Q. Would it be possible to report the fees as negative other income? An ordinary and necessary expense to receive the earnings from PredictIt?
A. No. The consensus, here, is it's not deductible. It's not "earnings". Hobby expenses are not deductible. Investment expenses are not deductible. Gambling losses are only deductible to the extent of winnings and only as an itemized deduction.
That said, if you feel you have an erroneous 1099-Misc,
You have several choices:
- Ideally, you get a corrected 1099-misc from the payer
- Don't report it on your return. Attach a copy of the 1099 and a statement explaining the circumstances. You can't e-file. From the IRS instructions for form 1099-Misc: Form 1099-MISC incorrect? If this form is incorrect or has been issued in error, contact the payer. If you cannot get this form corrected, attach an explanation to your tax return and report your income correctly.
- Report the income as misc line 8, Schedule 1 income (enter in TurboTax at the 1099-Misc screen) . Then enter a line 8 deduction, for the adjustment amount. In TurboTax (TT), enter at:
- Federal Taxes tab
- Wages & Income
Scroll down to:
-Less Common Income
-Misc Income, 1099-A, 1099-C
- On the next screen, choose – Other reportable income - Answer yes to Any other Taxable Income -On the next screen, Enter the number with a minus sign (-) in front. Briefly explain at description.
- Report only the net income and hope you can explain it away when & if the IRS contacts you
