Get your taxes done using TurboTax

People have to be very careful about the churn rate with sports betting.  Suppose you win $100,000 but you lose $100,000 so you break even. That will be reported on your tax return as $100,000 of income. That will add to your adjusted gross income and may change your eligibility for making deductible IRA contributions or receiving other tax deductions and credits.  Then, you can take a tax deduction on schedule a for your losses. But if you don’t already itemize, you will not get the full benefit of the deduction and some of your winnings will end up being taxable even though you theoretically broke even.  For example, suppose you are married and have $10,000 of itemized deduction so you would normally use the standard deduction of $25,000. If you have $10,000 of winnings and $10,000 of losses so you break even, the $10,000 is taxable income, and the $10,000 of losses is an itemized deduction, but since your itemized deduction is less than the standard, you can’t actually deduct the losses so you will pay full income tax on the $10,000 of winnings. 

You don’t have to worry about the 1099K from PayPal for withdrawing part of your winnings, you have to worry about the W-2 G from the sports betting company that will report your winnings for the year.