1099k -online casino

[user19971]

Hello all,

I received a 1099k from PayPal indicating that I “won” a dollar amount through the year. However, I have a ledger showing that losses outweighed profits in this online casino. Due to this itemizing my deductions it is increasing the amount I owe in taxes. However, since this is reported in a 1099 k and I have proof indicating I lost more than the amount in the form. How do I go about showing this in taxes? Thank you 

[KrisD15]

Please understand that there are two issues with your situation:

1. You want to enter Gambling Winnings which were not reported with Form W-2G. (so that you can also report losses up to the amount won)

2. You have a 1099-K that reports "Other Income" but you want to report that amount as Gambling Winnings instead.

 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

CONTINUE

Enter your Gambling Losses     DONE

Gambling winnings are on Schedule 1 line 8b

Gambling loss in on Schedule A line 16

2. NOW LETS WORRY ABOUT THE FORM 1099-K

 The IRS will look for the Form 1099-K so you need to report it. 

You already reported the SAME AMOUNT as gambling, so you will 

a) Enter Form 1099-K so the IRS can match it

b) Back out the income so you are not double-taxed

To do that-

Enter the 1099-MISC Under

Wages & Income

Other Common Income

Income from Form 1099-K   START

Select "Other" for "Which type of income is your 1099-K for?" and enter the 1099-K as it was reported, 

THIS GETS THE FORM 1099-K ON YOUR RETURN, now back out the double income-

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

enter the amount AS A NEGATIVE AMOUNT (put a minus sign (-)  in front of the number

Done

The 1099-K as well as the negating entry will both be on Schedule 1 line 12

You entered the gambling winning where you could also report your loss

You entered the 1099-K so the IRS can find it

You entered a reversing entry to zero-out the 1099-K

[user19971]

Thank you very much for the quick response. However I am finding myself in a bit of a situation. Because this is forcing me to itemize my deductions it is taking my federal owed from $1200 to $7200. How is this so as the loss equalled/outweighed the profit? Is this really accurate that I will owe that much?

[JamesG1]

It is hard to say without seeing your tax return.  

You may have to review the other expenses that can be deducted on Schedule A Itemized Deductions.  In TurboTax Online, those expenses can be reported under Deductions & Credits down the left side of the screen.  You may also see this TurboTax Help.

I assume that you reported the gambling winnings even though you did not receive an IRS form W-2G.  Did you report your gambling losses on Schedule A line 16?  

In TurboTax Online, you should be able to view the tax return by selecting Print Center down the left side of the screen.  You may print or view your full tax returns prior to filing after you have paid for the software.  The amount of gambling losses you can deduct cannot exceed the winnings that you report as income.

Did you report the IRS form 1099-K income and reverse the income as outlined by @KrisD15 above?

@Ncaralle