INDUSTRY FORUM

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  • SmartWater

    Marketing and Social Media Manager

    Hello Grinders!

    One of the most important days of the DFS year is nearly upon us: the Super Bowl? Nope – the tax deadline!

    We’ve once again teamed up with the best in the business to help make sure you have everything in order for the current tax year.

    DFS Accounting Services, LLC has over 30 years of collective accounting experience and are a registered and licensed CPA firm with the AICPA and IL CPA Society. In short, they can provide unparalleled tax and consulting services for casual players and seasoned DFS Pros alike. They offer free tax consultation for your DFS activities over at dfsaccounting.com

    This is our 3rd year working with DFS Accounting and many of our own staff use them for their annual tax services. If you have any questions, this is your chance to ask away in this year’s Q&A thread!

    DFSAS Disclaimer: DFS Accounting, LLC are Certified Public Accountants licensed by the AICPA and State of Illinois. Any information provided is for informational purposes only and is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant, CPA, lawyer or other competent financial professional. Information posted by DFS Accounting, LLC on RotoGrinders or any other media forum does not constitute an accountant-client relationship. At your request, DFS Accounting, LLC can send an engagement letter, which outlines their responsibilities provided under their engagements.

  • drewcrawford03

    • 2019 FanDuel FantaSea Finalist

    • 312

      RG Overall Ranking

    • 2018 FanDuel WFFC Finalist

    In all seriousness, I think the issue with our interpretations is whether the IRS considers DFS hobby or gambling. I’m filing as gambling under “additional income” on an itemized 1040. Are you saying that the IRS has formally declared DFS as a hobby and not gambling?

  • RustyNutz

    @drewcrawford03 said...

    I was told completely differently from a tax professional I trust.

    Hope you trust him with your upcoming audit 😂

  • drewcrawford03

    • 2019 FanDuel FantaSea Finalist

    • 312

      RG Overall Ranking

    • 2018 FanDuel WFFC Finalist

    @RustyNutz said...

    Hope you trust him with your upcoming audit 😂

    Appreciate your concern, RustyNutz.

  • DFSAccounting

    @Volkster6 said...

    What are the implications for Canadian residents? We signed a form proving we are in fact Canadian but should we anticipate any forms/requirements on our end? Thank you!

    The IRS levies a 30% tax withholding requirement (or lower based on tax treaty) for nonresident aliens. DK and FD should automatically take this amount each time you withdraw from your account. There are no forms required as you are paying your tax when you withdraw.

  • DFSAccounting

    @drewcrawford03 said...

    In all seriousness, I think the issue with our interpretations is whether the IRS considers DFS hobby or gambling. I’m filing as gambling under “additional income” on an itemized 1040. Are you saying that the IRS has formally declared DFS as a hobby and not gambling?

    the IRS declared DFS as a game of luck or skill. Because of this, there is a different set of rules when it comes to this type of income. The IRS view gambling income, as “games of change or wagers on events with uncertain outcomes.”

    If its gambling income, the IRS allows you deduct your gambling losses up to your gambling winnings. Which is what you are trying to do. Unfortunately, DFS income is not gambling winnings.

    Your trusted tax preparer was correct on how to report GAMBLING winnings. Unfortunately, DFS income is not gambling winnings.

    AGAIN, DFS income is NOT Gambling Winnings.

  • DFSAccounting

    @mr_papageorgio said...

    Does anyone know when DK usually issues their tax forms?

    The filing deadline is January 31st. I would expect the 1099s to be issued mid to late February, if there is not an extension to file.

  • drewcrawford03

    • 2019 FanDuel FantaSea Finalist

    • 312

      RG Overall Ranking

    • 2018 FanDuel WFFC Finalist

    @DFSAccounting said...

    the IRS declared DFS as a game of luck or skill. Because of this, there is a different set of rules when it comes to this type of income. The IRS view gambling income, as “games of change or wagers on events with uncertain outcomes.”

    If its gambling income, the IRS allows you deduct your gambling losses up to your gambling winnings. Which is what you are trying to do. Unfortunately, DFS income is not gambling winnings.

    Your trusted tax preparer was correct on how to report GAMBLING winnings. Unfortunately, DFS income is not gambling winnings.

    AGAIN, DFS income is NOT Gambling Winnings.

    Can you point me to literature that says this? Everything I’ve seen says there is no official stance from the IRS and DFS is still up for interpretation.

  • sotnohc

    • 475

      RG Overall Ranking

    Yeah sorry Drew your guy is dead wrong. Where on Sch A is he putting the deduction? The only thing I can think of is he’s considering the deductions gambling losses. If you aren’t getting a W2G and you are claiming gambling losses they are going to be disallowed in a heartbeat, the computer will catch that and kick out a notice to pay tax on the disallowed deduction. You can put your 1099 on the other income line on the front of the return as you should with a hobby, but there’s no way to deduct losses. If you play regularly, which it looks like you do with your ranking, then perhaps you could file a Sch C. The only kicker there is self employment tax.

  • sotnohc

    • 475

      RG Overall Ranking

    @drewcrawford03 said...

    Can you point me to literature that says this? Everything I’ve seen says there is no official stance from the IRS and DFS is still up for interpretation.

    Do you get a 1099 or a W2G from DK and FD? That is where the character of the income is derived from. DFS Accounting probably has a rev proc handy, I don’t have any clients that play DFS but I have to do my own return LOL

    The IRS won’t even need to audit this but that was pretty funny. It will be an auto-generated notice and you will have to pay the tax on that disallowed deduction. I’m surprised this is getting so much push back. It sucks for DFS players but that’s what the regs say.

  • Pats7914

    • 74

      RG Overall Ranking

    • Ranked #98

      RG Tiered Ranking

    @drewcrawford03 said...

    Can you point me to literature that says this? Everything I’ve seen says there is no official stance from the IRS and DFS is still up for interpretation.

    Correct. The only interpretation the IRS has sent out is a dated, non-binding private letter which suggests the sites calculate income incorrectly as we should not be able to deduct the costs of losing entries. This would obviously have catastrophic implications for non-professional players.

    This is all somewhat of a gray area, although the typical way we report has not triggered numerous audits yet. Some people do report this as gambling income, FWIW, and I have seen at least one CPA publication that suggests this method is potentially kosher.

    DFS taxes still very much a gray area.

  • drewcrawford03

    • 2019 FanDuel FantaSea Finalist

    • 312

      RG Overall Ranking

    • 2018 FanDuel WFFC Finalist

    @Pats7914 said...

    Correct. The only interpretation the IRS has sent out is a dated, non-binding private letter which suggests the sites calculate income incorrectly as we should not be able to deduct the costs of losing entries. This would obviously have catastrophic implications for non-professional players.

    This is all somewhat of a gray area, although the typical way we report has not triggered numerous audits yet. Some people do report this as gambling income, FWIW, and I have seen at least one CPA publication that suggests this method is potentially kosher.

    DFS taxes still very much a gray area.

    Right, which is my point. Baffling to me how others think this is a black/white issue when it’s been repeatedly stated as a gray area.

  • blue

    @DFSAccounting said...

    The filing deadline is January 31st. I would expect the 1099s to be issued mid to late February, if there is not an extension to file.

    Does DK send you a 1099 in the mail or do you have to go to the document center on their website? Thanks.

  • SkateFiend

    @TheDataDetective said...

    No. The formula is this…

    net profit = winnings – entry fees + bonuses

    …not this, which is how you’re interpreting it:

    net profit = winnings – (entry fees + bonuses)

    Bonuses are equivalent to winnings.

    I don’t understand how bonuses can be counted as winning when they have no cash value.

    So if I accumulated crowns worth 50 bucks, they’re automatically added onto the winnings, even if I use all of them to enter contests by the end of the year and failed to cash in all of them?

  • DickyBigtop

    @DFSAccounting said...

    Hello Drew,

    @sotnohc is correct in his statement. Sounds like you play DFS as a hobby. Unfortunately TCJA repealed all hobby losses and deductions. The only way to offset your income with losses is to report your dfs activity as a business, most likely in your situation on the schedule C.

    If your “friend” is a tax professional you trust, why isn’t he/she preparing your tax return? You should use them instead of doing it yourself on turbo tax.

    Bam!

  • drewcrawford03

    • 2019 FanDuel FantaSea Finalist

    • 312

      RG Overall Ranking

    • 2018 FanDuel WFFC Finalist

    @DickyBigtop said...

    Bam!

    He’s wrong. Also never said the (several) sources I have spoken with are “friends”. Bam that fella.

  • TheDataDetective

    • Blogger of the Month

    @SkateFiend said...

    I don’t understand how bonuses can be counted as winning when they have no cash value.

    So if I accumulated crowns worth 50 bucks, they’re automatically added onto the winnings, even if I use all of them to enter contests by the end of the year and failed to cash in all of them?

    I agree 100%. The same is true of free bets for the Sportsbook apps…I don’t see how DK / FD can justify treating a $5 free bet as $5 of winnings. If anything, some fraction (e.g. 50%) of these types of non-guaranteed bonuses should count toward 1099 totals.

    @DFSAccounting any idea how they plan to do this?

  • jbfones

    • 874

      RG Overall Ranking

    Doc center for sure. They may mail also – I can’t remember on that one.

  • Shaptown88

    • 429

      RG Overall Ranking

    • Ranked #8

      RG Tiered Ranking

    So let me get this straight if i won $1,000 on DK and lost $300 on FD then my taxable amount would be still be $1,000 because the IRS counts this as a hobby and you cant deduct losses, or am I able to offset the losses from one site to another? And can subscriptions to rotogrinders be deducted from winnings or is that only if you file as a business? Thank you.

  • DickyBigtop

    @drewcrawford03 said...

    He’s wrong. Also never said the (several) sources I have spoken with are “friends”. Bam that fella.

    Then why you on here still asking questions?

    Why are you being a cheapo?

    Why are you not going with a CPA and having them do your taxes and absolving you of liabilities on filing?

    These are the real questions.

  • drewcrawford03

    • 2019 FanDuel FantaSea Finalist

    • 312

      RG Overall Ranking

    • 2018 FanDuel WFFC Finalist

    @DickyBigtop said...

    Then why you on here still asking questions?

    Why are you being a cheapo?

    Why are you not going with a CPA and having them do your taxes and absolving you of liabilities on filing?

    These are the real questions.

    I’ve moved on, you should too.

  • DFSAccounting

    @blue said...

    Does DK send you a 1099 in the mail or do you have to go to the document center on their website? Thanks.

    Should be in your account when you login

  • DFSAccounting

    @TheDataDetective said...

    I agree 100%. The same is true of free bets for the Sportsbook apps…I don’t see how DK / FD can justify treating a $5 free bet as $5 of winnings. If anything, some fraction (e.g. 50%) of these types of non-guaranteed bonuses should count toward 1099 totals.

    @DFSAccounting any idea how they plan to do this?

    We will reach out to them for further clarification; however, last we heard is that the free bet/crown or bonus they give is taxable when used (i.e. for the free bet or crown) or when received (i.e. for the bonus)

  • DFSAccounting

    @Shaptown88 said...

    So let me get this straight if i won $1,000 on DK and lost $300 on FD then my taxable amount would be still be $1,000 because the IRS counts this as a hobby and you cant deduct losses, or am I able to offset the losses from one site to another? And can subscriptions to rotogrinders be deducted from winnings or is that only if you file as a business? Thank you.

    Correct. No offsetting or deducting expenses for hobby. If the DFS venture is considered a business, yes; you can deduct losses and expenses.

  • TheDataDetective

    • Blogger of the Month

    @DFSAccounting said...

    We will reach out to them for further clarification; however, last we heard is that the free bet/crown or bonus they give is taxable when used (i.e. for the free bet or crown) or when received (i.e. for the bonus)

    Right, but what if you use a free bet but lose the bet (i.e. it nets a $0 return)? It seems that free bets should only be taxed if they result in a profit. The same is true of DK crowns or FDP. I would think that only bonuses paid in site credit should be taxed at face value.

  • SkateFiend

    @TheDataDetective said...

    Right, but what if you use a free bet but lose the bet (i.e. it nets a $0 return)? It seems that free bets should only be taxed if they result in a profit. The same is true of DK crowns or FDP. I would think that only bonuses paid in site credit should be taxed at face value.

    I asked DK in their “what would you like to know” thread about how crowns are taxed, and they suggested that I should take the question to a DFS tax expert.

    If I finished just below 600 dollars in profit but amassed crowns by finishing their iron man challenges, I would owe taxes? That’s a sweet deal for the government.

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