1099K

[nrumzie]

I received a 1099k from PayPal for my withdrawals from online sports betting (over 20k). My deposits through PayPal for sports betting is greater than my withdrawals received. I will not be receiving a W-2 G because I did not reach the $600 threshold (negative net on the year). How should I handle this? Is there a way to use my deposits to offset the withdrawal received? Do I need to enter the amount shown on the 1099k as 1099k other income or should I enter the amount as gambling winnings and then itemize my loses (loses greater than standard deduction)?

[SharonD007]

It depends on how you consider your sports betting if you will be able to offset your withdrawals from your deposits.  If your sports gambling is considered sports betting, your gambling winnings are considered income.  You can only deduct your losses if you itemize on Schedule A, and you can only claim losses up to your winnings.  You will need to have documentation to substantiate your losses which can include, receipts, tickets, or canceled checks.  You can also keep a detailed log that includes date and type of gambling activity and the amount of your winnings and losses.

Please review the TurboTax article Sports Betting Taxes Guide for more information.

If your sports betting is considered “fantasy sports”, there are two ways that you can report the income.  If you consider it a hobby, you will enter it as “other income” on Schedule 1. The organizer should have calculated your net profits by using a formula or by calculating net profit this way: (Withdrawals + Year End Account Balance) - (Deposits – Beginning Year Account Balance) = net profits.

 If you consider your fantasy sports betting as a business, you will enter your income and expenses on Schedule C.

Please review the TurboTax article Tax Considerations for Fantasy Sports Fans for more information.

Another resource from TurboTax How to pay taxes on gambling winnings and Losses provides more information.

[nrumzie]

I would consider it a hobby lol. I never receive a WG-2 from the sports betting companies (my net is not >$600). I received a 1099k because I use PayPal as a method to withdrawal my balances. My question revolves on how to handle the 1099k. Should I enter it as a 1099k or should I enter it as gambling income to which I can then itemize my expenses? Thanks!!!!!

[PatriciaV]

Yes, you should enter your gambling income under Less Common Income >> Prizes, Awards, and Gambling Winnings. This topic will allow you to enter your gambling losses as well. If you are able to itemize your deductions, your gambling losses will be reported on Schedule A to offset your winnings.

Note: Form 1099-K is used by the IRS to track payments that you received from credit cards, debit cards, or electronic payment services (Square, PayPal, ePay, etc.). For 2022 the IRS does not require you to report these payments separately. TurboTax will not give you a separate field for the amounts reported on your 1099-K(s), which is why you need to report this income under the appropriate income topic.