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lanerocco
New Member

1099K from PayPal-Due to Prizepicks

I'm sure A LOT of people will have this issue this year with a 1099K from PayPal due to prize pick earnings. My question is how can we go about doing this? 

Here's my situation:

My 1099K from PayPal is $12,000. I did not receive a 1099 misc from prize picks there for proving my loses outweighed my wins and EVERY "income" transaction on my PayPal account is strictly from prize picks.

 

Is my best option here to audit this 1099K and wait to show proof to the IRS and risk fees and interest if I don't win my claim? I will most likely have to send them every transaction on my prize pick account for 2024 but it just doesn't make sense because my proof is literally that I did not receive a 1099 from prize picks which is 100% proof that I did not make any income from sports gambling. And everything related to my PayPal is from them. 

 

 

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6 Replies
PatriciaV
Employee Tax Expert

1099K from PayPal-Due to Prizepicks

If you believe that the information on the Form 1099-K you received is incorrect and needs to be revised, you have the option to delay filing your tax return until this issue is resolved. Filing a request for extension of time to file will provide an additional six months to file your return. However, interest and penalties continue to accrue during this time if any additional tax due is not paid by the original filing deadline.

 

While Form W2-G may report NET gambling winnings if the amount exceeds the reporting threshold, Form 1099-K reports only the third-party transactions. This difference requires you to report your losses based on your personal gambling records. 

 

Enter the information from Form 1099-K in TurboTax under the Gambling topic. (Go to Tax Tools >> Tools >> Topic Search to easily find this section.) Using this topic allows you to report your losses at the same time.

 

According to IRS Topic No. 419, Gambling income and losses, you are required to report all gambling winnings on Form 1040 Schedule 1. This includes winnings reported on Form W-2G, 1099-MISC, and 1099-K.

 

Further, you may deduct gambling losses only if you itemize your deductions on Schedule A and kept a record of your winnings and losses. You can't report losses of more than the amount of gambling income you report. Claim your gambling losses up to the amount of winnings, as "Other Itemized Deductions." If you don't qualify to itemize your deductions, you aren't able to claim your gambling losses.

 

If you report gambling losses, maintaining accurate records of your winnings and losses is extremely important. Be sure to save copies of any transaction records to prove your log entries in case of an IRS audit.

 

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lanerocco
New Member

1099K from PayPal-Due to Prizepicks

My 1099K is correct because it’s all the “income” or money I withdrew from PrizePicks. But it doesn’t cancel any of the negatives so I’m basically using money that was already taxed to gamble with. Lost more than I won. Withdrew money that I did win at times and now that’s being taxed on PayPal but if I just sent my money straight to my bank account none of this would be happening because I wouldn’t have received anything from PrizePicks because I LOST more then I WON. 

PatriciaV
Employee Tax Expert

1099K from PayPal-Due to Prizepicks

Report the income from Form 1099-K under Gambling Winnings. Then enter the same amount on the following page for Gambling Losses. This is how the IRS expects you to report these transactions.

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1099K from PayPal-Due to Prizepicks


@lanerocco wrote:

My 1099K is correct because it’s all the “income” or money I withdrew from PrizePicks. But it doesn’t cancel any of the negatives so I’m basically using money that was already taxed to gamble with. Lost more than I won. Withdrew money that I did win at times and now that’s being taxed on PayPal but if I just sent my money straight to my bank account none of this would be happening because I wouldn’t have received anything from PrizePicks because I LOST more then I WON. 


Welcome to the world of gambling and taxes.  All your winnings are gross taxable income.  Your losses are an itemized deduction on schedule A (up to, but not more than, the amount of your winnings).  That means that, depending on your other itemized deductions and other tax situations, you might be able to fully deduct the losses, or not deduct the losses at all (meaning the winnings are fully taxable) or something in between.

 

That's the law, it's been the law for at least 50 years, and the law on taxation of gambling winnings hasn't changed just because new methods of gambling have been invented.  

1099K from PayPal-Due to Prizepicks

So do I file with the PayPal 1099-K or do I wait and see if PrizePicks sends me something? How does it work if PrizePicks sends me one as well considering PayPal is taxing me for the withdrawals 

JamesG1
Employee Tax Expert

1099K from PayPal-Due to Prizepicks

Should Prizepicks report gambling winnings on IRS form W-2g, you would report that amount.  Then post here to ask how you report the IRS form 1099-K from PayPal.

 

Follow these steps to report both income and losses in TurboTax Online:

 

  • Down the left side of the screen, click on Federal.
  • Down the left side of the screen, click on Wages & Income.
  • Scroll down to Less Common Income.  Click the down arrow to the right.
  • Click to the right of Gambling Winnings.

See this TurboTax Help.

 

Be advised that IRS form W-2G reports gambling winnings.  IRS form 1099-K reports third-party transactions.

 

See also the comments of @PatriciaV above.

 

@Teejay1208 

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