It is that time of year when US residents have to start thinking about taxes. That also means taxes on daily fantasy sports winnings. If you made a profit at daily fantasy sports last year, that income will need to be reported.
Are you one of the players who have been asked to fill out a W9 form? Does this mean you need to pony up and pay Uncle Sam?
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Does a W9 Form Mean You Owe Taxes?
Don’t panic – DraftKings, or any other daily fantasy site for that matter, simply requests this information from all players so it is on file if they need to issue you a 1099 form. Chances are if you haven’t received this request yet, you will at a later date.
Yes, they may request this info after you make a withdrawal request and even if you did not generate income during the year. Fortunately, this is standard information being collected and does not necessary mean you will be issued a 1099 a form.
Daily Fantasy W9 Forms Explained
W9 forms are a common form generally sent out to independent contractors, freelancers (versus employees) and many other situations where you have earned income.
When you fill out the DraftKings or FanDuel W9 form, you will be required to submit your full name or business name, tax classification (i.e. individual/sole proprietor, C Corp, S Corp etc), address, and social security number. In most cases, you list yourself as an individual.
Some are wondering if it is safe to submit your social security number to a daily fantasy sports site. The answer is almost definitely yes – daily fantasy sports sites are US companies so they should not be looked at any differently than any other business that might request you fill out a W9 or send you a 1099 form.
When You Might Owe Taxes
First of all, a disclaimer: We can only provide you with general information. Determining whether you definitively will need to pay taxes on your daily fantasy winnings is something that needs to be discussed with your tax adviser.
However, what we can tell you is that DraftKings and most DFS sites will issue you a 1099 form if you earned more than $600 in profit during the calendar year. Generally, daily fantasy sports winnings are calculated as winnings from contests + bonus earned – entry fees.
If you receive a 1099 form, you still may not owe taxes depending on your specific situation. But you are required to report the income to the IRS.
There is a common question about not receiving a 1099. If you showed a profit of $1 to $599 during a calendar year, you will probably not be issued a 1099 by DraftKings, FanDuel or any other daily fantasy sports site. However, the income will still be subjected to federal income tax and you will be required to report it on your tax form.
DraftKings W9 Email to Players
Here is the full email that some DraftKings players are sending players:
Hello, our compliance and identity verification requirements require DraftKings players to complete a W-9 form annually.
We need you to please complete this form at www.draftkings.com/w9
Unfortunately, if you do not complete the W-9 form your account may be restricted, and you will not be permitted to participate in DraftKings contests until your W-9 has been completed.
We appreciate your attention to this and thank you in advance for your cooperation.
If you have any questions or concerns about information being requested, send an email to the support department of the DFS site. DraftKings can be reached at email@example.com.