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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.

  • Deebob87

    What if you don’t have any net winnings at the end of the year (session)? For example , you were up $800 at one point but then down $1000 by the end of the year (session). Net loss of $200. Do you still report anything? Or does the negative amount wipe out your obligation to report?

  • ryan7962

    Has draftkings reported 1099 miscs yet?

  • djs

    @DFSAccounting said...

    We just received some additional and unfavorable IRS guidance related to DFS players (hobby or business) and gamblers.

    1099-K Forms (i.e. PayPal) should be reported on an individuals tax return (Other Income). The expenses related to that income (i.e entry fees) should be reported as an itemized deduction (Sch. A).

    Also, reporting gambling winnings is done through what the IRS refers to as a “session.” There is guidance that allows for the Taxpayer to set what he or she defines as a “session.” However, this is subject to approval by the IRS

    I received a 1099K from Paypal showing roughly $47,000 in payments received (all from gambling sites). If I go through all of the transactions throughout the year I deposited roughly $52,000 in my accounts, so I’m down $5,000 for the year. Do my 52k in deposits wipe out my 47k in payments? This is such a mess and I fear that I’m going to get hit with a big tax bill. No more Paypal for me.

  • DFSAccounting

    @Deebob87 said...

    What if you don’t have any net winnings at the end of the year (session)? For example , you were up $800 at one point but then down $1000 by the end of the year (session). Net loss of $200. Do you still report anything? Or does the negative amount wipe out your obligation to report?

    It depends on the sessions you choose. If you decide to have shorter session periods, and in one period you won $800 and the next session you lost $1,000, then you have to report your gambling winnings. You would report $800 in gambling winnings and $800 in gambling losses. You can’t report more losses than your wins.

    But if your your session is for a year, then the negative amount wipes out your obligation to report.

  • DFSAccounting

    @djs said...

    I received a 1099K from Paypal showing roughly $47,000 in payments received (all from gambling sites). If I go through all of the transactions throughout the year I deposited roughly $52,000 in my accounts, so I’m down $5,000 for the year. Do my 52k in deposits wipe out my 47k in payments? This is such a mess and I fear that I’m going to get hit with a big tax bill. No more Paypal for me.

    yeah using paypal to transfer funds have proven to be a mess and we are sorry you are in this position!

    In your situation, based on the limited information we have, you would have to report the $47k as gambling winnings and then $47k as gambling losses on your tax return. This is further complicated based on your session period. The easiest and most efficient way is to report a year long session, but you have to determine that based on the volume you play and the records you keep.

  • DFSAccounting

    @ryan7962 said...

    Has draftkings reported 1099 miscs yet?

    the filing deadline has passed, so be on the look out

  • SkateFiend

    @DFSAccounting said...

    the filing deadline has passed, so be on the look out

    But can they still request extensions? The tax info on my dk document center is still empty and I haven’t received 1099 yet.

  • samdaman777

    I found out that Draftkings is gonna be sending me a form W-2G for my pool win last year. My question is can I file deductions against that form to net it out to even and then get my withheld money they sent to the IRS back.

  • Deebob87

    It’s all very very confusing and vague with so many mixed messages out there. Thank you for clearing some of this up. I took a look at Fanduel’s website and it says they will send you a tax form if you have net winnings of $600 or more over the “course of the year.” I guess they consider the year one session. Not sure about other sites or if somone plays a bunch of sites. I only used Fanduel. Thanks again, very much appreciated.

  • lightninglarry

    • Ranked #52

      RG Tiered Ranking

    Received my 1099 from Fanduel. My question is can you write off or minimize the hit from sub services purchased toward said winnings IE a RG sub package? Thanks in advance.

  • Tapindouble

    For someone very new to this (and never had played enough years prior to generate tax implications on DK)

    What does the checkbox mean “I am subject to a mandatory IRS withholding of 24%”? How do we know if we are subject to the mandatory withholding? I think MANDATORY is what’s holding me up. If they’re offering to take the taxes out then fine, but why Would I be subject to that as a mandate? And what are the ramifications if I don’t check the box? Or more so what are the ramifications if I DO check the box?

    Just very confused by the wording. Usually I’ve seen places ask “would you like us to withhold taxes…” is that basically what this is, but worded strangely?

    Do I check the box or not?

  • DFSAccounting

    @samdaman777 said...

    I found out that Draftkings is gonna be sending me a form W-2G for my pool win last year. My question is can I file deductions against that form to net it out to even and then get my withheld money they sent to the IRS back.

    You’ll need to report the full W-2G on the tax return. Any losses to offset the income go on your Sch. A as a Misc itemized deduction.

  • DFSAccounting

    @lightninglarry said...

    Received my 1099 from Fanduel. My question is can you write off or minimize the hit from sub services purchased toward said winnings IE a RG sub package? Thanks in advance.

    Normally, no. The only way you can offset expenses against the income is if your DFS activity is considered/treated for tax purposes as a business.

  • DFSAccounting

    @Tapindouble said...

    For someone very new to this (and never had played enough years prior to generate tax implications on DK)

    What does the checkbox mean “I am subject to a mandatory IRS withholding of 24%”? How do we know if we are subject to the mandatory withholding? I think MANDATORY is what’s holding me up. If they’re offering to take the taxes out then fine, but why Would I be subject to that as a mandate? And what are the ramifications if I don’t check the box? Or more so what are the ramifications if I DO check the box?

    Just very confused by the wording. Usually I’ve seen places ask “would you like us to withhold taxes…” is that basically what this is, but worded strangely?

    Do I check the box or not?

    Checking the box will have DK withhold income tax from any winnings. There are two reasons you would be subject to backup withholding. Please see link below.

    https://www.irs.gov/businesses/small-businesses-self-employed/backup-withholding

  • Beatmycan

    @DFSAccounting said...

    Checking the box will have DK withhold income tax from any winnings. There are two reasons you would be subject to backup withholding. Please see link below.

    https://www.irs.gov/businesses/small-businesses-self-employed/backup-withholding

    So is it safer just to check the box? And the DK will deal with it later (I saw someone mention they ended up just refunding their DK account to make up over-withholding)

    Looking at the link, it basically says that a person is subject to backup withholding if they fail to provide correct identification or if they under report interest/dividends.

    I don’t see how any of that could be applicable to Draftkings earnings. The only one that seems to maybe be applicable is Gambling Winnings? Is that why it’s there?

    I just honestly don’t see a reason to check the box. I’m assuming there’s taxes on it obviously (24% seems high) but I don’t know much about taxes on these types of earnings and have no clue what to do in this situation.

    It almost feels safer to just check the box and let DK make it up to me later to potentially avoid some penalty by not checking the box?

    I just have no clue how it would apply to me. And if it applies to me doesn’t it apply to everyone? Meaning why is it even an option?

  • jwitte007

    Would you ever need to file as a business and pay self employment tax? My taxes aren’t complicated and have always taken the standard deduction. I also only play on one site so no need to itemize for DFS purposes.

    If I have a track record of being consistently profitable in DFS each year, can I still take the standard deduction and simply report as other income? Or will they determine SE tax needs to be paid at some point?

    Thanks!

  • DFSAccounting

    @samdaman777 said...

    I found out that Draftkings is gonna be sending me a form W-2G for my pool win last year. My question is can I file deductions against that form to net it out to even and then get my withheld money they sent to the IRS back.

    Yes, you can report your gross losses up to your winnings. The amount you withheld will be reported on the W-2g and you will include that on your tax return. Your losses will be reported as an itemized deduction on your Schedule A.

    As for getting your withheld money refunded to you, that depends on your whole tax situation.

  • DFSAccounting

    @jwitte007 said...

    Would you ever need to file as a business and pay self employment tax? My taxes aren’t complicated and have always taken the standard deduction. I also only play on one site so no need to itemize for DFS purposes.

    If I have a track record of being consistently profitable in DFS each year, can I still take the standard deduction and simply report as other income? Or will they determine SE tax needs to be paid at some point?

    Thanks!

    Yes you can still take the standard deduction and report it as other income. There is no “need” to file as a business, but if you playing style qualifies you as a business or full-time and it is advantageous for tax purposes, then you may want to report it as such.

    For your situation, report it as other income ( you will NOT incur SE tax).

  • DFSAccounting

    we’d be happy to discuss with you in more detail. reach out to us infodfsaccounting.com and we will walk you through this.

  • DFSAccounting

    @SkateFiend said...

    But can they still request extensions? The tax info on my dk document center is still empty and I haven’t received 1099 yet.

    the deadline to request an extension to provide recipients a 1099-misc was the same day as the filing deadline, Feb 1st. We suggest you request your annual transaction history and figure out your win/loss for the year. This will provide some insight as to what you can except as taxable income. It may be for your situation, you will not get one.

  • Anton0824

    Hi there, when you say “You can’t report more losses than your wins”, can you provide an example of this please? I play on both fanduel and draftkings so I want to file my net profit for the session (2020 year); what forms do I need to use/submit for this? Also, for years 2018 and 2019, I was at a net loss between the two sites, which I did not report; can I go back and amend my tax returns for the previous years and add that so I can get a bigger return?

    I know it’s quite a bit of questions but thank you so much for the time and effort explaining! It’s very much appreciated!!

  • dbrown0147

    I received my 1099 from DK.

    I also was profitable on DK sports book.

    Is my understanding correct that I only include the net income from daily fantasy winnings but for gambling winnings I include gross winnings and can deduct losses?

  • nohitter48

    Data Grinder

    • 2020 NASCAR Live Finalist

    When entering the 1099-MISC into TurboTax, there are 9 options for uncommon situations that apply for income entered into Box 3, one of which is “This was prize winnings.” Does this apply and/or is it allowed for DFS purposes or am I selecting “None of these apply”?

  • ryan7962

    Just so I know for future reference the best way to cash out is a bank transfer or check in the mail so that way I only get a 1099 MISC? I’ve made the mistake of cashing out thru paypal the past 3 years and will have to do some amendments. I figure with checks I will only have to report a 1099 MISC if I’m up.

  • DFSAccounting

    @Anton0824 said...

    Hi there, when you say “You can’t report more losses than your wins”, can you provide an example of this please? I play on both fanduel and draftkings so I want to file my net profit for the session (2020 year); what forms do I need to use/submit for this? Also, for years 2018 and 2019, I was at a net loss between the two sites, which I did not report; can I go back and amend my tax returns for the previous years and add that so I can get a bigger return?

    I know it’s quite a bit of questions but thank you so much for the time and effort explaining! It’s very much appreciated!!

    “I play on both fanduel and draftkings so I want to file my net profit for the session (2020 year); what forms do I need to use/submit for this?”
    If you’re DFS activity qualifies as a business, you would use Form Schedule C.

    “can I go back and amend my tax returns for the previous years and add that so I can get a bigger return?”
    If you’re DFS activity qualifies as a business, you could go back and amended 2018/2019 to claim that loss. If the activity does not qualify as a business, then no.

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