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Does DraftKings report all winnings to IRS?

Fantasy sports winnings of $600 or more are reported to the IRS. If it turns out to be your lucky day and you take home a net profit of $600 or more for the year playing on websites such as DraftKings and FanDuel, the organizers have a legal obligation to send both you and the IRS a Form 1099-MISC.

turbotax.intuit.com - Tax Considerations for Fantasy Sports Fans - TurboTax Tax Tips & Videos
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OVERVIEW

Fantasy sports leagues can yield hefty winnings if Lady Luck smiles on you. If you win big—or even not so big—you'll need to save a portion of that money for the Internal Revenue Service (IRS). What many don't realize, is that those net winnings constitute taxable income.



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Fantasy sports winnings of $600 or more are reported to the IRS

If it turns out to be your lucky day and you take home a net profit of $600 or more for the year playing on websites such as DraftKings and FanDuel, the organizers have a legal obligation to send both you and the IRS a Form 1099-MISC. If you receive your winnings through PayPal, the reporting form may be a 1099-K. The 1099 tax forms report your winnings to the taxing authorities and also gives you information for completing your taxes. Even if you don't receive a 1099 form, you are still required to report all of your income on your federal and state income tax returns. The IRS planned to implement changes to the 1099-K reporting requirement for the 2022 tax year. However, the IRS recently delayed the implementation of the new $600 reporting threshold for goods and service transactions from third party processors like Venmo and Paypal to 2023, reverting tax year 2022 back to the previously higher 1099-K reporting threshold (over $20,000 in payments and more than 200 transactions). If you don’t receive a 1099-K, the IRS still expects you will report all your income, regardless of the amount. Organizers typically calculate players' net profits using a formula Fantasy sports organizers must figure out players' net profits in order to determine who gets 1099 forms. They use a formula to determine when a player hits the $600 level: Prizes won minus entry fees plus bonuses = net profit. Another way to calculate this is: (Withdrawals + Year End Account Balance) - (Deposits – Beginning Year Account Balance) = net profits. Reporting income or loss from fantasy sports on Form 1040 You are required to report all income earned from fantasy sports either as "other income" on Schedule 1 for Form 1040, or as business income on Schedule C. If you use the first approach, your fantasy sports is considered a hobby and you can't deduct any of your expenses or losses.

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