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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.

  • tmp13

    Yeah, for me, I have to really question whether it’s even worth it to play on FFPC again this year. I may not have been clear before. The 1099 they sent doesn’t even deduct the entry fees from the contests I cashed in, let alone the ones I didn’t. So, for example, in one league w/ a $250 entry, I finished in third, my “prize” was $250, and then that $250 is included in the lump sum of gross winnings I now have to pay taxes on! So I can’t seem to make the math work in my head to where it’s worth it, unless I enter one contest a year and win it.

    The 1099 says 2k. The 2k was won on contest that had entry fees totaling $577. So, really, I think I should be paying taxes on a net sum profit of $1423, but if I enter 1423 on my tax return, that will automatically get flagged, right? (And really, I shouldn’t even have to pay it on 1423 either, because that just pretends like the other 1500 or so in entry fees for losing contests doesn’t even exist)

  • jamesrrrr

    Dictator

    try thatlink.

    https://rotogrinders.com/threads/rotogrinders-official-2019-2020-dfs-accounting-tax-q-a-thread-3273344?page=3#reply-3291771

  • wafic

    • 579

      RG Overall Ranking

    • Ranked #55

      RG Tiered Ranking

    @tmp13 said...

    Yeah, for me, I have to really question whether it’s even worth it to play on FFPC again this year. I may not have been clear before. The 1099 they sent doesn’t even deduct the entry fees from the contests I cashed in, let alone the ones I didn’t. So, for example, in one league w/ a $250 entry, I finished in third, my “prize” was $250, and then that $250 is included in the lump sum of gross winnings I now have to pay taxes on! So I can’t seem to make the math work in my head to where it’s worth it, unless I enter one contest a year and win it.

    The 1099 says 2k. The 2k was won on contest that had entry fees totaling $577. So, really, I think I should be paying taxes on a net sum profit of $1423, but if I enter 1423 on my tax return, that will automatically get flagged, right? (And really, I shouldn’t even have to pay it on 1423 either, because that just pretends like the other 1500 or so in entry fees for losing contests doesn’t even exist)

    You should absolutely pay on your net winnings and not on the gross that you received. Retain your records in case you ever get audited. This happened to me years ago on a now defunct site called snapdraft. IRS inquired, I provided all my supporting documentation, and they sided with me.

    Any 1099 you receive at gross is really wrong. The companies are inflating what they made out in payments probably to reduce their own tax liability. Just because someone reports a 1099 incorrectly to me, I wouldn’t let it 1) stress me out or 2) change my habits and no longer play DFS. You’re likely to not get audited, you have like a 1 in 180 chance and if you do retain your supporting documention; it’ll probably be via mail inquiry anyway. Don’t understand why people get so nervous about the IRS.

  • 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.

    they will do both. If they didn’t extend their filing deadline then 1099-misc should be arriving soon. If they extend it will be closer to early-mid March

  • DFSAccounting

    @TheDataDetective said...

    You can’t, which is infuriating and makes the accuracy of their tax reporting even more dubious. On both FD and DK, certain types of bonuses are not included in the transaction histories that are downloadable.

    It would take about 10 lines of code for their developers to make this net profit available via the website and seems like an obvious feature to add.

    you can get your net winnings/losses by requesting via email. I’ve seen them respond with a summary and/or attach an excel with all your activity within the requested period.

  • DFSAccounting

    @dictator_teddy said...

    Can someone please confirm with me if I am understanding this correctly, I am not sure what is going on.

    Scenario A: Let’s say I enter a $100 contest with cash, and double up and win $200. Is FD/DK calculating my net winnings as $100 or $200 in this scenario?

    Scenario B: Let’s say I enter a $100 Satellite that won a $200 ticket. I use the $200 ticket and I lose. I think the net winnings should be a ($100) loss. How does FD/DK calculate the net winnings here?

    Scenario C: Let’s say I enter a $100 Satellite that won a $200 ticket. I use the $200 and I win $500. I think the net winnings should be $400. How does FD/DK calculate the net winnings here?

    scenario A: your net winnings $100. $200 – your entry fee $100 scenario B: your net winnings is $200. $200 - your entry fee $100. The IRS looks at that $200 satellite fee as income.
    scenario c: your net winnings is $600. $200 satellite ticket + $500 off satellite ticket – entry fee @ $100.

  • DFSAccounting

    @wafic said...

    You should absolutely pay on your net winnings and not on the gross that you received. Retain your records in case you ever get audited. This happened to me years ago on a now defunct site called snapdraft. IRS inquired, I provided all my supporting documentation, and they sided with me.

    Any 1099 you receive at gross is really wrong. The companies are inflating what they made out in payments probably to reduce their own tax liability. Just because someone reports a 1099 incorrectly to me, I wouldn’t let it 1) stress me out or 2) change my habits and no longer play DFS. You’re likely to not get audited, you have like a 1 in 180 chance and if you do retain your supporting documention; it’ll probably be via mail inquiry anyway. Don’t understand why people get so nervous about the IRS.

    You are correct all around. 1099-misc you receive SHOULD reflect the net result of 2019. Like we said before, the IRS views DFS as a game of skill thus categorizing your dfs winnings as prizes. For dfs income aka prize winnings, the IRS allows you deduct your entry fee to arrive at your taxable income. This is what FD and Dk should be doing. We suggest all dfs players whether professional or part time request their annual history and compare it to your 1099-misc. Having this data is also great support for the VERY slim chance the IRS inquires.

  • TheFFOracle

    @DFSAccounting said...

    scenario A: your net winnings $100. $200 – your entry fee $100 scenario B: your net winnings is $200. $200 - your entry fee $100. The IRS looks at that $200 satellite fee as income.
    scenario c: your net winnings is $600. $200 satellite ticket + $500 off satellite ticket – entry fee @ $100.

    This is actually incorrect. In scenario C, FanDuel considers the $200 ticket + $500 winnings as income and the $100 and $200 as entry fees for $400 in net winnings.

  • DFSAccounting

    @tmp13 said...

    Yeah, for me, I have to really question whether it’s even worth it to play on FFPC again this year. I may not have been clear before. The 1099 they sent doesn’t even deduct the entry fees from the contests I cashed in, let alone the ones I didn’t. So, for example, in one league w/ a $250 entry, I finished in third, my “prize” was $250, and then that $250 is included in the lump sum of gross winnings I now have to pay taxes on! So I can’t seem to make the math work in my head to where it’s worth it, unless I enter one contest a year and win it.

    The 1099 says 2k. The 2k was won on contest that had entry fees totaling $577. So, really, I think I should be paying taxes on a net sum profit of $1423, but if I enter 1423 on my tax return, that will automatically get flagged, right? (And really, I shouldn’t even have to pay it on 1423 either, because that just pretends like the other 1500 or so in entry fees for losing contests doesn’t even exist)

    yes you are correct. the 1099-misc should have shown $1,423 aka net your entry fees. Unfortunately, the IRS will receive a 1099-misc with the $2k and will be looking for that amount on your taxes. You should call FFPC and request for an amended 1099-misc.

  • drewcrawford03

    • 2019 FanDuel FantaSea Finalist

    • 331

      RG Overall Ranking

    • 2018 FanDuel WFFC Finalist

    @DFSAccounting said...

    You are correct all around. 1099-misc you receive SHOULD reflect the net result of 2019. Like we said before, the IRS views DFS as a game of skill thus categorizing your dfs winnings as prizes. For dfs income aka prize winnings, the IRS allows you deduct your entry fee to arrive at your taxable income. This is what FD and Dk should be doing. We suggest all dfs players whether professional or part time request their annual history and compare it to your 1099-misc. Having this data is also great support for the VERY slim chance the IRS inquires.

    Going to chime in each time this idea is posted, for the sake of anyone reading in a similar position:

    I’ve now talked with double-digit CPAs/professionals and huge-volume DFS players, and every single one has laughed at the notion that the IRS is black and white here. There is an absolutely firm gray area with DFS, and itemizing losses against winnings across sites is not only doable but completely passable according to all of these people.

  • TheDataDetective

    • Blogger of the Month

    @DFSAccounting said...

    you can get your net winnings/losses by requesting via email. I’ve seen them respond with a summary and/or attach an excel with all your activity within the requested period.

    Right, but what they send you doesn’t include bonuses such as DK crowns (for DFS) or free bets & DK dollar bonuses (for Sportsbook). Therefore, it’s basically useless.

  • eruthruff

    DK says that they requested a waiver from the IRS to delay posting their 1099’s until February 28. I believe that’s the date they posted last year, so they probably plan to use every last minute. My question…why does it take them so long? I know for a fact they have computers.

  • sgogineni

    • 109

      RG Overall Ranking

    • Ranked #71

      RG Tiered Ranking

    Is this the case when you directly enter contests with your crowns? It just does not sound right to me if the crowns are taxed even if they are used to enter a contest and you do not win anything in that contest

  • TheDataDetective

    • Blogger of the Month

    @eruthruff said...

    DK says that they requested a waiver from the IRS to delay posting their 1099’s until February 28. I believe that’s the date they posted last year, so they probably plan to use every last minute. My question…why does it take them so long? I know for a fact they have computers.

    Their software developers are clearly dysfunctional. Like I said, assuming they store user transaction data in a properly modeled repository (database) it would take about 10 lines of code to add the ability to extract a log of transactions for a given date range and export it as a CSV file. Since they don’t support this via the website, I emailed their support team to ask their Dev team to do this for me…it has been 3 weeks without a response despite my following up. Get on the ball, DK!

  • sgogineni

    • 109

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    • Ranked #71

      RG Tiered Ranking

    @TheFFOracle said...

    This is actually incorrect. In scenario C, FanDuel considers the $200 ticket + $500 winnings as income and the $100 and $200 as entry fees for $400 in net winnings.

    This kind of calculation would make more sense. However, are you sure this is how FD/DK calculate it?

  • sgogineni

    • 109

      RG Overall Ranking

    • Ranked #71

      RG Tiered Ranking

    @DFSAccounting said...

    scenario A: your net winnings $100. $200 – your entry fee $100 scenario B: your net winnings is $200. $200 - your entry fee $100. The IRS looks at that $200 satellite fee as income.
    scenario c: your net winnings is $600. $200 satellite ticket + $500 off satellite ticket – entry fee @ $100.

    Is this the case when you directly enter contests with your crowns? It just does not sound right to me if the crowns are taxed even if they are used to enter a contest and you do not win anything in that contest

  • TheFFOracle

    @sgogineni said...

    This kind of calculation would make more sense. However, are you sure this is how FD/DK calculate it?

    I’m 100% positive this is how FD calculates it since they sent me a spreadsheet with their math. 4 columns: entry fees, ticket entry fees, winnings, ticket winnings. They combine winnings and ticket winnings and subtract entry fees and ticket entry fees to calculate your Net Earnings. They then add any bonus money and that total is what gets reported on the 1099-MISC.

  • Pats7914

    • 74

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    • Ranked #98

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    @drewcrawford03 said...

    Going to chime in each time this idea is posted, for the sake of anyone reading in a similar position:

    I’ve now talked with double-digit CPAs/professionals and huge-volume DFS players, and every single one has laughed at the notion that the IRS is black and white here. There is an absolutely firm gray area with DFS, and itemizing losses against winnings across sites is not only doable but completely passable according to all of these people.

    Yes, and logic would suggest that is the case if we can deduct losing entries from winnings on the same site. That said, it is going to be messy to actually try and file that way post tax act changes, definitely increases the chances of your return getting flagged.

    At the same time, it is also possible the IRS decides to take the position that we can’t deduct losing entries at all and owe taxes on (winnings-cost of winning entries) (Note FPPC already follows an even stricter standard by reporting gross winnings over $600 and not deducting entry fees)

    It is also unclear that DFS can’t fall under gambling income/losses. Sites obviously don’t report it that way, but the CPA’s posting here are incorrect when they say the IRS has taken a position on this.

    Huge volume DFS players can be a little bit different in that, if they are filing as a business, deducting losses across sites is much more clear that for the average player not filing as a business.

    Taxes and reporting are kind of a mess, for both online gambling and DFS. Hopefully Congress addresses the ambiguity at some point and we dont end up with nonsensical but dire results (i.e., huge back tax bills to account for losing entries being non deductible)

  • drewcrawford03

    • 2019 FanDuel FantaSea Finalist

    • 331

      RG Overall Ranking

    • 2018 FanDuel WFFC Finalist

    @Pats7914 said...

    Yes, and logic would suggest that is the case if we can deduct losing entries from winnings on the same site. That said, it is going to be messy to actually try and file that way post tax act changes, definitely increases the chances of your return getting flagged.

    At the same time, it is also possible the IRS decides to take the position that we can’t deduct losing entries at all and owe taxes on (winnings-cost of winning entries) (Note FPPC already follows an even stricter standard by reporting gross winnings over $600 and not deducting entry fees)

    It is also unclear that DFS can’t fall under gambling income/losses. Sites obviously don’t report it that way, but the CPA’s posting here are incorrect when they say the IRS has taken a position on this.

    Huge volume DFS players can be a little bit different in that, if they are filing as a business, deducting losses across sites is much more clear that for the average player not filing as a business.

    Taxes and reporting are kind of a mess, for both online gambling and DFS. Hopefully Congress addresses the ambiguity at some point and we dont end up with nonsensical but dire results (i.e., huge back tax bills to account for losing entries being non deductible)

    100%, well said.

  • js5734

    so i received a 1099 misc from fanduel but have equal / more amount of losses on DK for fantasy sports with an email from DK showing my net losses for 2019 – do i really have to pay taxes on the 1099 from Fanduel even though i actually lost money in 2019? between the two site i was a clear loser – i mean there is no way i should have to pay taxes on just the site that i won. Can someone give me some guidance?

  • WhiteyJones8

    @Pats7914 said...

    Yes, and logic would suggest that is the case if we can deduct losing entries from winnings on the same site. That said, it is going to be messy to actually try and file that way post tax act changes, definitely increases the chances of your return getting flagged.

    At the same time, it is also possible the IRS decides to take the position that we can’t deduct losing entries at all and owe taxes on (winnings-cost of winning entries) (Note FPPC already follows an even stricter standard by reporting gross winnings over $600 and not deducting entry fees)

    It is also unclear that DFS can’t fall under gambling income/losses. Sites obviously don’t report it that way, but the CPA’s posting here are incorrect when they say the IRS has taken a position on this.

    Huge volume DFS players can be a little bit different in that, if they are filing as a business, deducting losses across sites is much more clear that for the average player not filing as a business.

    Taxes and reporting are kind of a mess, for both online gambling and DFS. Hopefully Congress addresses the ambiguity at some point and we dont end up with nonsensical but dire results (i.e., huge back tax bills to account for losing entries being non deductible)

    Taxes are not always as common sense as people think. I have a friend that hit several jackpots at the local casino. She received a W2G for each one.

    They totaled about $13,000 in winnings. She claims to have lost it all back. So she’s allowed to deduct gambling losses if she itemizes deductions.

    The funny thing is the standard deduction is already $12,200 for a single person so she received barely any benefit for losing back all her winnings. If she were head of household or married she would actually be able to deduct $0 of her losses since they were less than standard deduction. Shit happens.

    Essentially it looks something (With made up numbers) like this:

    Her Income: $40,000
    Standard Deduction $12,200
    Taxable without w2gs: $27,800

    Same income: $40,000
    Gambling winnings: $13,000
    Gambling losses: $13,000
    Taxable income: $40,000

  • WhiteyJones8

    @js5734 said...

    so i received a 1099 misc from fanduel but have equal / more amount of losses on DK for fantasy sports with an email from DK showing my net losses for 2019 – do i really have to pay taxes on the 1099 from Fanduel even though i actually lost money in 2019? between the two site i was a clear loser – i mean there is no way i should have to pay taxes on just the site that i won. Can someone give me some guidance?

    I’ll let the expert answer you here but it is possible you do have to pay taxes on the income.

    Your options:
    You really wouldn’t see much benefit to going the gambling losses route (see my post above) because you would have to itemize deductions.

    If you file as a for profit hobby you can’t deduct losses (see posts on the previous page).

    The only other option is you file your DFS play as a business and deduct the losses making it show a $0 profit. That might be a little aggressive. Is it really a business if it doesn’t ever make money?

  • js5734

    i am a homeowner and with 2 kids – so i most definitely itemize – not really looking for a benefit – just not looking to pay taxes on phantom winnings when in reality i lost money throughout the year

  • WhiteyJones8

    @js5734 said...

    i am a homeowner and with 2 kids – so i most definitely itemize – not really looking for a benefit – just not looking to pay taxes on phantom winnings when in reality i lost money throughout the year

    If you are married the standard deduction is $24,500. If not, with your kids if you are head of household it is $18,500.

    Awfully hard to get there with just mortgage interest. I was mainly just pointing out these new tax laws kind of screw gamblers over.

    The ideal situation is that whatever form of gambling you do nets your losses for you before reporting them. If they don’t (like a W2G from a slot win) you don’t have a lot of options to write off that win assuming you lose it all back.

  • js5734

    @WhiteyJones8 said...

    If you are married the standard deduction is $24,500. If not, with your kids if you are head of household it is $18,500.

    Awfully hard to get there with just mortgage interest. I was mainly just pointing out these new tax laws kind of screw gamblers over.

    The ideal situation is that whatever form of gambling you do nets your losses for you before reporting them. If they don’t (like a W2G from a slot win) you don’t have a lot of options to write off that win assuming you lose it all back.

    i have the deductions including property taxes and mortgage interest to cover the standard

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