BANKROLL FORUM

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  • PJGuin23

    DFS Tax Guru

    As some of you may or may not know, I am pleased to announce that I have an exclusive partnership with Rotogrinders to provide tax preparation and consulting services for the RG community. Good news is the 1099-MISC Forms are beginning to trickle in and I’m gladly accepting new clients. I am a CPA based out of suburban Philadelphia with a tax practice focusing on DFS, poker players and Horse Racing. I have years experience with the latter and that’s where I received most of my Hobby vs. Business Income experience. I can work with anyone throughout the United States and have very likely prepared your State and/or Local Tax returns.

    You can also ask basic questions on this thread I would be happy to answer. To remind you, more specific questions to your overall income and expenses situation may require a professional opinion from a tax preparer or CPA. Again, you can contact me for those services if you wish. If you currently have an accountant (common for Grinders with small businesses), I would be happy to corroborate with them to prepare an accurate return for you for DFS purposes.

    There are no significant changes for this season compared to last for DFS purposes. Buzzing around the new Administration is the possibility of major tax reform with potentially significant changes in tax rates, brackets and deductions. They have no effect for your 2016 tax return and not likely for your 2017 return (rarely are retroactive) but I have been monitoring the situation closely. As we have seen with legislation regarding DFS, there are multiple competing interests at work and “tax reform” could be minimal, if anything. I would wait and see until the law is codified and signed. If anything changes, your situation could vary greatly.

    My website is dailyfantasytaxes.com. You can contact me through there where I have a contact form and my toll free number or PM me on here

    PJGuin23’s Disclaimer: I am a Certified Public Accountant licensed by the Commonwealth of Pennsylvania. Any information provided is for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant, CPA, lawyer or other competent financial professional. Presentation of information I provide on RotoGrinders does not constitute an accountant-client relationship. Such relationship can be established by engaging in professional services privately with PJGuin23. RotoGrinders readers are advised not to act upon information I provide without seeking the service of a professional accountant well versed in your particular situation.

  • e4e5nf3nc6

    • 819

      RG Overall Ranking

    • 2015 DraftKings FBWC Finalist

    • 2015 FanDuel WFBBC Finalist

    I got a 1099 from Aces. Interesting they put it in box 7. I have only received box 3 other income in the past. Any reason for this?

  • PJGuin23

    DFS Tax Guru

    @e4e5nf3nc6 said...

    I got a 1099 from Aces. Interesting they put it in box 7. I have only received box 3 other income in the past. Any reason for this?

    I would have none. IMO, it’s wrong.

  • TheImmortalGoud

    I also got a 1099 from Aces and it is also listed in box 7. Going to try to get a hold of Fantasydraft or Aces support. Also, if anyone did not get a 1099 from Aces; you could still view your history on Aces if you go to dev.fantasyaces.com

  • PJGuin23

    DFS Tax Guru

    Definitely want to get that fixed because Box 3 will at least give you the option of filing as a Hobby whereas Box 7 will certainly invite a Schedule C/Self Employment and the IRS will most certainly look for it.

  • nam6641

    • x2

      2016 DraftKings FFWC Finalist

    @PJGuin23 said...

    I would have to determine what the best course of action based on information you provide me. I’d lean that towards a Schedule C. If you want specific tax preparation/consulting, feel free to PM me.

    I see some talk about putting things on a schedule C. I got audited a year ago and what came out of it was in 2013 I had claimed losses (low 5 figures) on a schedule C. During the audit I was told fantasy sports needs to be reported as gambling. I had other positive income for other stuff on Schedule C and was told this loss cannot be used. So they revised my net income and I had to pay the taxes plus a fee for both federal and state.

    Personally I think it is ridiculous because if one year you win $1M you will get hit with a $400k tax bill. If you lose $1M the next year then tough luck, can’t use it to deduct from other income and can’t carry it forward. And if you win $1M in year 3 then you will need to pay $400k in taxes. Anything around in tax code that says this isn’t the case?

  • PJGuin23

    DFS Tax Guru

    @nam6641 said...

    I see some talk about putting things on a schedule C. I got audited a year ago and what came out of it was in 2013 I had claimed losses (low 5 figures) on a schedule C. During the audit I was told fantasy sports needs to be reported as gambling. I had other positive income for other stuff on Schedule C and was told this loss cannot be used. So they revised my net income and I had to pay the taxes plus a fee for both federal and state.

    Personally I think it is ridiculous because if one year you win $1M you will get hit with a $400k tax bill. If you lose $1M the next year then tough luck, can’t use it to deduct from other income and can’t carry it forward. And if you win $1M in year 3 then you will need to pay $400k in taxes. Anything around in tax code that says this isn’t the case?

    Don’t know who the agent/examiner who made the assessment was but you might be able to appeal that. Also the hobby-business issue. Don’t know if that was mentioned in the audit. Was it a correspondence or field audit? Typically in correspondence audits, they are performed by the IRS Service Center where the examiner may not even have a college degree let alone an Accounting Degree or CPA. It’s likely the person has little level of sophistication regarding this. I’m guessing this is a correspondence audit. I would need more details.

  • PJGuin23

    DFS Tax Guru

    Also, was the “5 figure loss” over and above your 1099 amount or was the 5 figures used to offset other income? If the latter, not a good idea in your 1st year playing especially.

    I’d have to know exactly what you did, what was said on the adjustment report, did you use a CPA/EA, did you appeal, etc.

  • dereku

    PMd you

  • PJGuin23

    DFS Tax Guru

    @dereku said...

    PMd you

    Got it!

  • nam6641

    • x2

      2016 DraftKings FFWC Finalist

    @PJGuin23 said...

    Also, was the “5 figure loss” over and above your 1099 amount or was the 5 figures used to offset other income? If the latter, not a good idea in your 1st year playing especially.

    I’d have to know exactly what you did, what was said on the adjustment report, did you use a CPA/EA, did you appeal, etc.

    Had to go into a field office.

    In 2013 it was a net fantasy sports loss, so I was trying to use the loss to offset other unrelated income.

    In 2012 I had won at fantasy sports. In 2014 I had won in fantasy sports. And I showed her in 2015 I won big (six figures) in fantasy sports, so I was making the claim it was a business because I was reporting net profit in 3 of 4 years and in 2015 it was my main source of income. They wouldn’t accept that, said that any net loss in a year could not be used to offset other unrelated business profits.

  • PJGuin23

    DFS Tax Guru

    @nam6641 said...

    Had to go into a field office.

    In 2013 it was a net fantasy sports loss, so I was trying to use the loss to offset other unrelated income.

    In 2012 I had won at fantasy sports. In 2014 I had won in fantasy sports. And I showed her in 2015 I won big (six figures) in fantasy sports, so I was making the claim it was a business because I was reporting net profit in 3 of 4 years and in 2015 it was my main source of income. They wouldn’t accept that, said that any net loss in a year could not be used to offset other unrelated business profits.

    The IRS has not defined DFS as “gambling” still and from what I read there have been repeated requests to get clear guidance. Was the opinion from a Revenue Agent or Tax Compliance Officer? My guess is it was a TCO if they had you visit the office. Typically they have Accounting Credits but not to the level of an RA.

    I think you could have a good appeal case (not sure if time has expired). Question is it is worth fighting or letting it lie from an economic standpoint? PM me if you like I’m curious.

  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @nam6641 said...

    Had to go into a field office.

    In 2013 it was a net fantasy sports loss, so I was trying to use the loss to offset other unrelated income.

    In 2012 I had won at fantasy sports. In 2014 I had won in fantasy sports. And I showed her in 2015 I won big (six figures) in fantasy sports, so I was making the claim it was a business because I was reporting net profit in 3 of 4 years and in 2015 it was my main source of income. They wouldn’t accept that, said that any net loss in a year could not be used to offset other unrelated business profits.

    So I am assuming you filed a separate Schedule C for Fantasy Sports in 2013 and took a 5 figure loss? This then essentially offset any other income you had on the 1040? Did you file your DFS play/income on Schedule C in 2012? Not sure why the IRS would mention “gambling,” but my assumption is that most of them still have no clue what DFS is. I got audited myself for my 2012 return and they wanted me to show my income on Schedule C (opposite of what they said you can do). I wrote a response letter and they finally agreed with how I reported it as Other Income.

    Like PJGuin23 said, you probably have a pretty good appeal case.

  • PJGuin23

    DFS Tax Guru

    @Stewburtx8 said...

    So I am assuming you filed a separate Schedule C for Fantasy Sports in 2013 and took a 5 figure loss? This then essentially offset any other income you had on the 1040? Did you file your DFS play/income on Schedule C in 2012? Not sure why the IRS would mention “gambling,” but my assumption is that most of them still have no clue what DFS is. I got audited myself for my 2012 return and they wanted me to show my income on Schedule C (opposite of what they said you can do). I wrote a response letter and they finally agreed with how I reported it as Other Income.

    Like PJGuin23 said, you probably have a pretty good appeal case.

    Folks, this is why we need to repeal PASPA, not dance around with UIGEA, and get the taxes codified! If guidance says IRC 165 for DFS then so be it. No one has said it yet per Regulation or Court Case.

    Or at least reduce PASPA to ASPA … or if you have collegiate gambling offer the athletes a decent stipend.

  • mjc08bc

    • 161

      RG Overall Ranking

    • Ranked #4

      RG Tiered Ranking

    .

  • PJGuin23

    DFS Tax Guru

    @mjc08bc said...

    I got a 1099-MISC from DK for just over $5K. I’m married military with legal residence in TX (no state income tax), but living in MD. The federal aspect is easy enough to understand, but I’m looking for some help determining how to file appropriately.

    Do I need to file separately from my wife and do a MD state return with nothing but the 1099? My wife has to file in MD, and we usually file through TurboTax. This year, it has become a bit confusing as I don’t think it is a common occurrence, and the software either tries to make me pay my entire income tax to MD, or nothing at all. Thanks for all the good information!

    Does your wife’s W2 have an MD address? If it’s the TX one then all you have to do is file the MD with her income. Try to get DFS income away from MD as much as you can.

    Other option is Federal MFJ and MFS for states.

  • WidumBoise

    Finna FADE Uncle Sammy this year.

  • mjc08bc

    • 161

      RG Overall Ranking

    • Ranked #4

      RG Tiered Ranking

    @PJGuin23 said...

    Does your wife’s W2 have an MD address? If it’s the TX one then all you have to do is file the MD with her income. Try to get DFS income away from MD as much as you can.

    Other option is Federal MFJ and MFS for states.

    .

  • HoldTheBaby

    I want to make a contribution to my Roth IRA but I didn’t earn anything outside of dfs and am wondering if fanduel winnings are considered ‘earned income’?

  • PJGuin23

    DFS Tax Guru

    @HoldTheBaby said...

    I want to make a contribution to my Roth IRA but I didn’t earn anything outside of dfs and am wondering if fanduel winnings are considered ‘earned income’?

    Hobby=Unearned. Schedule C=Earned.

  • yanksfan1

    I have not received a form from Fantasy Aces. I have no idea what to do, how much I made, or what to put on tax return

  • yanksfan1

    @TheImmortalGoud said...

    I also got a 1099 from Aces and it is also listed in box 7. Going to try to get a hold of Fantasydraft or Aces support. Also, if anyone did not get a 1099 from Aces; you could still view your history on Aces if you go to dev.fantasyaces.com

    that link gets me to my account but there is no information as to entry fees and winnings

  • PJGuin23

    DFS Tax Guru

    FYI, we have a couple weeks left in Tax filing season and I have room for more people but to get your return out by April 18th, I would need:

    - Last year’s tax return – All tax documents ready to go (W2, 1099, 1095, Brokerage Statements, etc.) – Downloaded CSV Transaction Histories from the sites you play on if available

    If you don’t have everything, no need to panic. I can file an Extension for you which would give you until October 15, 2017 (some states later). I would just need some basic information.

  • MikeMineo

    hi PJ – curious how DFS winnings impact the self-employment tax, if at all. do DFS winnings count toward the self-employment tax? (if, for example, you’re self-employed in public relations, nothing to do with DFS).

    this site seems to suggest I just have to pay the income tax on it unless I file as a professional DFS player – http://dailyfantasytaxes.com/professional-daily-fantasy-player/
    but I wanted to ask you.

    just trying to estimate some things for this year and figuring out if I should set aside 15% (my tax bracket) or 30.3% (tax bracket + self-employment tax) of winnings.

    I realize that all my net earnings from my primary self-employment job (PR) have to be taxed by income tax + self-employment tax, but wasn’t sure if for the amount I profited on Fanduel this year I just have to worry about income tax for that specifically.

    thanks!

  • sports1

    Hello,can you please provide me where to go to view the basics of what you can write off in taxes and what percentage of your entry fee can be written off ?
    If I got a tax form for $6500 but i deposited $3700 that year, what is that $3700 considered. a write off?

    i truly appreciate your help!

  • PJGuin23

    DFS Tax Guru

    @MikeMineo said...

    hi PJ – curious how DFS winnings impact the self-employment tax, if at all. do DFS winnings count toward the self-employment tax? (if, for example, you’re self-employed in public relations, nothing to do with DFS).

    this site seems to suggest I just have to pay the income tax on it unless I file as a professional DFS player – http://dailyfantasytaxes.com/professional-daily-fantasy-player/
    but I wanted to ask you.

    just trying to estimate some things for this year and figuring out if I should set aside 15% (my tax bracket) or 30.3% (tax bracket + self-employment tax) of winnings.

    I realize that all my net earnings from my primary self-employment job (PR) have to be taxed by income tax + self-employment tax, but wasn’t sure if for the amount I profited on Fanduel this year I just have to worry about income tax for that specifically.

    thanks!

    They COULD be subject to SE if you file as a business. Also, if your W2 wages are above the SSI cap, the SE bite won’t be so terrible, more like 2.9%.

    As a hobby, not an issue.

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