Received 1099k with some earnings being gambling and others income

[Efinn05]

Hello,

This morning I received a 1099k from PayPal for going over the $20,000 threshold. After reviewing this 1099k, a majority of the transactions on there are from online sportsbook and casino gambling sites, such as Fanduel, Draftkings, etc. Overall, I have a net loss on these websites but since the gross payments crossed the threshold it was reported to the IRS. In addition to the gambling income, I have roughly $2000 that comes from freelancing activities that I have done this year. In addition, there are also some payments that I have sent/received for personal reasons. When I complete my taxes this year, I want to make sure that I reflect everything properly, which leads to my question: How do I go about reporting this gambling income (losses), my side hustle income, and just my regular transactions between myself and friends? From my understanding, I should report all gambling winnings (withdrawals from the websites) and losses (deposits to the websites) on my W2-g. I believe I should then report my other "side hustle" income as miscellaneous income and do nothing about regular transactions. Is this the proper way to file it on my taxes? I want to make sure that my 1099k is accurately reflected on my return.

[MinhT1]

Do not enter your form 1099-K. However, keep all documents you may have about the transactions in case of audit or inquiry from the IRS.

1. Report your betting income as Gambling winnings.

2. Income from your side hustles is self-employed income.

You report the income you received in cash, checks or bank transfers or without a 1099-NEC as self-employed income under Other self-employed income.

• In business income, just under Type of Income, click on Add Income for this work
• On the next page, click on the radio button next to Other Self-employed Income
• Click Continue to enter your income received in cash, checks or bank transfers.

If you have expenses related to this business, you can deduct them.

To report your business income and expenses, you'll need to use TurboTax Self-Employed (Online) or TurboTax Home and Business (CD/Download).

3. You do not report your personal transfers between friends. But keep any documents related to these.

[Efinn05]

To clarify for point 1: Any withdrawals from betting websites should be considered "winnings" and then when I am asked for losses I put in my total deposits? So for instance if I deposited $2000 and withdrew $500 (for a net loss of $1500) I should put $500 as winnings and $1500 as losses? 

[DianeW777]

You must report your total winnings for all of 2021, then report all losses for the year in the box where indicated. Losses are allowed only as an itemized deduction on Schedule A with other deductible expenses such as mortgage interest and property taxes, also charitable contributions to name a few. Losses will be allowed to the extent of winnings.  

If the itemized deductions are greater than the standard deduction this will be a valuable benefit.

• The standard deduction for married couples filing jointly for tax year 2021 rises to $25,100, up $300 from the prior year.
• For single taxpayers and married individuals filing separately, the standard deduction rises to $12,550 for 2021, up $150, and
• For heads of households, the standard deduction will be $18,800 for tax year 2021, up $150. 

Taxpayers who are at least 65 years old or blind can claim an additional 2021 standard deduction of $1,350 ($1,700 if using the single or head of household filing status). For anyone who is both 65 and blind, the additional deduction amount is double.  You're considered to be 65 on the day before your 65th birthday.