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  • DFSAccounting

    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 Rotogrinders 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, we can provide unparalleled tax and consulting services for casual players and seasoned DFS Pros alike, and we also offer free tax consultation for your DFS activities over at dfsaccounting.com

    This is our 4th year working with Rotogrinders and we are proud that so many of the RG staff and members use our annual tax services! We hope for another successful year helping the RG community again this tax season, and 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.

  • phantom1584

    Paypal/1099k question. I used paypal to fund my DK account multiple times in the year (over 200 transactions, and over $10k total), however any winnings were pulled out via direct bank deposit. Would this trigger a 1099k from paypal? Via the report I ran on paypal, my total gross is negative. This has all been quite a learning experience for me, mostly that I shouldn’t transfer nearly as often.

  • jdubadubs

    Will tonights NBA slate, assuming it settles after midnight, apply to 2020 or 2021 net income?

  • Baller93

    I have the same question. Does anyone know? Looking to play some sizeable dollars on FanDuel tonight, and want to make sure I understand the tax implications.

  • biffrenylds

    What evidence is required to demonstrate my DFS activity is a business rather than a hobby?

  • jwitte007

    I was not profitable until October of this year, but then ended up in significant profit. Do I need to pay estimated taxes by January 15 or can I wait to pay when I file?

  • DFSAccounting

    @phantom1584 said...

    Paypal/1099k question. I used paypal to fund my DK account multiple times in the year (over 200 transactions, and over $10k total), however any winnings were pulled out via direct bank deposit. Would this trigger a 1099k from paypal? Via the report I ran on paypal, my total gross is negative. This has all been quite a learning experience for me, mostly that I shouldn’t transfer nearly as often.

    The 1099-K from PayPal (if you do receive one) is an informational only form to the IRS.

  • DFSAccounting

    @jdubadubs said...

    Will tonights NBA slate, assuming it settles after midnight, apply to 2020 or 2021 net income?

    Most likely it will be reported in 2021 based on DK/FD CSV files we have seen.

  • DFSAccounting

    @jwitte007 said...

    I was not profitable until October of this year, but then ended up in significant profit. Do I need to pay estimated taxes by January 15 or can I wait to pay when I file?

    This depends on your overall income, prior year tax liability, current year tax liability & the amount of tax you have paid in prior to 1/15/21. To be safe and not get hit with underpayment penalties, we’d recommend making an estimated payment (if you think you will owe) prior to 1/15/21

  • billythekidcowboysheat

    When should i expect my fanudel tax form? I took down a gpp january 2020 and have yet to receive one.

  • rangers9624

    I am confused as to how DK sportsbook/casino reports winnings on individual bets for tax purposes in the transaction history/statement. It appears that they don’t net out the stake from an individual bet’s winnings. For example, say I play 1 hand of blackjack with a wager of $1000, and I end up pushing. DK appears to report this as 1000$ of bet winnings. I understand that you are not able to net gross winnings with losses, but I didn’t realize (and am still skeptical of) that you are not able to subtract the wager from any given payout on an individual bet. So, is this one bet considered 0$ of winnings or 1000$ of winnings and 1000$ of losses?

  • DFSAccounting

    @billythekidcowboysheat said...

    When should i expect my fanudel tax form? I took down a gpp january 2020 and have yet to receive one.

    Should be by end of Jan; however, FD/DK have gotten extensions in prior years.

  • DFSAccounting

    @rangers9624 said...

    I am confused as to how DK sportsbook/casino reports winnings on individual bets for tax purposes in the transaction history/statement. It appears that they don’t net out the stake from an individual bet’s winnings. For example, say I play 1 hand of blackjack with a wager of $1000, and I end up pushing. DK appears to report this as 1000$ of bet winnings. I understand that you are not able to net gross winnings with losses, but I didn’t realize (and am still skeptical of) that you are not able to subtract the wager from any given payout on an individual bet. So, is this one bet considered 0$ of winnings or 1000$ of winnings and 1000$ of losses?

    It is our understanding that in your example, there would be no winnings (i.e. income).

  • thedkexperience

    In general when I do my taxes I go to each gambling site and asks for the data file of my profits and losses. While I wish they were all wins sometimes you’ll take a loss on a website for the year.

    So to my question …

    If a website says that you did not make enough to worry about the taxes is this a real thing? I had this happen for a small amount last year on one website.

    Basically is there a number that you can win or lose where it literally doesn’t matter for tax purposes.

  • DFSAccounting

    @thedkexperience said...

    In general when I do my taxes I go to each gambling site and asks for the data file of my profits and losses. While I wish they were all wins sometimes you’ll take a loss on a website for the year.

    So to my question …

    If a website says that you did not make enough to worry about the taxes is this a real thing? I had this happen for a small amount last year on one website.

    Basically is there a number that you can win or lose where it literally doesn’t matter for tax purposes.

    by the letter of the law, you have to report your world wide income, no matter how small it is. But, there are income limit requirements for businesses to file certain tax forms with the IRS. When the website says you did not make enough money to worry about, what they are saying is that they are not reporting your small winnings to the IRS. It’s up to you to report that income or don’t worry about it.

  • Deebob87

    Fairly new to FanDuel and I have a question about taxes. I made bets May through July 2020. My account page reads:

    Winnings $2490
    Bets $2614
    Net total —$124

    Do I pay taxes on the $2490? Or does the negative total wipe out the obligation for the year? Would hate to pay taxes on $2490 when I’m actually down $124 for the year but obviously will do whatever is required.

    When I go to the tax information in my account it reads: You don’t have any tax events to show for this year (2020)

  • DFSAccounting

    @Deebob87 said...

    Fairly new to FanDuel and I have a question about taxes. I made bets May through July 2020. My account page reads:

    Winnings $2490
    Bets $2614
    Net total —$124

    Do I pay taxes on the $2490? Or does the negative total wipe out the obligation for the year? Would hate to pay taxes on $2490 when I’m actually down $124 for the year but obviously will do whatever is required.

    When I go to the tax information in my account it reads: You don’t have any tax events to show for this year (2020)

    Correct, your expenses (loss) are greater than your income (winnings). You do not need to pay tax on the $2,490

  • Deebob87

    Great , thank you! There is so much conflicting information out there about this.

  • scooter186

    Hi, is there any given threshold or IRS requirement(s) you need to meet to classify yourself as a business vs. a hobbyist?

    Also, for your clients who do file as a business, do they incorporate (and is it required to do so)?

  • DFSAccounting

    @scooter186 said...

    Hi, is there any given threshold or IRS requirement(s) you need to meet to classify yourself as a business vs. a hobbyist?

    Also, for your clients who do file as a business, do they incorporate (and is it required to do so)?

    The IRS uses a 9 criteria test to determine hobby vs. business (https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses). We’ve simplified the IRS code into our questionnaire to help determine hobby vs. business (https://dfsaccounting.com/tax-treatment-determination/).

    We recommend all of our business clients to setup a separate legal entity and file separate tax forms (normally an 1120S). Putting a DFS activity that qualifies as a business on a personal tax return (Schedule C) is possible; however, the Sch. C is one of the most highly audited schedules by the IRS (if not #1).

  • nerdytenor

    • 36

      RG Overall Ranking

    • Ranked #27

      RG Tiered Ranking

    What are the tax implications for playing DFS out-of-state?

    For instance, if I live in state A, play dfs in state B while on vacation and win, do I have to file in state B? (Assume both state A and state B are legal DFS states).

    Thank you!

  • Barnes

    Can someone clear this up. If you play sportsbook betting , like betting on the winner of a game, how do taxes work?

    I’ve heard you declare gross winnings, not just net winnings, for tax purposes. I’ve also heard you only declare your net winnings and pay tax on that. Which is it? For example if you’ve won $500 one time , but then lose $400 later so you’re up net $100 at the end of the year , how do you report? Do you report your gross winnings ($500) , then deduct losses ($400), and pay taxes on $100? Or simply report the $100 net, and pay taxes on that? Thanks!

  • DFSAccounting

    @Barnes said...

    Can someone clear this up. If you play sportsbook betting , like betting on the winner of a game, how do taxes work?

    I’ve heard you declare gross winnings, not just net winnings, for tax purposes. I’ve also heard you only declare your net winnings and pay tax on that. Which is it? For example if you’ve won $500 one time , but then lose $400 later so you’re up net $100 at the end of the year , how do you report? Do you report your gross winnings ($500) , then deduct losses ($400), and pay taxes on $100? Or simply report the $100 net, and pay taxes on that? Thanks!

    You are correct…: You declare your gross gambling winnings and the write off your gross losses as an itemized deduction on your Schedule A. The catch is what is reported as gross winnings. For sites like DK and FD, they are treating the whole year as a “session.” So they take into account your gross winnings and net your gross losses throughout the year to arrive at your annual “gross winnings.”

    Let’s say you had net “gross” winnings in DK but net “gross” losses in FD during 2020. You then report your net “gross” winnings from DK and report your net “Gross” losses from FD as an itemized deduction on your schedule A.

    In your example, if the $500 winnings and $400 losses happened on one site, you would report $100 net.
    If they happened on difference sites, you would report $500 as winnings and then $400 in gambling losses on your schedule A.

  • Barnes

    Thank you so much for the reply. So if you bet on only one site like fanduel for the entire year, on taxes simply report your net gain (assuming you have a net gain). Even if you go up, and down, and back up, you only report the net winnings. If I won $500, lost $600, then won $400, I would report $300 (my net profit) as winnings on my taxes. There is no separate reporting of winning $500, deducting a $600 loss, and winning $400 for tax purposes? Just the profit, $300, in one fanduel “session” which is the calendar year. Did I understand that correctly? Thanks, this is a big help!

  • IOWActuary

    @DFSAccounting said...

    You are correct…: You declare your gross gambling winnings and the write off your gross losses as an itemized deduction on your Schedule A. The catch is what is reported as gross winnings. For sites like DK and FD, they are treating the whole year as a “session.” So they take into account your gross winnings and net your gross losses throughout the year to arrive at your annual “gross winnings.”

    Let’s say you had net “gross” winnings in DK but net “gross” losses in FD during 2020. You then report your net “gross” winnings from DK and report your net “Gross” losses from FD as an itemized deduction on your schedule A.

    In your example, if the $500 winnings and $400 losses happened on one site, you would report $100 net.
    If they happened on difference sites, you would report $500 as winnings and then $400 in gambling losses on your schedule A.

    Ha, I was just thinking of using this “session” qualifier. Is there precedence for doing this? I’ve also been confused on how this will hit my taxes. I have $8,000 in net winnings across 5 websites, all showing a positive net win for the year.

    You’re saying I can report my 1099 amounts of net winnings rather than having to break apart my gross winnings onto my 1040 and netting out my losses on schedule A? Paying tax on 1099s would save me about $1,000 by not having to itemize.

    Does the same go for the DK/FD sportsbooks?

    Thanks for the responses!

  • alphadelt

    Very glad I found this. So, here’s my breakdown (roughly) between FD/DK:

    Total Wagered: $100,000
    Total Won: $110,000

    So, obviously this is a net $10,000 gain, and I believe enough to lose our standard deduction. However, am I to be taxed (federal and state (PA)) on $110,000 or just the $10,000. I’ve seen some conflicting reports across the board, and am happy that there is someone qualified answering questions.

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