1099k and gambling, need to amend taxes

[Mikel9979]

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

[KrisD15]

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. 

• 1. You can enter the amount of gambling that were not reported on Form W-2G by going to 
  Wages & Income
  Less Common Income
  Prizes, Awards, and Gambling Winnings    START or UPDATE
  "Did you receive a W-2G"   "No"
  "Let's check for winning not reported on a W-2G"    "yes"  enter the amount of the 1099-K that were Gambling Winnings (5,000?)
  CONTINUE
  Enter your Gambling Losses    (3,900?)

DONE
Gambling winnings are on Schedule 1 line 8b
Gambling loss in on Schedule A line 16
 

• Next, enter the 1099-K and select "Other" for the type of income.
• Wages & Income
• Other Common Income
• Income from Form 1099-K   
• Select "Other" for the type and enter the income listed in Box 1a on Form 1099-K Do not make any adjusting entries on the screen
• 1099-K income is listed on Schedule 1 line 8z

Finally make an adjusting entry so the income is not doubled

• Wages & Income
  LESS COMMON INCOME
  Miscellaneous Income, 1099-A, 1099-C    START 
  Scroll all the way down to the LAST option- Other reportable income   START 
  Type "Gambling winnings reported on 1099-K" or some other description the IRS will understand and enter the amount AS A NEGATIVE AMOUNT (put a minus sign (-)  in front of the number
• Done
   

[Mikel9979]

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?

[KrisD15]

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.