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.

    • Link
    • Last Updated 1 year ago
  • MikeK

    @rotokevin said…

    Two approaches:

    Aggressive – No 1099, no taxes. Without documentation of earnings, many people elect not to claim them at all.

    Conservative – file with your best estimate as to the earnings.

    Best course of action – attempt to contact Joust (support@dailyjoust.com might still work). If they have no record of you needing to receive a 1099, proceed using one of the above methods. The worst case would be to take the aggressive route above only to have had your 1099 get lost in the mail, which will trigger a letter from the IRS and taxes owed. Best to confirm whether or not a 1099 exists before making any decisions.

    Hey Kevin, does “aggressive” work with Fantasy Fued?

  • rotokevin

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

    • 2014 FanDuel WFBC Finalist

    @MikeK said…

    Hey Kevin, does “aggressive” work with Fantasy Fued?

    It’s up to the taxpayer, but the tax code says that all income must be reported without regard for whether it was reported separately via 1099, W-2, etc. The compliance with voluntary reporting of unreported income is quite low, though in the event of an audit, those earnings would likely be uncovered.

    That’s a long answer, but that is the situation. It’s up to you and your tolerance for risk.

  • MikeK

    @rotokevin said…

    It’s up to the taxpayer, but the tax code says that all income must be reported without regard for whether it was reported separately via 1099, W-2, etc. The compliance with voluntary reporting of unreported income is quite low, though in the event of an audit, those earnings would likely be uncovered.

    That’s a long answer, but that is the situation. It’s up to you and your tolerance for risk.

    Thanks Kevin, do you know what the risk is if you are audited and you get caught trying to hide income? Are we talking fine, jail, repayment? What would most likely happen if I got caught not reporting $1800 from FF?

    Thanks a lot Kevin.

  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @MikeK said…

    Thanks Kevin, do you know what the risk is if you are audited and you get caught trying to hide income? Are we talking fine, jail, repayment? What would most likely happen if I got caught not reporting $1800 from FF?Thanks a lot Kevin.

    For an amount that small you will just have to pay any back tax plus any penalties and interest.

    You obviously wouldn’t say you knowlingly hid income though if you did get audited.

  • MikeK

    @Stewburtx8 said…

    For an amount that small you will just have to pay any back tax plus any penalties and interest.

    You obviously wouldn’t say you knowlingly hid income though if you did get audited.

    Thanks Stewy, I’m going to take the gamble and it will be an oversight if the IRS audits my bank account.

  • LawnStar

    @rotokevin said…

    When filing on schedule C, I have used “contest entry fees” as the description for deducting losses. Remember, the IRS doesn’t have the sophisticated knowledge of this space that those of us at RG have. The language you propose is probably more “correct,” but sounds more like capital gain/loss language to the IRS. Claiming winnings from fantasy sports should logically have entry fees, so that is my preferred description. I’ve filed returns that way for the past 2 years with no noise from the IRS.

    sounds good, thanks.

  • rotokevin

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

    • 2014 FanDuel WFBC Finalist

    @Stewburtx8 said…

    For an amount that small you will just have to pay any back tax plus any penalties and interest.

    You obviously wouldn’t say you knowlingly hid income though if you did get audited.

    Exactly this. Stew knows his stuff.

  • ldmariodl28

    • Blogger of the Month

    @rotokevin said…

    Daily Joust should adhere to the January 31 deadline for 1099 issuance. Practically speaking, though, defunct entities don’t tend to be overly compliant with rules once they cease to operate. If you don’t see a 1099 by Feb 15, you can probably assume one won’t be coming.

    It is possible that the history was transferred to FTD and that the surviving entity will issue the 1099 for a player’s combined 2013 play on FSL, BuzzDraft, Joust and FTD. I’m guessing that is doubtful, though.

    Got it in the mail today.

  • ChaosM83

    • 605

      RG Overall Ranking

    I don’t think I’ve seen an answer as to what to do about Daily Joust records. Can I estimate losses?

  • headChopper

    RG Contributor (OG Status)

    • 275

      RG Overall Ranking

    • Ranked #38

      RG Tiered Ranking

    • 2014 DraftKings FBWC Finalist

    • x3

      2012 FanDuel WFFC Finalist

    Can I write my 2013 tax payment off as a business expense in 2014?

  • emac

    • Ranked #87

      RG Tiered Ranking

    @headChopper said…

    Can I write my 2013 tax payment off as a business expense in 2014?

    Everyone can deduct tax preparation fees in the year they occur (i.e. if you buy tax software or if you have someone else prepare your taxes you can deduct that expense).

  • rotokevin

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

    • 2014 FanDuel WFBC Finalist

    @ChaosM83 said…

    I don’t think I’ve seen an answer as to what to do about Daily Joust records. Can I estimate losses?

    I’m confused by this question. I responded to your first question about Joust records above in which you implied that you had winnings, but no 1099. When it comes to substantiating losses, you have a bit more latitude. Absent actual game-level history, an itemization of deposits and withdrawals from paypal/credit card would be about the best you can do.

  • rotokevin

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

    • 2014 FanDuel WFBC Finalist

    @headChopper said…

    Can I write my 2013 tax payment off as a business expense in 2014?

    Emac answered regarding tax preparation, but I think you are asking if you can deduct the fat check you have to write to Uncle Sam because you crush this game like no other. Am I right?

    If so, the answer is no. The government tends to frown on using settlement of previous tax liabilities as a means to reduce current tax liability.

  • emac

    • Ranked #87

      RG Tiered Ranking

    @rotokevin said…

    Emac answered regarding tax preparation, but I think you are asking if you can deduct the fat check you have to write to Uncle Sam because you crush this game like no other. Am I right?

    If so, the answer is no. The government tends to frown on using settlement of previous tax liabilities as a means to reduce current tax liability.

    But it sure would be a lot cooler if they did!

    http://www.youtube.com/watch?v=ojX6zfsOqjQ

  • Calebdub

    Lol Dfs are impossible to win now fd gets 10% state gets 10% that means to have to win 75% of the time in cash games to make any profit

  • rotokevin

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

    • 2014 FanDuel WFBC Finalist

    @Calebdub said…

    Lol Dfs are impossible to win now fd gets 10% state gets 10% that means to have to win 75% of the time in cash games to make any profit

    What about the Fed? They’re going to want 25% or so. By your math, you’d have to win 100% of the time then.

    Go back and check your math. Let me know when you need a hint where you went wrong.

  • Calebdub

    @rotokevin said…

    What about the Fed? They’re going to want 25% or so. By your math, you’d have to win 100% of the time then.

    Go back and check your math. Let me know when you need a hint where you went wrong.

    Did I miss read ?? Where am I wrong

  • Calebdub

    @Calebdub said…

    Did I miss read ?? Where am I wrong

    The way I understood that article is u pay 10 % in taxes on anything under 17k plus the rake that makes it 20%…. So ud have to win 70% of your games to break even… Not saying I’m right just confused

  • rotokevin

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

    • 2014 FanDuel WFBC Finalist

    @Calebdub said…

    Did I miss read ?? Where am I wrong

    The payment of income taxes cannot take an income-producing activity from a net profit to a net loss. If it is agreed that a 60% winner handily tops the 10% rake, the payment of taxes will still yield a net profit.

  • Calebdub

    @rotokevin said…

    The payment of income taxes cannot take an income-producing activity from a net profit to a net loss. If it is agreed that a 60% winner handily tops the 10% rake, the payment of taxes will still yield a net profit.

    But either way u look at it is still paying 20% rake just a diff way of going about it… So u have to when 70% witch is close to impossible… I could be totally wrong but I’m just usein logic… Like I said I’m confused

  • rotokevin

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

    • 2014 FanDuel WFBC Finalist

    In a word, no.

    Example:

    Contest Entries: $10,000 ($30 per day, give or take)
    Win rate: 60%
    Contest winnings: $10,800
    Net Profit: $800

    Assess taxes:
    Federal at 25% marginal rate = $200
    State at 5% marginal rate = $40

    Net profit = $560

    The taxes are assessed on the profit from the activity while the rake is on the gross entry fees (win or lose).

  • Calebdub

    @rotokevin said…

    In a word, no.

    Example:

    Contest Entries: $10,000 ($30 per day, give or take)
    Win rate: 60%
    Contest winnings: $10,800
    Net Profit: $800

    Assess taxes:
    Federal at 25% marginal rate = $200
    State at 5% marginal rate = $40

    Net profit = $560

    The taxes are assessed on the profit from the activity while the rake is on the gross entry fees (win or lose).

    To smart for me I’m lost…. Thanks for the help so to simplify it if I’m winning at 60% I’m way over breaking even,…even tho I’m paying out a huge %… Is that true ?

  • headChopper

    RG Contributor (OG Status)

    • 275

      RG Overall Ranking

    • Ranked #38

      RG Tiered Ranking

    • 2014 DraftKings FBWC Finalist

    • x3

      2012 FanDuel WFFC Finalist

    @rotokevin said…

    Emac answered regarding tax preparation, but I think you are asking if you can deduct the fat check you have to write to Uncle Sam because you crush this game like no other. Am I right?

    If so, the answer is no. The government tends to frown on using settlement of previous tax liabilities as a means to reduce current tax liability.

    Yeah thats what I was saying. I was just being sarcastic/humorous though. I thought you of all people would appreciate it during this busy time of the year for people in the tax preparation industry.

  • rotokevin

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

    • 2014 FanDuel WFBC Finalist

    @Calebdub said…

    To smart for me I’m lost…. Thanks for the help so to simplify it if I’m winning at 60% I’m way over breaking even,…even tho I’m paying out a huge %… Is that true ?

    If your account balance is going up, taxes won’t turn you into a losing player.

  • rotokevin

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

    • 2014 FanDuel WFBC Finalist

    @headChopper said…

    Yeah thats what I was saying. I was just being sarcastic/humorous though. I thought you of all people would appreciate it during this busy time of the year for people in the tax preparation industry.

    lol, Chop. I’m too dense to realize I was being trolled. Well played, sir.

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