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  • PJGuin23

    DFS Tax Guru

    As many or some of you may know, I have a tax practice specializing in Daily Fantasy Sports participants. My site is Daily Fantasy Taxes, and I can make your DFS filing simple & easy if you are looking for help. I have a partnership with RotoGrinders to offer DFS Tax Services to the RG Community. I am a CPA and have DFS clients along with other industries such as Horse Racing (DFS similarities on Hobby-Business), Construction and Services. I met some of you in New York last November and had a blast! I was told all tax related posts would be kept to this thread. Alternatively you can read my Tax article here My rates are reasonable and I have e-filing. We can work over the phone or by e-mail, whichever you prefer.

    Note: I have a fax and a Secure Web Portal to exchange files if needed.

    Last piece of advice, wait to file your return if you have FanDuel or DraftKings income.

    So without further adieu, let’s get the DFS Tax General Q&A going……..ask away!

    PJGuin23’s Disclaimer: I am a Certified Public Accountant licensed by the Commonwealth of Pennsylvania. Any information provided is for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant, CPA, lawyer or other competent financial professional. Presentation of information I provide on RotoGrinders does not constitute an accountant-client relationship. Such relationship can be established by engaging in professional services privately with PJGuin23. RotoGrinders readers are advised not to act upon information I provide without seeking the service of a professional accountant well versed in your particular situation.

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  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @PJGuin23 said...

    I just became aware of the bankruptcy. Not sure of any 1099 filing but a reminder income is income.

    I agree but the sticky situation is what about the folks that have “income” but it is essentially in limbo or trapped on the site and they are unable to access it and do not know if it will ever be recovered?

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  • hendog

    • 839

      RG Overall Ranking

    • 2017 DraftKings FFWC Finalist

    @qatman said...

    Were you able to download it? I keep getting the message “The document you requested was unable to be retrieved.” I assume they’ll send out paper copies also – maybe they just haven’t finalized everything yet (hence the lack of email).

    Yes I was able to download it. I would not assume that you will receive a paper copy, you might want to ask DK support.

  • PJGuin23

    DFS Tax Guru

    @Stewburtx8 said...

    I agree but the sticky situation is what about the folks that have “income” but it is essentially in limbo or trapped on the site and they are unable to access it and do not know if it will ever be recovered?

    I’d always go with the doctrine of constructive receipt and if it’s a loss, take the loss in the year incurred. I’d have to look at case law on this one.

  • yountingly

    • 461

      RG Overall Ranking

    • Ranked #43

      RG Tiered Ranking

    I got an email and a document/form in the mail. Guess they wanted to make sure I got it. I don’t want to know what is inside so I’m not opening until I need to when we start to work on our taxes. Lol.

  • detroittigers44

    So here is my situation, I just got a 1099 from DK for $1,000… All of the other sites I basically broke even.. Lost a bit on Draft/Aces, made a little on Fanduel etc… I entered the $1000 on the 1099 as income and now am at the business expense section… How do you classify internet and Directv subscriptions on TurboTax? Is this the best way to do it?

    I had NBA League Pass and MLB Extra Innings and want to deduct a portion of my internet, that’s all I want to do.

  • PJGuin23

    DFS Tax Guru

    @detroittigers44 said...

    So here is my situation, I just got a 1099 from DK for $1,000… All of the other sites I basically broke even.. Lost a bit on Draft/Aces, made a little on Fanduel etc… I entered the $1000 on the 1099 as income and now am at the business expense section… How do you classify internet and Directv subscriptions on TurboTax? Is this the best way to do it?

    I had NBA League Pass and MLB Extra Innings and want to deduct a portion of my internet, that’s all I want to do.

    Does not look very likely you will benefit from those expenses based on the net winnings. As a hobby, you’re subject to a 2% AGI floor. As a business Schedule C, then maybe but not likely able to with $1000

  • kcroyalty29

    So I just filed today and have two questions.

    I ended up winning around $10,000 this year but made $70,000 from my career/job.

    At first, before my CPA understood what DFS was, he just put it under my Schedule C so I was going to have to pay the Social Security taxes as if it was contracted work.

    He then asked, “Wait… do you have to pay money to enter these things? And you win and lose money?” and then quickly told me it should be considered a hobby and that I could just put it on Line 21 of the 1040 as “Other Income” and that would suffice. He seemed certain.

    My two questions.

    1. Would you agree?

    2. For those who HAVE done the route I did – simply just list it as OTHER on line 21 – has anyone ever actually been called out/questioned/audited by the IRS over this?

    Thanks for your answers!

  • PJGuin23

    DFS Tax Guru

    @kcroyalty29 said...

    So I just filed today and have two questions.

    I ended up winning around $10,000 this year but made $70,000 from my career/job.

    At first, before my CPA understood what DFS was, he just put it under my Schedule C so I was going to have to pay the Social Security taxes as if it was contracted work.

    He then asked, “Wait… do you have to pay money to enter these things? And you win and lose money?” and then quickly told me it should be considered a hobby and that I could just put it on Line 21 of the 1040 as “Other Income” and that would suffice. He seemed certain.

    My two questions.

    1. Would you agree?

    2. For those who HAVE done the route I did – simply just list it as OTHER on line 21 – has anyone ever actually been called out/questioned/audited by the IRS over this?

    Thanks for your answers!

    1. It’s gray. If it was a $10,000 “hit” then I’d lean Hobby. If it was a “grind” I’d lean business. It requires effort for the most part. Case law makes arguments either way.

    2. People have been. One case it was Line 21, called in for audit but made argument for Hobby then it was all good.

  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @kcroyalty29 said...

    So I just filed today and have two questions.

    I ended up winning around $10,000 this year but made $70,000 from my career/job.

    At first, before my CPA understood what DFS was, he just put it under my Schedule C so I was going to have to pay the Social Security taxes as if it was contracted work.

    He then asked, “Wait… do you have to pay money to enter these things? And you win and lose money?” and then quickly told me it should be considered a hobby and that I could just put it on Line 21 of the 1040 as “Other Income” and that would suffice. He seemed certain.

    My two questions.

    1. Would you agree?

    2. For those who HAVE done the route I did – simply just list it as OTHER on line 21 – has anyone ever actually been called out/questioned/audited by the IRS over this?

    Thanks for your answers!

    Yes, I’ve been audited for DFS winnings and sent a bill for self-employment taxes owed (about $2k). I sent a letter arguing that it was a hobby and not a business. After many months of waiting I finally got a letter basically showing that they agreed and my balance was zero.

  • BDholla89

    • 235

      RG Overall Ranking

    • Ranked #34

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    • x2

      2017 DraftKings FHWC Finalist

    PJGuin23 I sent you a PM whenever you get a chance.

  • kaneb

    When I ran the DFS Analyzer it shows a gain for 2016 that is about $350 less than what the 1099 I received from Draftkings is showing. I understand any contests I entered by using tickets obtained from FPP would be counted in that difference but I had nowhere near $350 of contests entered with FPP tickets. Does anyone else have this much of a discrepancy? Could it have something to do with STEPS contests and how they are accounted for?

  • kcroyalty29

    Final question from me. I just gave my Line 21 and hobby/business question above.

    With my situation out there, my final question is what are the realistic odds that the IRS has a problem with the Line 21 “Hobby” classification and reaches out? Would they only catch this if I were to be audited? I guess I’m asking, above there are two examples of this happening, but are there many more where it doesn’t? Thanks!

  • bigmel911

    WFFC 2014 Finalist

    • 249

      RG Overall Ranking

    • 2014 FanDuel WFFC Finalist

    @kaneb said...

    When I ran the DFS Analyzer it shows a gain for 2016 that is about $350 less than what the 1099 I received from Draftkings is showing. I understand any contests I entered by using tickets obtained from FPP would be counted in that difference but I had nowhere near $350 of contests entered with FPP tickets. Does anyone else have this much of a discrepancy? Could it have something to do with STEPS contests and how they are accounted for?

    Yes, I have a huge discrepancy too that I can’t figure out. My DK 1099 shows I made $4518 more than DFS Analyzer shows. Not happy having to try and figure this out.

  • moped_jones

    If this is a “business” do you get to deduct your business expenses (aka “losses”). I would argue that the losses were necessary b/c they have led to me becoming a better player over time. Do also get to deduct NBA League pass and my internet? My phone? Sometimes I use my phone for DFS.

    Right now it’s just a hobby since I have not won big.

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  • btwice80

    @kcroyalty29 said...

    Final question from me. I just gave my Line 21 and hobby/business question above.

    With my situation out there, my final question is what are the realistic odds that the IRS has a problem with the Line 21 “Hobby” classification and reaches out? Would they only catch this if I were to be audited? I guess I’m asking, above there are two examples of this happening, but are there many more where it doesn’t? Thanks!

    The past two years I’ve listed DFS winnings as Other Income on line 21 (while just taking the standard deduction, no itemized) and have not been audited or questioned at all.

  • kcroyalty29

    Thank you bTwice! Anyone else?

  • PJGuin23

    DFS Tax Guru

    @moped_jones said...

    If this is a “business” do you get to deduct your business expenses (aka “losses”). I would argue that the losses were necessary b/c they have led to me becoming a better player over time. Do also get to deduct NBA League pass and my internet? My phone? Sometimes I use my phone for DFS.

    Right now it’s just a hobby since I have not won big.

    Depends on the business usage. If so then yes.

  • BloodGame

    @btwice80 said...

    The past two years I’ve listed DFS winnings as Other Income on line 21 (while just taking the standard deduction, no itemized) and have not been audited or questioned at all.

    Same here

  • zpa1989

    so your DFS winnings that are taxable for this past year are from jan 1 2016 to jan 1 2017? how does that work? My CSV on FD is pretty deep it goes all the way back to the beginning i can’t even tell which one to click on to start at this past fiscal year. still haven’t received my 1099 yet from FD just trying to see if i made anything this past year on the dfs analyzer

    edit: nvm, you can change the start date in the DFS analyzer. but my question is when does the fiscal year start? jan 1st of 2016?

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  • Straface23

    Am I able to deduct certain expenses against my DFS income if the income is entered on Line 21 as Other Income? This is my first year as a profitable player but plan on growing my exposure to DFS. It is not my main source of income but it is certainly a grind as I literally research and play every single day. I’m just not really sure how to report my 2016 winnings. Will I owe more or less taxes if its reported as a Hobby vs a schedule C business? If it’s schedule C, how will I know if I am opening myself up to being hit with some kind of self employment tax by the IRS?

    Any insight on the topic would be very helpful. Thanks in advance.

  • BloodGame

    Yes – Jan 1st-Dec 31st each year.

  • PJGuin23

    DFS Tax Guru

    @Straface23 said...

    Am I able to deduct certain expenses against my DFS income if the income is entered on Line 21 as Other Income? This is my first year as a profitable player but plan on growing my exposure to DFS. It is not my main source of income but it is certainly a grind as I literally research and play every single day. I’m just not really sure how to report my 2016 winnings. Will I owe more or less taxes if its reported as a Hobby vs a schedule C business? If it’s schedule C, how will I know if I am opening myself up to being hit with some kind of self employment tax by the IRS?

    Any insight on the topic would be very helpful. Thanks in advance.

    I would have to look at everything such as winnings/losses from sites, expenses, etc. to determine the best course of action. Yes there’s self employment with a Schedule C but expenses are easier to take.

  • bhdevault

    • Lead Moderator

    • Blogger of the Month

    Locking this thread. Please use this thread for any tax questions/concerns: https://rotogrinders.com/threads/official-2016-dfs-tax-thread-1725474

    Thanks!

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