Do I Have to Pay Taxes on Daily Fantasy Sports Winnings?
The NFL opened up their 100th season this past weekend with all 32 teams in action. The beginning of football season means a lot of new things are beginning. Flannel shirts, pumpkin spice, and bonfires are all set to be staples for most Americans over the next couple of months. But the beginning of football also means a big return in the amount of taxpayers playing daily fantasy sports on sites such as FanDuel, DraftKings, or Yahoo Fantasy.
In 2015, it is estimated that DraftKings and FanDuel alone paid out approximately $1 billion dollars in winnings. Of course, the federal government is going to get its cut on that $1 billion dollars. Fantasy sports winnings of any amount is considered income according to the IRS, but if you have over $600 of “net profit”, the site will send both you and the IRS a Form 1099-MISC.
“Net profit” is calculated as (prizes won-entry fees+bonuses). Contrary to popular belief, it is not calculated on withdrawals. As previously stated, if your net profit on any given daily fantasy sports website is greater than $600, expect a Form 1099-MISC to be sent to both you and Uncle Sam. Daily fantasy sports should be reported on a Form 1040 under line 21 as “Other Income”. To conclude, make sure to disclose your daily fantasy sports winnings on your tax return. If you get a Form 1099-MISC, remember that the IRS also has a copy so you should factor it into your tax return.