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  • DFSAccounting

    Hello Grinders!

    As the Official DFS Tax Partners of RotoGrinders , we here at DFS Accounting Services, LLC would like to take a moment to introduce ourselves. We are a consulting and advisory firm with 30+ years of collective accounting experience and are also a registered and licensed CPA firm with the AICPA and IL CPA Society. Our focus is on providing unparalleled tax and consulting services to the casual and professional Daily Fantasy Sports (DFS) Player. We also offer “free tax consultation on your DFS activities.”: dfsaccounting.com

    We aim to provide the RG Community with top-notch service for a 2nd year in a row!

    DFS is an exciting and competitive industry that offers big payouts and we understand the allure of playing DFS because we play it ourselves! With big winnings comes big tax responsibilities, and that’s where we come in!

    Now with that said, let’s get the DFS Tax Q&A going… please ask away!

    DFSAS Disclaimer: We 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 us on RotoGrinders or any other media forum does not constitute an accountant-client relationship. At your request, we can send an engagement letter, which outlines our responsibilities provided under our engagements.

  • kiteman

    This might seem like a very simple question, but one I didn’t see a direct answer to. If I had a big winning and report it properly as hobby income, is my total income (let’s say employer salary income and draftkings income are my only income) still taxed at the appropriate tax level at that total income bracket as set forth by the US government? Or does the hobby income in particular stand separated from said tax bracket and gets taxes at some type of different rate altogether?

    In other words if my total income puts me in the 24% tax bracket, I will end up paying 24% on my total income including DK, or is fantasy income taxed at 30% or whatever no matter my total income?

  • DFSAccounting

    @mattnuz07 said...

    Hello, I recently had the good fortune of winning 100k on DK. Very grateful for that but I am an absolute moron when it comes to understanding tax laws. I live in Massachusetts so Uncle Sam’s coming for his cut. Please let me know if any of the below is not accurate and provide some added clarity to the claiming losses against it?

    From my own research – I found out that the winnings combine with my normal income and put me in appropriate tax bracket – from the looks of it means I will owe 32% federal, and in 5.05% State.

    I was told by my tax guy that I could claim losses against it for Federal if I itemized (losing scratch tickets, lottery tickets, losses in Daily), but cannot in Massachusetts unless I prove it is my job which it is not. I am a bit confused by reading the below threads now regarding claiming losses against it.

    Obviously want to abide by the law but handing over $32k to Federal, and $5.1k to State when I know in all likelihood i won’t net out at +100k doesn’t seem right.

    Thanks for your time!

    IRS identifies income from DFS as a games of skill and technical ability and not luck (gambling). Gambling income has its own rules and regulations and should be separated from from DFS income, as the IRS views them differently. Because of this, we have taken the position to NOT combine DFS income/losses and gambling/losses. Your accountant may take a different position. Based on your statement, your DFS income was for fun or “hobby,” there is not much you can do. I suggest putting 35-40% aside for taxes

  • DFSAccounting

    @eperson911 said...

    Does DK actually mail the 1099 or is it just provided online?

    Both, it should be mailed to you or you can access online

  • DFSAccounting

    @kiteman said...

    This might seem like a very simple question, but one I didn’t see a direct answer to. If I had a big winning and report it properly as hobby income, is my total income (let’s say employer salary income and draftkings income are my only income) still taxed at the appropriate tax level at that total income bracket as set forth by the US government? Or does the hobby income in particular stand separated from said tax bracket and gets taxes at some type of different rate altogether?

    In other words if my total income puts me in the 24% tax bracket, I will end up paying 24% on my total income including DK, or is fantasy income taxed at 30% or whatever no matter my total income?

    It is a good question. DFS/hobby income is not separate and is taxed the same way as your W-2 income. Both incomes are included when determining what tax bracket you are in. If your total income puts you in the 24% tax bracket, that is the tax rate you will be taxed at. Now it might not be the actual physical tax rate you pay ie. effective tax rate. But that is conversation for another day. Feel free to email us, if you have further questions. info@dfsaccounting.com

  • eperson911

    @DFSAccounting said...

    Both, it should be mailed to you or you can access online

    My address on the 1099 is different than my shipping address on DK. Do you know which they ship it to?

  • MHDU2424

    • 481

      RG Overall Ranking

    • Ranked #64

      RG Tiered Ranking

    What is the minimum for qualifying your DFS play as a business?

  • Kp24

    So, if I won $100k but they send my the 1099 for additional income of $60k, since I have about $40k back, can I then itemize all my deposits to DK to show the IRS it took me probs $10k in deposits to gain this additional income?

    Would that then lower my additional income to $50k by itemizing my deposits and claiming them as losses?

    Thank you for any help or suggestions

  • Tdetroitlions

    Hello. I received my 1099-misc from DK but it said I had a positive net income. I actually lost money in 2018 on DK so I’m not sure how it is saying I had an income. Any help would be appreciated.

  • Ipt007

    So 1099 should be out now? DK still doesn’t have one online for me.

  • DFSAccounting

    @MHDU2424 said...

    What is the minimum for qualifying your DFS play as a business?

    There is technically no minimum. There are multiple criteria that determine if the DFS activity qualifies as a business.

  • DFSAccounting

    @Kp24 said...

    So, if I won $100k but they send my the 1099 for additional income of $60k, since I have about $40k back, can I then itemize all my deposits to DK to show the IRS it took me probs $10k in deposits to gain this additional income?

    Would that then lower my additional income to $50k by itemizing my deposits and claiming them as losses?

    Thank you for any help or suggestions

    If you qualify your DFS activity as a business you can deduct losses.

  • DFSAccounting

    @Ipt007 said...

    So 1099 should be out now? DK still doesn’t have one online for me.

    Yes. Our clients have received their 1099s

  • MikeMineo

    I pay quarterly estimated payments in taxes since I run my own business/self-employed. I do not list DFS as a business.

    For prize winnings of a substantial sum with DFS won this past month, am I correct in thinking that these winnings are not included in projecting these quarterly taxes? My taxes on the DFS winnings from 2019 are paid when I file my 2019 taxes in early 2020, and list it as ordinary income (as opposed to my earnings from a self-employment), correct?

    First quarter taxes for 2019 are due in about a month, so am just making sure I proceed as normal with those, while still anticipating 25-30% of my DFS winnings being taxed when I file next year.

  • DFSAccounting

    @MikeMineo said...

    I pay quarterly estimated payments in taxes since I run my own business/self-employed. I do not list DFS as a business.

    For prize winnings of a substantial sum with DFS won this past month, am I correct in thinking that these winnings are not included in projecting these quarterly taxes? My taxes on the DFS winnings from 2019 are paid when I file my 2019 taxes in early 2020, and list it as ordinary income (as opposed to my earnings from a self-employment), correct?

    First quarter taxes for 2019 are due in about a month, so am just making sure I proceed as normal with those, while still anticipating 25-30% of my DFS winnings being taxed when I file next year.

    If you report the DFS winnings as hobby income, yes. You will pay the tax due in 2020 when you file the 2019 tax return. One thing to be aware of is that if you are substantially underpaid when you file in 2020 you maybe subject to underpayment penalties.

  • DFSAccounting

    @MHDU2424 said...

    What is the minimum for qualifying your DFS play as a business?

    There is no exact minimum amount to qualify your DFS as a business. You have to look at your investment in terms of your total income and determine if that is material to you. for example, if you have a W-2 job making $40k a year and you invest $15-$20k into DFS. That is a material investment to you. Your profit motive is to re-coup your investment and additional profit. make sense?

  • Rocinanteyyz

    Quick question,

    I never withdrew from my account last year but increased my bankroll by about $6000. I never received a tax form in the mail or on the draftkings website. Is this because I never withdrew during the calendar year? If I withdraw now will that $6000 show up on my 2019 tax form?

    Thanks in advance.

  • DFSAccounting

    Getting close to the filing deadline.

    We just had a client receive a corrected 1099-MISC from DK. Please check your accounts to make sure you did not receive one.

    If you did, please reach out to us. We can help.

  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @Rocinanteyyz said...

    Quick question,

    I never withdrew from my account last year but increased my bankroll by about $6000. I never received a tax form in the mail or on the draftkings website. Is this because I never withdrew during the calendar year? If I withdraw now will that $6000 show up on my 2019 tax form?

    Thanks in advance.

    Withdrawals don’t matter. If you made $6000 net profit in 2018, you should have got a 1099-MISC from DraftKings

  • DFSAccounting

    @Stewburtx8 said...

    Withdrawals don’t matter. If you made $6000 net profit in 2018, you should have got a 1099-MISC from DraftKings

    Agreed. Sorry, we missed this question.

    We recommend checking your DK account for the 1099. We had a client receive a corrected 1099 from DK a day or so ago (just an FYI for those tracking this thread).

  • Zyriankec888

    Thx a lot. You are already really helping me in a few situations.

  • DFSAccounting

    @Zyriankec888 said...

    Thx a lot. You are already really helping me in a few situations.

    Great! Glad to hear! Thank you for the support

  • Dunzor

    One thing I will say for folks who has sizable wins and sizable losses on another site/gambling losses is that you might be able to save yourself some money by having a preparer like HR block do it and get the piece of mind insurance. I took mine there and they itemized my deductions and deducted my gambling losses from my winnings even though I know the accounting folks here said that’s not how it should work. I then paid like $40 for the insurance so that if the fed gov comes back and says they did it wrong they will pay any additional owed amount up to like 6k. I know it’s a bit of a grey area but it puts the responsibility for a mistake on someone else and saved me several thousand on what I thought I might have to pay if I tried to file myself.

  • DFSAccounting

    @Dunzor said...

    One thing I will say for folks who has sizable wins and sizable losses on another site/gambling losses is that you might be able to save yourself some money by having a preparer like HR block do it and get the piece of mind insurance. I took mine there and they itemized my deductions and deducted my gambling losses from my winnings even though I know the accounting folks here said that’s not how it should work. I then paid like $40 for the insurance so that if the fed gov comes back and says they did it wrong they will pay any additional owed amount up to like 6k. I know it’s a bit of a grey area but it puts the responsibility for a mistake on someone else and saved me several thousand on what I thought I might have to pay if I tried to file myself.

    Gambling losses up to winnings can be included on Sch. A if you itemize. DFS losses are considered a different type of activity and cannot.

    Be careful with the H&R Block “Peace of Mind” plan. Their terms and conditions are fairly strict. You are correct, they will “reimburse” you up to $6K if they prepared the return wrong. You have to pay the additional tax, penalty, interest first. Then, if it is determined they prepared the return wrong they will cut you a check back. This process could take months or even years.

    One provision in the terms and conditions of the “Peace of Mind” plan you might want to look into more is “The Plan does not apply to”
    (iv) additional taxes assessed as the result of your desire to take a position on your return that challenges current IRS or judicial tax law guidelines or interpretation. In the event you receive a refund of any assessment that Block has paid you under the Plan, you must reimburse Block for the amount of such refund;

    Technically, you took a tax position on the return that challenges current IRS tax law guidance. It is possible for them to deny any claim if the IRS and H&R Block interrupt the return as such.

  • Dunzor

    @DFSAccounting said...

    Gambling losses up to winnings can be included on Sch. A if you itemize. DFS losses are considered a different type of activity and cannot.

    Be careful with the H&R Block “Peace of Mind” plan. Their terms and conditions are fairly strict. You are correct, they will “reimburse” you up to $6K if they prepared the return wrong. You have to pay the additional tax, penalty, interest first. Then, if it is determined they prepared the return wrong they will cut you a check back. This process could take months or even years.

    One provision in the terms and conditions of the “Peace of Mind” plan you might want to look into more is “The Plan does not apply to”
    (iv) additional taxes assessed as the result of your desire to take a position on your return that challenges current IRS or judicial tax law guidelines or interpretation. In the event you receive a refund of any assessment that Block has paid you under the Plan, you must reimburse Block for the amount of such refund;

    Technically, you took a tax position on the return that challenges current IRS tax law guidance. It is possible for them to deny any claim if the IRS and H&R Block interrupt the return as such.

    Thanks for the heads up, I did tell them very clearly where all the income was from (dfs) and where the losses were (casino gambling) , and asked their recommendation on how it should be declared/deducted and they itemized and deducted the losses so if it comes back I’ll feel comfortable fighting them on it, but thank you for the info, good to know in case it happens

  • DFSAccounting

    @Dunzor said...

    Thanks for the heads up, I did tell them very clearly where all the income was from (dfs) and where the losses were (casino gambling) , and asked their recommendation on how it should be declared/deducted and they itemized and deducted the losses so if it comes back I’ll feel comfortable fighting them on it, but thank you for the info, good to know in case it happens

    No problem at all. Just to cover yourself, you might want to get that in writing from the preparer at H&R Block. We’re fairly confident that they won’t do that, but you can try. Their terms of service also have some strict rules around how long you have to notify them and the methods used to notify them. Hopefully, you don’t have to worry about the notice.

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