Congratulations, you won money at daily fantasy sports. Now it may be time to pay Uncle Sam.
If you are one of the many DFS players won money last year, you may have already received or will be receiving a 1099-MISC form your favorite daily fantasy sports sites. Daily fantasy play winnings are also subject to taxes just like any other income, so make sure you are including your DFS winnings on your tax returns.
Today we will go over some of the more common questions that players have about their daily fantasy sports earnings and the tax implications. We’re not tax professionals here at Daily Fantasy Sports Codes, but we can inform you of some of the things to think about as you prepare your taxes and consult with your tax advisor.
Frequent Asked Questions on Daily Fantasy Taxes
How are Winnings Calculated for Daily Fantasy Taxes?
The most accepted method of calculating your daily fantasy sports winnings for the year is to use the following formula: Prize winnings + bonuses earned – entry fee amounts.
What if I didn’t keep good records during the year?
If you didn’t keep good records during the year, an easy way to estimate your winnings is to consider your deposits and withdrawals during the year with your balances at the beginning and end of the year: 2015 end of year balance + withdrawals – (deposits during the year – 2015 beginning year balance).
Under what circumstances will I receive a 1099-MISC form?
You will receive a 1099-MISC form at each site where you have earned more than $600 in net winnings during the calendar year. 1099s are usually sent out before January 31st. Highly active players may also receive a 1099-K form if transaction totals were over $20,000 and the number of transactions were over 200. This will not apply to the vast majority most players.
What is a 1099 form?
A 1099 form is a document that states the income you have earned from a particular institution during a given tax year. They are typically issued by banks, investment brokers and businesses to individuals who have received income during the year. 1099 forms are also reported to the IRS.
What is a W9 form?
DFS sites send players W9 forms under certain circumstances. Receiving or filling out a form does not mean you will owe taxes. It is simply a form requesting basic information from players in the event they have DFS winnings during the year.
Do I need to report my daily fantasy income if I won less than $600?
Yes, if you have earned more than $1 in daily fantasy sports winnings during the year, legally that income will need to be reported, regardless of whether or not you earned over $600.
Where do I report dfs income on my 1040 form?
Daily fantasy income in generally reported on line 21 (“Other Income”) of the 1040 individual income tax return form.
Can I report my loses?
Because losses on individual contests are accounted for when a site issues you a 1099, loses will not be applicable. However, if you win at one site while losing at another, you may be able to deduct your losses if you itemize your deductions. Those using the standard deduction will not be able to.
If you are a professional player, you may be able to report the income on the Schedule C form (Profit or Loss From Business). A benefit of using Schedule C is that you will be able to report net loses for a DFS site and deduct other expenses related to your daily fantasy sports work including items such as computers, office equipment, daily fantasy sports tools and services. Consulting a tax advisor is strongly recommended if you think you might qualify to use Schedule C.
Can I use a software program like TurboTax to handle my DFS income?
If you are a typical non-professional player, tax software programs like TurboTax are a great solution. Just enter the 1099 information when prompted. Professional players are likely best served by first contacting a tax advisor.
How much will I owe?
This question is difficult to answer since this will depend on a variety of factors including, but not limited to, the amount of other income you received, deductions, exemptions, how you are treating daily fantasy income (regular income vs schedule C) and other factors. If you are familiar with all of these factors on your income, you can make ballpark assumptions by looking at this 2015 federal tax rates.
What happens if I don’t report my daily fantasy income?
If you don’t report the income from your 1099-MISC tax form, the IRS will likely send you a notice that their documentation does not match your tax return. In the case of daily fantasy sports winnings less than $600, the IRS will not be notified. You are still legally required to report the income, however. The IRS does not look too fondly upon U.S. citizens who avoid taxes.
Do I owe state taxes on daily fantasy sports winnings?
If your state is one of those that have a state income tax, yes, that income is likely subject to state tax as well. Make sure you report the income on your state tax forms.