Forgive me if this was asked before, but I received a 1099k from PayPal due to sports book winnings, but not a W2G. I won about $5k and the 1099k says I won about that too. I initially filed my taxes using my net winnings and did not include the 1099k information. In my initial taxes I only listed the net winnings, which was about $1100.00. I know this is wrong. I will be amending my taxes.
My question is how to identify this as gambling and acknowledge the 1099k. Please advise as to the correct steps. I am afraid to change the gambling to zero and enter the $5k as other.
Thanks,
Mike
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Before you read the entire answer, be aware that if you need to amend your return, you also will need to state WHY you are amending and you can simply say something like "To account for gambling winnings reported on Form 1099-K"
This might resolve your concern.
If not-
If you report as gambling, you can then also report your losses, however the losses need to be documented and the loss is reported on Schedule A; therefore the loss would only be deducted if you itemize deductions, but the income is transferred to your 1040, so without itemizing, you are taxed on the full amount of winnings.
If you want to report the full amount of the 1099-K and also report the income as gambling, it would be a process, and may be more work than really necessary.
DONE
Gambling winnings are on Schedule 1 line 8b
Gambling loss in on Schedule A line 16
Finally make an adjusting entry so the income is not doubled
In my initial return I listed my net gambling winnings, which I know is incorrect. I determined that my winnings are pretty close to the amount listed on the 1099k. So for clarity I was just going to use the amount from the 1099k.
I am going to acknowledge the 1099k, but if I’m claiming the 1099k as income. Do I need to list it as gambling winnings?
or is it good practice to list the income under gambling and then back out the 1099k income as duplicate?
If you're not going to claim any loss, just enter the 1099-K and select "Other" for type of income and also mention "gambling reported on 1099-K" for the reason for amending. (so they don't wonder what happened to the 1,100 gambling reported on the original return)
I'm sure the IRS will make changes to the 1099-K, so no sense trying to be consistent with how you report it at this point.
So I filed my amended returns and now PayPal issued me a revised 1099k(gambling ) changing my payments from $5k to zero. I previously determined my gambling winnings were about $5k. This is the amount I claimed, listed the income as other and stated in the field that it was “gambling winnings as mentioned on the 1099k.” I am wondering can I just leave it alone?
Yes, you can just leave it alone. If you had $5,000 in gambling winnings and that is what is correctly reported on your last amended return, you do not need to make a change since the $0 would be inaccurate.
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