1099 k from paypal hard rock bet

[STPETEJACK]

Hello,

I see some discussion about the  1099k forms from Paypal (used for transactions at Hard Rock Bet)  and I'm trying to figure out the easiest way to do this on my taxes.  I used paypal for many Hard Rock bet transactions

( deposits, withdrawals) throughout 2024.  Losses exceeded winnings for the year. 

 This 1099K comes across as income, which is simply not true. 

Could someone please provide a step by step way to basically zero out the gross amount of payment so this is not considered income?

Thanks for any advice here.

[DianeW777]

Yes.  If I understand your question you have income from betting through Hard Rock Bet online casino.  Any gambling winnings are taxable and any gambling expenses are only deductible if you can itemize your deductions, limited to the amount of winnings.

On the other hand, you are not required to pay tax on your own money, if you also did take money out of PayPal that was your own funds. The key is you must have the details because you are responsible to know the difference in funds in your PayPal account.

Enter your 1099-K and you are allowed to reduce it for any amount that was money you already earned from another source and placed into your account, then withdrew the same funds.

• If you use the 1099-K entry you will not be asked to select 'gambling winnings' so you will select 'Other'. For this reason the question about losses will not be asked but the income will be reported.

The other option for reporting gambling winnings is to use the steps below. You must track the winnings and the expenses of the gambling.

Gambling Winnings

A payer is required to issue you a Form W-2G if you receive certain gambling winnings or have any gambling winnings subject to federal income tax withholding. You must report all gambling winnings as 'Other Income' on your tax return including winnings that aren't reported on a form. 

Gambling Losses

You may deduct gambling losses only if you itemize your deductions and kept a record of your winnings and losses. The amount of losses you deduct can't be more than the amount of gambling income you reported on your return. Claim your gambling losses up to the amount of winnings.

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.

1. Sign into your TurboTax Online/Mobile or TurboTax Desktop account
2. 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
3. Follow the screen prompts based on your situation (reporting document or none)
4. 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.

                            

[STPETEJACK]

Thanks Diane for your input.

I have a follow up question please.

As I read this below, let's say I put in the amount listed on the 1099 K under "other".

Since this was my money coming and going out of paypal, and winnings did not exceed losses, if I enter "zero" instead of 16,263, how would the "income" be reported to the IRS?  The 1099 K would not match the manual entry of "0" that I entered. 

I would prefer not to itemize gambling winnings and losses as my standard deduction is far greater than if I itemized.

Thanks.

"

Enter your 1099-K and you are allowed to reduce it for any amount that was money you already earned from another source and placed into your account, then withdrew the same funds.

• If you use the 1099-K entry you will not be asked to select 'gambling winnings' so you will select 'Other'. For this reason the question about losses will not be asked but the income will be reported.

[DianeW777]

You must enter the gambling winnings one place or the other. Gambling winnings must be separated out from other money you may have added to PayPal and also withdrew.

It will be a manual calculation you must do to account for same money in and out of  your PayPal account above and beyond any winnings. The winnings are taxable and the tax law does not allow an adjustment for the money spent on gambling unless you can itemize your deductions. The purpose of this is for you to prove there was money included in the 1099-K that was not winnings and not required to be added to your income.

If the standard deduction is much higher (most common), then the gambling losses are not used period. Let me know if this is still not clear.

@STPETEJACK 

[STPETEJACK]

Thanks for your insight Diane.

I have reviewed your suggestions and they are very valuable.

After consideration,  I decided I am NOT  itemizing my gambling wins and losses.

 If I were to itemize wins and losses,  I'd lose the standard deduction, which makes no sense.

I'm not going to ask Paypal for a corrected 1099-k as I don't see that happening.

  I  entered the 1099 K  manually with an offsetting entry, following insructions below. 

" the error should be reported on Form 1040, Schedule 1, Additional Income and Adjustments to Income, Part I, Additional Income, Line 8z, Other Income, with an offsetting entry in Part II, Adjustments  to Income, Line 24z, Other Adjustments.

After I finished the return, turbotax saw no red flags and said low chance of audit.

 Anyone else use this approach using Paypal for Hard Rock Bet transactions?

 Thanks.