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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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    • Last Updated 5 years ago
  • PJGuin23

    DFS Tax Guru

    @cpleone said...

    Just a quick clarification on the net winnings thing. I was talking to a friend who does tax stuff on the side, he was saying that you have to do an itemized deduction to be taxed on your net winnings. If you do a standard deduction (which I do, no family, don’t own a home, etc.), then I’ll be taxed on my gross winnings. Does this sound correct?

    As of now, it depends on the site. Some send 1099s for pure Gross Winnings. Most industry standard do not.

  • mmark5

    So I clink on the link “Daily Fantasy Taxes” and it goes to “Draw is empty”.. Just do a PM?

  • zshoom

    • 2016 Single Entry Series Finalist

    Probably a long shot here, but do you happen to know how DFS profit is taxed for Canadians?

    I can’t think of any reason why I would be on the hook here in Canada (Fanduel is an American company and gambling profit is not taxed here anyway), but will I need to submit anything to the IRS?

    I have seen conflicting information on this – some say I don’t need to do anything, some say I need to pay tax in the US then apply for some type of rebate, some say I need to pay tax the same as an American would…really confused as to what to do. Any information/direction would be hugely appreciated. Thanks for reading.

  • atfrost

    • Blogger of the Month

    @cpleone said...

    Just a quick clarification on the net winnings thing. I was talking to a friend who does tax stuff on the side, he was saying that you have to do an itemized deduction to be taxed on your net winnings. If you do a standard deduction (which I do, no family, don’t own a home, etc.), then I’ll be taxed on my gross winnings. Does this sound correct?

    Your friend is treating your 1099 as a 1099G as opposed to a 1099-MISC. the 1099-MISC goes on Line 21 of your 1040 and is taxed as ordinary income. FD and DK naturally send you your net winnings in the form of a 1099. So if you win 20K and lose 30K, you’ll receive nothing; but, if you win 20K and only lose 5K, you’ll receive a 1099-MISC for 15K. This 15K will go on Line 21 and you will still be eligible for your standard deduction.

    DISCLAIMER: I am speaking strictly from how those two sites have handled 1099s in the past. I have always received 1099-MISC and never a 1099-G. Those sites sending a 1099-G would seriously hurt their argument that this isn’t Gambling.

  • PJGuin23

    DFS Tax Guru

    @atfrost said...

    Your friend is treating your 1099 as a 1099G as opposed to a 1099-MISC. the 1099-MISC goes on Line 21 of your 1040 and is taxed as ordinary income. FD and DK naturally send you your net winnings in the form of a 1099. So if you win 20K and lose 30K, you’ll receive nothing; but, if you win 20K and only lose 5K, you’ll receive a 1099-MISC for 15K. This 15K will go on Line 21 and you will still be eligible for your standard deduction.

    DISCLAIMER: I am speaking strictly from how those two sites have handled 1099s in the past. I have always received 1099-MISC and never a 1099-G. Those sites sending a 1099-G would seriously hurt their argument that this isn’t Gambling.

    It would be a W-2G for Gambling not a 1099G. A 1099G is governmental payments.

    But your head’s in the right spot.

  • PJGuin23

    DFS Tax Guru

    @mmark5 said...

    So I clink on the link “Daily Fantasy Taxes” and it goes to “Draw is empty”.. Just do a PM?

    My website is www.dailyfantasytaxes.com. You could also PM me as well.

  • PJGuin23

    DFS Tax Guru

    @zshoom said...

    Probably a long shot here, but do you happen to know how DFS profit is taxed for Canadians?

    I can’t think of any reason why I would be on the hook here in Canada (Fanduel is an American company and gambling profit is not taxed here anyway), but will I need to submit anything to the IRS?

    I have seen conflicting information on this – some say I don’t need to do anything, some say I need to pay tax in the US then apply for some type of rebate, some say I need to pay tax the same as an American would…really confused as to what to do. Any information/direction would be hugely appreciated. Thanks for reading.

    If the sites withhold US income then you need a registered agent to get your money back. I am not one, but will find you a link for one. As for Canadian taxes my understanding is hobby, no, professional it’s taxed. But I would speak to a Canadian CA for those purposes

  • atfrost

    • Blogger of the Month

    @PJGuin23 said...

    It would be a W-2G for Gambling not a 1099G. A 1099G is governmental payments.

    But your head’s in the right spot.

    Yes that is correct, my bad. It’s busy season now so i see so many forms per day that I cant keep them all straight!

  • zshoom

    • 2016 Single Entry Series Finalist

    @PJGuin23 said...

    If the sites withhold US income then you need a registered agent to get your money back. I am not one, but will find you a link for one. As for Canadian taxes my understanding is hobby, no, professional it’s taxed. But I would speak to a Canadian CA for those purposes

    Thanks for the reply. Everyone I’ve talked says the same thing re: Canadian taxes, it’s the US I’m worried about. If they withhold money I will definitely look into a registered agent. Hopefully fanduel sends out some tax documents soon so I can get this done with. Thanks again.

  • PJGuin23

    DFS Tax Guru

    @zshoom said...

    Thanks for the reply. Everyone I’ve talked says the same thing re: Canadian taxes, it’s the US I’m worried about. If they withhold money I will definitely look into a registered agent. Hopefully fanduel sends out some tax documents soon so I can get this done with. Thanks again.

    Sure.

  • PJGuin23

    DFS Tax Guru

    @atfrost said...

    Yes that is correct, my bad. It’s busy season now so i see so many forms per day that I cant keep them all straight!

    I hear ya! Gets even more interesting at the local taxation levels!

  • myb821

    @myb821 said...

    Pjguin if winning on one site and losing on the other, if not itemizing deductions does it mean the only way to subtract losses is by going the schedule c route which means paying SE?

    bump

  • PJGuin23

    DFS Tax Guru

    @myb821 said...

    bump

    That would be correct.

  • PJGuin23

    DFS Tax Guru

    @myb821 said...

    bump

    Also make sure to keep track of ANY DFS related expenses. This includes subscriptions, computers, equipment, cable/Internet bills, possibly cell phone, others.

  • myb821

    @PJGuin23 said...

    Also make sure to keep track of ANY DFS related expenses. This includes subscriptions, computers, equipment, cable/Internet bills, possibly cell phone, others.

    Thanks I dont know how it would work claiming my internet bill as its not only used for DFS same with my personal computer. In another thread someone asked about filing a schedule C if they also have a full time job and you said you only can under certain circumstances. Can someone not own a small business and have a full time job? I really did not understand your response there.

  • awilson45

    This might be a dumb question, but when DK or FD sends you a 1099 does it say what your winnings were? Also just a general tax related Q, but when your employer sends you a 1099 I’m assuming it states your earnings, correct?

    This year is the first year I’ve decided to take initiative and do my own taxes. My dad has always done them for me, but I’m 22 and a senior in college, it’s time that I grow up and start doing my own taxes. I wasn’t a profitable player in 2015, but am in 2016 and will definitely have to claim winnings. Is the 1099-MISC form relatively simple?

  • PJGuin23

    DFS Tax Guru

    @myb821 said...

    Thanks I dont know how it would work claiming my internet bill as its not only used for DFS same with my personal computer. In another thread someone asked about filing a schedule C if they also have a full time job and you said you only can under certain circumstances. Can someone not own a small business and have a full time job? I really did not understand your response there.

    It would be a portion of expenses. Again subjective.

    You can have a small business and a FT job. For DFS purposes I’d have to look at if it applies towards you. Hope that makes sense.

  • PJGuin23

    DFS Tax Guru

    @awilson45 said...

    This might be a dumb question, but when DK or FD sends you a 1099 does it say what your winnings were? Also just a general tax related Q, but when your employer sends you a 1099 I’m assuming it states your earnings, correct?

    This year is the first year I’ve decided to take initiative and do my own taxes. My dad has always done them for me, but I’m 22 and a senior in college, it’s time that I grow up and start doing my own taxes. I wasn’t a profitable player in 2015, but am in 2016 and will definitely have to claim winnings. Is the 1099-MISC form relatively simple?

    As of my understanding the 1099 reports earnings.

    As for the 1099 form and whether your filing is “simple” depends on how much you made, what you spent, how often you played and so much more.

  • rubendelg9

    I have a loss this year as its my first year playing DFS. I’d like to carry that NOL to future years to offset future earnings. What would be my best option to achieve this?

  • PJGuin23

    DFS Tax Guru

    @rubendelg9 said...

    I have a loss this year as its my first year playing DFS. I’d like to carry that NOL to future years to offset future earnings. What would be my best option to achieve this?

    Do you have other income (wages)?

  • JustGetMetoSunday

    Uh oh, PJ! I just discovered this thread. I already filed b/c I really needed the return right away. I figured it would be okay, as long as I amended my return prior to 4/15/16. However, after reading this thread, I’m pretty concerned.

    Assuming I amend my return as soon as I receive my 1099, how screwed am I?

    Just to give you some background, I had net winnings of about 11 k on one site, and net losses of about 3 k on another.

    FYI, I’m also a Pennsylvania resident and I appreciate all your feedback on the proposed Bill and other legal issues surrounding DFS in our state.

    Hopefully, I will have the opportunity to do this the right way next year!

    Thanks in advance!

  • PJGuin23

    DFS Tax Guru

    @JustGetMetoSunday said...

    Uh oh, PJ! I just discovered this thread. I already filed b/c I really needed the return right away. I figured it would be okay, as long as I amended my return prior to 4/15/16. However, after reading this thread, I’m pretty concerned.

    Assuming I amend my return as soon as I receive my 1099, how screwed am I?

    Just to give you some background, I had net winnings of about 11 k on one site, and net losses of about 3 k on another.

    FYI, I’m also a Pennsylvania resident and I appreciate all your feedback on the proposed Bill and other legal issues surrounding DFS in our state.

    Hopefully, I will have the opportunity to do this the right way next year!

    Thanks in advance!

    If interested in tax services for your amended return, by all means PM me. Where in PA?

  • rubendelg9

    Yes, I have a FT job and play DFS every night.

  • Stewburtx8

    • 2012 FanDuel WFBC Finalist

    @rubendelg9 said...

    I have a loss this year as its my first year playing DFS. I’d like to carry that NOL to future years to offset future earnings. What would be my best option to achieve this?

    Everyone’s situation is different and you should talk to a tax professional (PJGuin is a good one) but I would likely advise against doing this. Showing a NOL in your first year of DFS play will likely be a audit red flag. I think you would have some trouble arguing that your DFS play is truly a business. You can play every night and still have it be a hobby, especially if you ended the year with a loss.

    Also remember that what you do today does sort of set a precedent going forward. Once you file your DFS play as a business, you will need to likely do so going forward. The NOL may help reduce your taxable income next year, but you may still have a higher tax liability due to SE tax on your “business” than if you just filed your income as “Other Income” on Line 21 of the 1040. Just something to think about. But as mentioned earlier, everyone’s situation is different and you should talk to a tax professional.

  • PJGuin23

    DFS Tax Guru

    @Stewburtx8 said...

    Everyone’s situation is different and you should talk to a tax professional (PJGuin is a good one) but I would likely advise against doing this. Showing a NOL in your first year of DFS play will likely be a audit red flag. I think you would have some trouble arguing that your DFS play is truly a business. You can play every night and still have it be a hobby, especially if you ended the year with a loss.

    Also remember that what you do today does sort of set a precedent going forward. Once you file your DFS play as a business, you will need to likely do so going forward. The NOL may help reduce your taxable income next year, but you may still have a higher tax liability due to SE tax on your “business” than if you just filed your income as “Other Income” on Line 21 of the 1040. Just something to think about. But as mentioned earlier, everyone’s situation is different and you should talk to a tax professional.

    I generally concur with this. Likely red flag. It may technically be OK, but the IRS can prove hobby very easily and DFS is on shakier ground. Horse racing is more established and more likely to get away with it. Even then NOLs are rare because it only offsets other active income. If taking losses, I’d HIGHLY recommend a business plan and your operations be almost NO DOUBT a business. That of course would be expensive and overbearing for DFS purposes. Worth it more for horse racing operations against active income without an NOL but even then…

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