Paypal will issue a single 1099-K for all transactions made on your
account, co-mingling your fantasy sports funds and funds from another
business in the same account can create a record-keeping nightmare.
Paypal allows you to have more than one account and it is advisable to
keep hobby income like fantasy sports separated from any commercial
activities you may be involved in.
Currently, under Federal law, these types of winnings in addition to fantasy sports are considered games of
skill rather than gambling. Therefore, income from fantasy sports is
treated as hobby income, rather than gambling income. Hobby income is
generally reported as “Other income” on line 21 of your Form 1040. You
can also generally deduct hobby expenses (such as losses from another
fantasy sports site, sports publications used for research, TV sports
packages, and content subscriptions such as ESPN Insider). However,
expenses from hobby income fall under Miscellaneous Itemized Deductions,
which are allowed as deductions only to the extent the expenses exceed
2% of your total AGI (adjusted gross income).
You may report hobby income and expenses equal to (but not more than) the hobby income.
To
find this section in TurboTax, open your return, then go to My Account >>
Tools >> Topic Search. Type in "hobby income, loss", then click
the topic in the list and GO to go directly to the start of this section.
Follow the prompts to enter your hobby income and expenses.
source: http://hancockdana.com/2016/02/03/how-fantasy-sports-are-taxed/
