorry I’m very long winded)

    Very good article. One thing I think should be noted, and correct me if I’m wrong, is that deducting losses from other sites would be subject to the 2% AGI limitation. If you are deducting losses to “Produce or collect taxable income that must be included in your gross income”(IRS), that the deductions are subject to a 2% AGI limitation. In your example the $300 losses might not necessarily be deductible due to a person’s AGI. Now if this was considered under the gambling rules then any losses wouldn’t be subject to the 2% floor. Then, again, we wouldn’t be able to play legally. Only three more months of hell. Good luck this busy season.

    Yes, you are 100% correct. I glossed over that issue in the lesson because I didn’t want to get too deep into the technical aspects. If we are talking the numbers I used in the example, it’s unlikely that the $300 would be deductible after application of the 2% floor.

  • deactivated17417

    Kevin I had a few questions and your article answered them all. I just wanted to post and say thank you, it is much appreciated.

  • barro

    My biggest issue with how most site do taxes is that the sites are not FDIC insured like a bank.
    If one earns $1000 interest, pays taxes on it and then the bank goes belly up before the money is withdrawn there is government protection.
    However, if one win $1000 on a DFS site and the sites dies before the money is taken out there is no protection.
    Personally, i think taxes should be based on Money Withdrawn – Money deposited.
    I know this can leads to some shenanigans. But its my 2 cents

  • Putz

    @barro said…

    My biggest issue with how must site do taxes it that the sites are FDIC insured like a bank.
    If one earns $1000 interest, pays taxes on it and then the bank goes belly up before the money is withdrawn there is government protection.
    However, if one win $1000 on a DFS site and the sites dies before the money is taken out there is no protection.
    Personally, i think taxes should be based on Money Withdrawn – Money deposited.
    I know this can leads to some shenanigans. But its my 2 cents

    Great points.

  • DillingerFour

    FD Rep - DFBMeeMee Champ (x2)

    • Blogger of the Month

    Kevin,

    Can I write off our loss in the RotoGrinders Beer Pong tournament? Also, can I get a tax credit from TommyG for late-swapping in and beating us?

    Thanks!

  • db730

    RotoGrinders Media Director

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    I think a serious question could someone write off the Grinders Party Flight/Hotel expenses as a DFS “conference”? I know it sounds kind of silly, but my non-CPA brain thinks there could be some justification for this.

  • rotokevin

    2014 RG Bowling Co-Champion, CPA & DFS Tax Guru

    • 2014 FanDuel WFBC Finalist

    @barro said…

    My biggest issue with how most site do taxes is that the sites are not FDIC insured like a bank.
    If one earns $1000 interest, pays taxes on it and then the bank goes belly up before the money is withdrawn there is government protection.
    However, if one win $1000 on a DFS site and the sites dies before the money is taken out there is no protection.
    Personally, i think taxes should be based on Money Withdrawn – Money deposited.
    I know this can leads to some shenanigans. But its my 2 cents

    I disagree and believe that the “net winnings” method is most appropriate. The player has the rights to transfer the funds to his/her bank account. These are not restricted payments. In the event a site fails, the player can write off the funds lost in the failure in the same manner that he/she would write off losses on another site.

    In your example, recall that FDIC insurance has limits. If the person in your example had $500k on deposit, earning $1k of interest (2%, not bad) and the bank fails, the FDIC is only on the hook to cover the first $250k, leaving the remaining $251k as a loss that the account holder will have to seek recovery via lawsuit or from a successor institution (if one exists). The same tax-based remedy exists in this scenario.

    That being said, my opinion doesn’t really matter here. The sites themselves have spent plenty of money with tax lawyers to vet this approach. It’s nice to see everyone following the same method. It cuts down on confusion, which is great for everyone.

  • rotokevin

    2014 RG Bowling Co-Champion, CPA & DFS Tax Guru

    • 2014 FanDuel WFBC Finalist

    @DillingerFour said…

    Kevin,

    Can I write off our loss in the RotoGrinders Beer Pong tournament? Also, can I get a tax credit from TommyG for late-swapping in and beating us?

    Thanks!

    The best tax credit is revenge. We’ll get ‘em in September.

  • rotokevin

    2014 RG Bowling Co-Champion, CPA & DFS Tax Guru

    • 2014 FanDuel WFBC Finalist

    @db730 said…

    I think a serious question could someone write off the Grinders Party Flight/Hotel expenses as a DFS “conference”? I know it sounds kind of silly, but my non-CPA brain thinks there could be some justification for this.

    That’s a gray area, but you could take that stance. It would be easier if it was called something other than a party, though. GrinderFest? GrinderCon? GrinderCamCon?

    I digress. I think if you are filing the schedule C route it is much easier to claim those expenses. Networking with so many great players could certainly qualify as educational expenses if one wanted to take that stance.

  • rotokevin

    2014 RG Bowling Co-Champion, CPA & DFS Tax Guru

    • 2014 FanDuel WFBC Finalist

    @TheCoz said…

    Kevin I had a few questions and your article answered them all. I just wanted to post and say thank you, it is much appreciated.

    Great to hear, Coz. Thanks for the feedback.

  • rotokevin

    2014 RG Bowling Co-Champion, CPA & DFS Tax Guru

    • 2014 FanDuel WFBC Finalist

    @barro said…

    My biggest issue with how most site do taxes is that the sites are not FDIC insured like a bank.
    If one earns $1000 interest, pays taxes on it and then the bank goes belly up before the money is withdrawn there is government protection.
    However, if one win $1000 on a DFS site and the sites dies before the money is taken out there is no protection.
    Personally, i think taxes should be based on Money Withdrawn – Money deposited.
    I know this can leads to some shenanigans. But its my 2 cents

    One last thought on this. The withdrawals-deposits method can be harmful to players that carry over balances from year end and then withdraw. Say a player deposits $1000 on December 1st, wins a little and ends the year at $1,200. He then loses $300 in January and withdraws the remaining $900. In total, he’s lost $100, but he’s going to get a 1099 for $900 and only has $300 of January losses to write off against that “income.” The “net winnings” method keeps the player current with the IRS at the end of each year. It’s really best for all involved.

  • jlowery73

    2012 DDC Main Event Champion

    • 800

      RG Overall Ranking

    • 2014 FAFC Finalist

    • x3

      2015 FACFC Finalist

    I can’t help but agree with this last sentence on net winnings. I have heard numerous players talk of keeping winnings in at the end of the year, but to me they are setting themselves up for a large pay-in the following year (unless they plan on going on a losing streak).

    Best to pay taxes on the year you made the profits.

  • LawnStar

    Tag 4 later. Great post.

  • barnstorm

    Do Fantasy Winnings get reported as Income, not Gambling Winnings?

    So I can’t deduct my casino and sports gambling losses from my Fantasy winnings?

  • rotokevin

    2014 RG Bowling Co-Champion, CPA & DFS Tax Guru

    • 2014 FanDuel WFBC Finalist

    @barnstorm said…

    Do Fantasy Winnings get reported as Income, not Gambling Winnings?

    So I can’t deduct my casino and sports gambling losses from my Fantasy winnings?

    Correct. They are classified as two different income categories.

  • barnstorm

    @rotokevin said…

    Correct. They are classified as two different income categories.

    Oh, that sucks as I have winnings in Fantasy and losings in casinos and sports betting.

  • vinsane38

    if you have a corporation, you can do this kind of expensing all the time against income. If you are trying to do that as personal expenses, that likely has to meet the 2% AGI req as a “non reimbursible business expense”.

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