topic 1099-MISC box 3 for prizes where I put wager down in Get your taxes done using TurboTax

1099-MISC box 3 for prizes where I put wager down

An2425 — Tue, 04 Feb 2025 17:20:23 GMT

Hi all, I have a big issues and can’t find a straight answer anywhere.

This year, I played online rummy games, where I put money in, play, and either win or lose. I got quite a surprise when I was taxed on total winnings and not just what I withdrawaled. I kept a lot of money in the game just to play, and didn’t realize all of this would be taxed!

I got a 1099-Misc form with the amount won on box 3.

How do I classify this on my tax return?? It’s prizes, but if I put a wager on it, am I allowed to show this as gambling winnings and deduct my expenses (ie the games I lost)? Bc if not, sounds like I can’t deduct anything I put in.

any help would be very appreciated!

Re: 1099-MISC box 3 for prizes where I put wager down

ThomasM125 — Tue, 04 Feb 2025 17:46:58 GMT

Your winnings are classified as gambling winnings on your tax return. Your wagers are deductible up to the amount of your winnings, but as itemized deductions. So, unless you have enough itemized deductions to surpass your standard deduction, the deduction will not benefit you.

When you enter your gambling winnings in the Less Common Income section of TurboTax, under Prizes, Awards, and Gambling Winnings, you will be asked to enter your gambling losses. They will be applied to your itemized deductions and will be deducted from your gambling income if you are able to benefit from itemizing your deductions.

Re: 1099-MISC box 3 for prizes where I put wager down

An2425 — Tue, 04 Feb 2025 18:53:11 GMT

Thanks so much for this info.

when u go to “less common income”, then “gambling winnings”, it tells me I need a form W-2G. The winnings I got came on a 1099-MISC. can I put this information from my 1099-Misc down here, or will that be flagged by IRS since it’s not in right category?

Re: 1099-MISC box 3 for prizes where I put wager down

KrisD15 — Tue, 04 Feb 2025 21:00:55 GMT

The IRS will want to see the 1099-MISC reported on your tax return.

If you do not itemize deductions, the losses from the gambling will not be used, they will not be deducted from your income, they will not be deducted from your winnings

If you take the Standard Deduction, as most people do, there is no reason to enter your gambling loss.

In this case (you use the Standard Deduction) the winnings will be taxed the same, if entered from a W-2G or as a 1099-MISC.

IF THE ADDITION OF GAMBLING LOSSES WILL BE ADVANTAGOIUS TO YOU please follow the steps listed below.

You will enter the gambling winnings so that you can also enter the losses.

You will enter the 1099-MISC so that it matches what the the IRS has on file.

You will enter a NEGATIVE 1099-MISC to negate the double reporting.

Go to

Wage & Income

Less Common Income

Prizes, Awards, and Gambling Winnings

It first asks if you have a W-2G, select No.

Next, enter the amount won from the 1099-MISC

Continue and enter the amount of losses on the following screen.

Click Done

Enter the 1099-MISC as it is reported.

Wages & Income

1099-MISC and Other Common Income

Income from 1099-MISC START or UPDATE

Next, enter a negative adjustment

Wages & Income

Less Common Income

Miscellaneous Income, 1099-A, 1099-C START

Scroll down to "Other reportable income" START

Type "Gambling reported twice" or something similar that will let the IRS know what you are doing

Enter the same total amount of the 1099-MISC to zero it our (enter as a negative number)

Click DONE

The total winnings will be on Schedule 1 line b2 and carried to line b4

The 1099-MISC will be on line z2b

The adjustment is on line z12

The amount from Schedule 1 flows to Form 1040 line 8

Re: 1099-MISC box 3 for prizes where I put wager down

An2425 — Tue, 04 Feb 2025 23:00:46 GMT

THANK YOU SO MUCH! Wow, these instructions were amazing.

A few follow up questions:

- is there anywhere within irs rules that states that prizes that had a wager put down to get income can count as gambling winnings? I’m nervous that they will reject it.

- it’s ok to put that the gambling was a hobby, right?
- if I put my losses are the same as my winnings, will that raise red flags to the irs? Even if the amount is pretty material?

Re: 1099-MISC box 3 for prizes where I put wager down

KrisD15 — Tue, 04 Feb 2025 23:19:04 GMT

HERE is a link that explains how the IRS defines Gambling. Basically the main point is that you have the risk of losing.

Therefore if someone won a prize, but they did not need to buy a ticket, (a name was drawn from a hat) that would not be gambling. So yes, if you had to pay to play, that would be gambling. You are at risk of losing.

Yes, you would indicate that gambling is a hobby. If you were a professional gambler, you would file Schedule C as self-employed and different rules would apply you how you claim the income.

As long as you're honest and have documentation to support what you report, you should report the loses, even if they are more than what you won. (only the same amount of loss will be allowed on Schedule A).

Lots of people lose as much or more than they win, that's why casinos make money.

HERE is an IRS Online Interview that might be helpful.

Re: 1099-MISC box 3 for prizes where I put wager down

An2425 — Tue, 04 Feb 2025 23:20:52 GMT

I want to give you a hug. Thank you

Re: 1099-MISC box 3 for prizes where I put wager down

An2425 — Sat, 08 Feb 2025 23:30:05 GMT

Same rules apply if I put this on an amended return, right? They can still see the positive and negative on the 1099-misc line? Should I provide this explaination to them if I’m amending for this?

Re: 1099-MISC box 3 for prizes where I put wager down

JohnW152 — Sun, 09 Feb 2025 16:16:53 GMT

Yes, that'd be great. The IRS always loves a good explanation......... and I've passed along your thanks to Kris!

Re: 1099-MISC box 3 for prizes where I put wager down

user17700577056 — Mon, 09 Feb 2026 16:27:14 GMT

When turbo tax asks "DESCRIBE THE REASON FOR THE 1099-MISC" Do we type in Gambling?

Re: 1099-MISC box 3 for prizes where I put wager down

DianeW777 — Mon, 09 Feb 2026 16:39:19 GMT

It depends. If it was from gambling then you would type that description. If it was from another reason you would type the description that best describes it. The next screen will ask about uncommon situations, for gambling you would select 'prize winnings'. This entry will not ask about your losses.

The correct way to enter gambling winnings would be to use the steps below.

Yes, every dollar you win is a taxable event for your federal tax return and possibly your state return.

IRS Topic 419 Gambling Income and Losses

Enter the gambling winnings using the steps below.

Sign into your TurboTax Online/Mobile or TurboTax Desktop account
Select Tax Home (on the left) > Income & Expenses > Less Common Income > Gambling Winnings > Start
1. TurboTax Desktop start with Income > Less Common Income > Gambling Winnings
Follow the screen prompts based on your situation (reporting document or none)
Be prepared with your gambling losses as well but they may or may not affect your tax return. If you itemize deductions it could help.
1. Can you Claim Gambling Losses on your Tax Taxes?

You can delete the 1099-MISC if you use the steps above so that it's not duplicated:

If you're using TurboTax Online software and need to delete a form, click here .
If you're using TurboTax Desktop software and need to delete a form, click here.

@user17700577056