I have been playing on a casino website called chumba casino. It does everything through paypal. You purchase through there and you cash out through there. I am used to dealing with w2g's and the losses that you can put in. I have never had a 1099k before and I am wondering where do I post it and can I enter my losses and also which product do I need to purchase to enter this information?
Paypal will issue a single 1099-K for all transactions made on your
account, co-mingling your fantasy sports funds and funds from another
business in the same account can create a record-keeping nightmare.
Paypal allows you to have more than one account and it is advisable to
keep hobby income like fantasy sports separated from any commercial
activities you may be involved in.
Currently, under Federal law, these types of winnings in addition to fantasy sports are considered games of
skill rather than gambling. Therefore, income from fantasy sports is
treated as hobby income, rather than gambling income. Hobby income is
generally reported as “Other income” on line 21 of your Form 1040. You
can also generally deduct hobby expenses (such as losses from another
fantasy sports site, sports publications used for research, TV sports
packages, and content subscriptions such as ESPN Insider). However,
expenses from hobby income fall under Miscellaneous Itemized Deductions,
which are allowed as deductions only to the extent the expenses exceed
2% of your total AGI (adjusted gross income).
You may report hobby income and expenses equal to (but not more than) the hobby income.
To find this section in TurboTax, open your return, then go to My Account >> Tools >> Topic Search. Type in "hobby income, loss", then click the topic in the list and GO to go directly to the start of this section. Follow the prompts to enter your hobby income and expenses.
source: http://hancockdana.com/2016/02/03/how-fantasy-sports-are-taxed/
I was looking on IRS website and it said that I could claim the losses on #28 under other misc deductions, is that correct?
No. It's Schedule A line 23, subject to 2% rule not to exceed hobby income. <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/p529.pdf">https://www.irs.gov/pub/irs-pdf/p529.pdf</a>
So if my 1099k is for $50,000, I can claim up to $50,000 in losses, as long as I have the back up and it will go in Line 23. What does the 2% rule mean?
2% of your AGI will be deducted from the $50000 before it's added to the other deductions (mortgage, donations, etc.) 100,000 AGI x 2% = $2,000 $50,000 minus $2,000 = $48,000 deduction. Hope this helps!
On my instructions that I got with the 1099k it states if the box that says third party network is checked they will not be reported, is that true?
I have the same issue. I got an audit from IRS for year 2017 when I played Chumba Casino and received 1099k from PayPal for all winnings I received but not sure how and if I filed it correctly. I need to contact turbo tax if an accountant could fix this for me.
hi
i am just wondering how you navigated this situation. i won over 230k in chumba but also paid over 140k to play. not sure if i should claim gambling losses or what i should do.
gross winnings must be reported as income. the cost of the bets and losses can only be deducted if you itemize deductions (Schedule A). further, they are limited to gambling winnings.