Normally gambling winnings are reported on form W-2G. You received Form 1099-K because the payments were made electronically. You can enter your gambling or prize winnings reported on a 1099-K in TurboTax by following these steps:
If taxes were withheld, enter the withholding using these steps:
Does this also apply to Sweepstakes Winnings? So I can file my 1099k under the same steps? And what about sweepstake losses?
@Vangmx. Yes, sweepstakes winnings/prizes are handled the same way that gambling winnings are handled. As a way of background, 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 2021, the IRS does not require you to report these payments separately, which means you would not report these payments separate and apart from how you would report income reflected on a 1099-Misc. Therefore, TurboTax will not give you a separate field for the amounts reported on your 1099-K(s).
To report this income, go to Wages & Income, and then scroll down to the section, 1099-Misc and Other Common Income. You may see a category for 1099-K; however, if you select that category, TurboTax will prompt you to select another category. Therefore, select 1099-Misc, and enter the information about your winnings as you move through the application.
Regarding gambling losses, such losses are indeed tax deductible, but only to the extent of your winnings and there is the requirement to report all the money you win as taxable income on your return. But here is the major point to consider, the deduction is only available if you itemize your deductions. If you claim the standard deduction, then you can't reduce your tax by your gambling losses, but you still need to report your winnings even if you take the standard deduction.
Below is a link to a TurboTax article that addresses gambling winnings and taxes which you might find helpful.