I have received a 1099-K from PayPal in the amount of $121,060.27. I have never in my life sold any services or goods other than an occasional garage sale over the years. I am retired and live with my husband who is still employed. My husband and I had formed an online casino club with my sister and her husband over COVID and get together often to play online casinos together, I also play on my own. We use my PayPal as a money go through, the same money may play through over and over. For example my sister sends me $200 to my PayPal account I add $200, we play $400, take out the balance from the casino play (if any) put back into PayPal we split it and then try again next time, may be the next day. I did print a win/loss statement from my BetMGM account as we use this account most often and it shows a loss of $38052.19. While this is a substantial amount it does not account for the remaining $83008.08 that I know I did not win. I know this club and my online gambling has been a substantial loss as it shows in our finances, we chalked it up to expensive entertainment cutting out vacations, etc.! How do I explain this to the IRS? I don’t feel describing $121,000 as “erroneous income on 1099K” will be enough.
