Paypal sent me a 1099-K [for legal gambling]

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Topic Author
w30442bob
Posts: 5
Joined: Thu Jan 27, 2022 11:20 am

Paypal sent me a 1099-K [for legal gambling]

Post by w30442bob »

[Moved into a new thread from: Paypal sent me a 1099K [for eBay sales] --admin LadyGeek]

PayPal sent me a 1099 K says I made 51.000 or so. But all this was from legal gambling ( sportsbooks). I paid into the Sportsbook sites all with PayPal and 1 credit card ( that didn’t charge anything to deposit) I know PayPal didn’t deduct what I deposited only what I withdrew. I know that I didn’t make anything ( if any) what do I need to do to have all
My ducks in a row and how do I file etc?
If I’d of known this I’d of not used PayPal at all. Very frustrating

Thanks in advance for anyone’s thoughts and help on this Bobby S
Topic Author
w30442bob
Posts: 5
Joined: Thu Jan 27, 2022 11:20 am

Re: Paypal sent me a 1099K

Post by w30442bob »

Please someone assist me on this. Thanks..
jhawktx
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Re: Paypal sent me a 1099K

Post by jhawktx »

I wonder what 51.000 is? Is it supposed to refer to a currency value? If yes, it is not in standard use in the US.
michaeljc70
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Re: Paypal sent me a 1099K

Post by michaeljc70 »

w30442bob wrote: Thu Jan 27, 2022 12:27 pm PayPal sent me a 1099 K says I made 51.000 or so. But all this was from legal gambling ( sportsbooks). I paid into the Sportsbook sites all with PayPal and 1 credit card ( that didn’t charge anything to deposit) I know PayPal didn’t deduct what I deposited only what I withdrew. I know that I didn’t make anything ( if any) what do I need to do to have all
My ducks in a row and how do I file etc?
If I’d of known this I’d of not used PayPal at all. Very frustrating

Thanks in advance for anyone’s thoughts and help on this Bobby S
You cannot deduct gambling losses unless you itemize (or are a professional gambler). Assuming that was $51k and you had more losses than that, it would make sense to itemize. You report gambling winnings as Other Income on the 1040. Those betting sites should be issuing you a tax form.

The bad part is say you win 10k and have 10k of losses. The standard deduction is $12.5k (single) so it doesn't make sense to itemize unless you have other deductions.
pshonore
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Re: Paypal sent me a 1099K

Post by pshonore »

michaeljc70 wrote: Fri Jan 28, 2022 10:59 am
w30442bob wrote: Thu Jan 27, 2022 12:27 pm PayPal sent me a 1099 K says I made 51.000 or so. But all this was from legal gambling ( sportsbooks). I paid into the Sportsbook sites all with PayPal and 1 credit card ( that didn’t charge anything to deposit) I know PayPal didn’t deduct what I deposited only what I withdrew. I know that I didn’t make anything ( if any) what do I need to do to have all
My ducks in a row and how do I file etc?
If I’d of known this I’d of not used PayPal at all. Very frustrating

Thanks in advance for anyone’s thoughts and help on this Bobby S
You cannot deduct gambling losses unless you itemize (or are a professional gambler). Assuming that was $51k and you had more losses than that, it would make sense to itemize. You report gambling winnings as Other Income on the 1040. Those betting sites should be issuing you a tax form.

The bad part is say you win 10k and have 10k of losses. The standard deduction is $12.5k (single) so it doesn't make sense to itemize unless you have other deductions.
Most sports betting sites do not produce tax documents unless you are getting odds of at least 600 to 1 and and the "win" is over a certain limit.
michaeljc70
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Joined: Thu Oct 15, 2015 3:53 pm

Re: Paypal sent me a 1099K

Post by michaeljc70 »

pshonore wrote: Fri Jan 28, 2022 11:33 am
michaeljc70 wrote: Fri Jan 28, 2022 10:59 am
w30442bob wrote: Thu Jan 27, 2022 12:27 pm PayPal sent me a 1099 K says I made 51.000 or so. But all this was from legal gambling ( sportsbooks). I paid into the Sportsbook sites all with PayPal and 1 credit card ( that didn’t charge anything to deposit) I know PayPal didn’t deduct what I deposited only what I withdrew. I know that I didn’t make anything ( if any) what do I need to do to have all
My ducks in a row and how do I file etc?
If I’d of known this I’d of not used PayPal at all. Very frustrating

Thanks in advance for anyone’s thoughts and help on this Bobby S
You cannot deduct gambling losses unless you itemize (or are a professional gambler). Assuming that was $51k and you had more losses than that, it would make sense to itemize. You report gambling winnings as Other Income on the 1040. Those betting sites should be issuing you a tax form.

The bad part is say you win 10k and have 10k of losses. The standard deduction is $12.5k (single) so it doesn't make sense to itemize unless you have other deductions.
Most sports betting sites do not produce tax documents unless you are getting odds of at least 600 to 1 and and the "win" is over a certain limit.
$600 is the limit that triggers reporting for sports betting. Sites like Draftkings net winnings against your losses and don't have to report it unless you won $600+ in the calendar year. What they report (or if they don't) to you/the IRS doesn't relieve you of your obligation to claim it.
pshonore
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Re: Paypal sent me a 1099K

Post by pshonore »

michaeljc70 wrote: Fri Jan 28, 2022 11:51 am
pshonore wrote: Fri Jan 28, 2022 11:33 am
michaeljc70 wrote: Fri Jan 28, 2022 10:59 am
w30442bob wrote: Thu Jan 27, 2022 12:27 pm PayPal sent me a 1099 K says I made 51.000 or so. But all this was from legal gambling ( sportsbooks). I paid into the Sportsbook sites all with PayPal and 1 credit card ( that didn’t charge anything to deposit) I know PayPal didn’t deduct what I deposited only what I withdrew. I know that I didn’t make anything ( if any) what do I need to do to have all
My ducks in a row and how do I file etc?
If I’d of known this I’d of not used PayPal at all. Very frustrating

Thanks in advance for anyone’s thoughts and help on this Bobby S
You cannot deduct gambling losses unless you itemize (or are a professional gambler). Assuming that was $51k and you had more losses than that, it would make sense to itemize. You report gambling winnings as Other Income on the 1040. Those betting sites should be issuing you a tax form.

The bad part is say you win 10k and have 10k of losses. The standard deduction is $12.5k (single) so it doesn't make sense to itemize unless you have other deductions.
Most sports betting sites do not produce tax documents unless you are getting odds of at least 600 to 1 and and the "win" is over a certain limit.
$600 is the limit that triggers reporting for sports betting. Sites like Draftkings net winnings against your losses and don't have to report it unless you won $600+ in the calendar year. What they report (or if they don't) to you/the IRS doesn't relieve you of your obligation to claim it.
It really depends on the Sportsbook - Here is what Rhode Island says:
Winnings are reported and taxed in accordance with IRS requirements
Winnings reported to the IRS - Any single wager paying three hundred (300) times the amount wagered and that is at least six hundred dollars ($600) is reported to the IRS.
Winnings reported to the IRS and taxed - If any winnings minus the amount wagered exceed five thousand dollars ($5,000) and the winnings are at least 300x the wager, federal taxes are withheld and the winnings are reported to the IRS.
Collecting on odds of greater than 300 to 1 are quite unusual but it can happen.
michaeljc70
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Re: Paypal sent me a 1099K

Post by michaeljc70 »

pshonore wrote: Fri Jan 28, 2022 1:13 pm
michaeljc70 wrote: Fri Jan 28, 2022 11:51 am
pshonore wrote: Fri Jan 28, 2022 11:33 am
michaeljc70 wrote: Fri Jan 28, 2022 10:59 am
w30442bob wrote: Thu Jan 27, 2022 12:27 pm PayPal sent me a 1099 K says I made 51.000 or so. But all this was from legal gambling ( sportsbooks). I paid into the Sportsbook sites all with PayPal and 1 credit card ( that didn’t charge anything to deposit) I know PayPal didn’t deduct what I deposited only what I withdrew. I know that I didn’t make anything ( if any) what do I need to do to have all
My ducks in a row and how do I file etc?
If I’d of known this I’d of not used PayPal at all. Very frustrating

Thanks in advance for anyone’s thoughts and help on this Bobby S
You cannot deduct gambling losses unless you itemize (or are a professional gambler). Assuming that was $51k and you had more losses than that, it would make sense to itemize. You report gambling winnings as Other Income on the 1040. Those betting sites should be issuing you a tax form.

The bad part is say you win 10k and have 10k of losses. The standard deduction is $12.5k (single) so it doesn't make sense to itemize unless you have other deductions.
Most sports betting sites do not produce tax documents unless you are getting odds of at least 600 to 1 and and the "win" is over a certain limit.
$600 is the limit that triggers reporting for sports betting. Sites like Draftkings net winnings against your losses and don't have to report it unless you won $600+ in the calendar year. What they report (or if they don't) to you/the IRS doesn't relieve you of your obligation to claim it.
It really depends on the Sportsbook - Here is what Rhode Island says:
Winnings are reported and taxed in accordance with IRS requirements
Winnings reported to the IRS - Any single wager paying three hundred (300) times the amount wagered and that is at least six hundred dollars ($600) is reported to the IRS.
Winnings reported to the IRS and taxed - If any winnings minus the amount wagered exceed five thousand dollars ($5,000) and the winnings are at least 300x the wager, federal taxes are withheld and the winnings are reported to the IRS.
Collecting on odds of greater than 300 to 1 are quite unusual but it can happen.
I am talking Federal taxes. Any state requirements are separate. Federal reporting has nothing to with the odds. Last I checked Rhode Island was in the US so Federal reporting would apply to money won in Rhode Island.
pshonore
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Re: Paypal sent me a 1099K

Post by pshonore »

michaeljc70 wrote: Fri Jan 28, 2022 1:16 pm
pshonore wrote: Fri Jan 28, 2022 1:13 pm
michaeljc70 wrote: Fri Jan 28, 2022 11:51 am
pshonore wrote: Fri Jan 28, 2022 11:33 am
michaeljc70 wrote: Fri Jan 28, 2022 10:59 am

You cannot deduct gambling losses unless you itemize (or are a professional gambler). Assuming that was $51k and you had more losses than that, it would make sense to itemize. You report gambling winnings as Other Income on the 1040. Those betting sites should be issuing you a tax form.

The bad part is say you win 10k and have 10k of losses. The standard deduction is $12.5k (single) so it doesn't make sense to itemize unless you have other deductions.
Most sports betting sites do not produce tax documents unless you are getting odds of at least 600 to 1 and and the "win" is over a certain limit.
$600 is the limit that triggers reporting for sports betting. Sites like Draftkings net winnings against your losses and don't have to report it unless you won $600+ in the calendar year. What they report (or if they don't) to you/the IRS doesn't relieve you of your obligation to claim it.
It really depends on the Sportsbook - Here is what Rhode Island says:
Winnings are reported and taxed in accordance with IRS requirements
Winnings reported to the IRS - Any single wager paying three hundred (300) times the amount wagered and that is at least six hundred dollars ($600) is reported to the IRS.
Winnings reported to the IRS and taxed - If any winnings minus the amount wagered exceed five thousand dollars ($5,000) and the winnings are at least 300x the wager, federal taxes are withheld and the winnings are reported to the IRS.
Collecting on odds of greater than 300 to 1 are quite unusual but it can happen.
I am talking Federal taxes. Any state requirements are separate. Federal reporting has nothing to with the odds. Last I checked Rhode Island was in the US so Federal reporting would apply to money won in Rhode Island.
Sorry to disagree - but the quotation is the criteria RI uses for Federal reporting (note the reference to IRS requirements). No sports betting site or horse track is reporting "net income" of $600. The US would be buried in paper if they did.
Topic Author
w30442bob
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by w30442bob »

PayPal shows all incoming but nothing outgoing on the 1099K. I’m married filing jointly. I guess I itemize. If I win anything it’s a couple thousand either way. I’ll Never use PayPal to fund again that’s for sure
LSLover
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by LSLover »

If you received a 1099-K for 2021 make sure it’s reporting ONLY transactions related to provision of goods or services taken place after March 11, 2021 because The American Rescue Plan Act of 2021 clarifies Form 1099-K reporting by third-party settlement organizations applies only for transactions for the provision of goods or services settled through a third-party payment network.

https://www.irs.gov/businesses/understa ... orm-1099-k
FoolishJumper
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Location: Midwest

Re: Paypal sent me a 1099-K [for legal gambling]

Post by FoolishJumper »

1099-K is not an income statement, so the correct way to do this is to ignore the 1099-K and don't report it - you didn't have income so you don't need to report it as such. The likelihood of an audit is very high (since the IRS got a 1099-K for $51k that isn't showing up on your Sch C or otherwise), so be sure to cross your t's and dot your i's and have all relevant information on your gambling history (with winnings and loses separately - you can't just offset and only report $500 net winnings - you have to report $50,000 of winnings and $49,500 of losses). They will want to see a record of all gambling to the individual wager to accept that you don't have any winnings to report on your taxes.

You have to claim all gross winnings on Line 8b of your Schedule 1 and all gross losses on Sch A (Itemized deductions - Line 16). If you don't itemize, then you are potentially out a significant amount of tax dollars unfortunately (as you will definitely want to itemize in the end since it seems you bet at least $51k last year - the IRS tax code is quite unfavorable to amateur gamblers unfortunately.

You will have recommendations online that suggest weird ways to put the 1099-K on your return but offset it the same negative number. In my experience in speaking with IRS employees who deal with taxpayer education & advocacy, they will accept this situation, but the correct method is as I mentioned above. Both cases have a high likelihood of audit though.
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Rainier
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by Rainier »

FoolishJumper wrote: Fri Jan 28, 2022 4:31 pm 1099-K is not an income statement, so the correct way to do this is to ignore the 1099-K and don't report it - you didn't have income so you don't need to report it as such. The likelihood of an audit is very high (since the IRS got a 1099-K for $51k that isn't showing up on your Sch C or otherwise), so be sure to cross your t's and dot your i's and have all relevant information on your gambling history (with winnings and loses separately - you can't just offset and only report $500 net winnings - you have to report $50,000 of winnings and $49,500 of losses). They will want to see a record of all gambling to the individual wager to accept that you don't have any winnings to report on your taxes.

You have to claim all gross winnings on Line 8b of your Schedule 1 and all gross losses on Sch A (Itemized deductions - Line 16). If you don't itemize, then you are potentially out a significant amount of tax dollars unfortunately (as you will definitely want to itemize in the end since it seems you bet at least $51k last year - the IRS tax code is quite unfavorable to amateur gamblers unfortunately.

You will have recommendations online that suggest weird ways to put the 1099-K on your return but offset it the same negative number. In my experience in speaking with IRS employees who deal with taxpayer education & advocacy, they will accept this situation, but the correct method is as I mentioned above. Both cases have a high likelihood of audit though.
I disagree. If you ignore the 1099-K you will not be audited....you will get a letter from the IRS with a bill for taxes due, interest and penalties, guaranteed. And it will be for the full amount that is reported on the 1099-K. It is completely automated and no human will be involved in the process.

The correct way is to report the 1099-K income so the IRS machines can match it to what was reported to them then include a subtraction and explanation as to why it is not income. I'm not an expert on gambling reporting so I defer on those specifics. Now, you may still be subject to an audit but this time it would involve a real person and since you have all your information saved it should be resolved.

Edit: Since the OP mentions "legal" gambling more than once I should assume that they have lots of unreported illegal gambling but that's a different topic. But stating that this is legal gambling is irrelevant to this topic.
trueblueky
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by trueblueky »

w30442bob wrote: Thu Jan 27, 2022 12:26 pm [Moved into a new thread from: Paypal sent me a 1099K [for eBay sales] --admin LadyGeek]

PayPal sent me a 1099 K says I made 51.000 or so. But all this was from legal gambling ( sportsbooks). I paid into the Sportsbook sites all with PayPal and 1 credit card ( that didn’t charge anything to deposit) I know PayPal didn’t deduct what I deposited only what I withdrew. I know that I didn’t make anything ( if any) what do I need to do to have all
My ducks in a row and how do I file etc?
If I’d of known this I’d of not used PayPal at all. Very frustrating

Thanks in advance for anyone’s thoughts and help on this Bobby S
I think you need more numbers. How much did you deposit? How much is still on deposit?
Topic Author
w30442bob
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by w30442bob »

I deposited into different betting sites all with PayPal and with a credit card that don’t charge interest on cash deposits. I printed the full year of PayPal transactions ( money in and money out) and I printed all my monthly statements from the other funding method I used I.e., ( credit card)
I can’t believe PayPal only shows on the 1099 K the money coming in and not money going out I’d of thought they’d at least show both and have either a negative or positive total? I guess they just don’t care. Very sad. But it is what it is I’m sure I’ll get it settled ok and I’ve definitely learned not to use them especially for money coming in. I risked slot to basically break even Ian’s it’s a crying shame to have to deal with this crap. Again it is what it is. I appreciate everyone’s thoughts and comments on this most unfortunate situation.
Topic Author
w30442bob
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Joined: Thu Jan 27, 2022 11:20 am

Re: Paypal sent me a 1099-K [for legal gambling]

Post by w30442bob »

So just file and offset the losses and itemize?
If I itemizee can I still use my married filing jointly standard deduction?
What I mess. NO MORE PAYPAL!
rkhusky
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by rkhusky »

w30442bob wrote: Tue Feb 08, 2022 1:34 pm If I itemizee can I still use my married filing jointly standard deduction?
No. You either itemize or use the standard deduction.
rkhusky
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by rkhusky »

FoolishJumper wrote: Fri Jan 28, 2022 4:31 pm You have to claim all gross winnings on Line 8b of your Schedule 1 and all gross losses on Sch A (Itemized deductions - Line 16). If you don't itemize, then you are potentially out a significant amount of tax dollars unfortunately (as you will definitely want to itemize in the end since it seems you bet at least $51k last year - the IRS tax code is quite unfavorable to amateur gamblers unfortunately.
+1

Here are the IRS directions:
https://www.irs.gov/taxtopics/tc419
Topic Author
w30442bob
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by w30442bob »

So I lose my standard deduction with me wife?
Carl53
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by Carl53 »

w30442bob wrote: Tue Feb 08, 2022 3:00 pm So I lose my standard deduction with me wife?
yes
Rollo Tomasi
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by Rollo Tomasi »

One thing to bear in mind is the wagered amount which is what PayPal will also include in the 1099K.

- I deposit $10K to a sports betting site
- I wager it and win $1k
- I withdraw $11k
- PayPal doesn’t know the difference and produces a 1099K for $11k, but I only won $1k

You don’t have itemise to show a win of $11k and a “loss” of $10k, you would just file the $1k as income and ignore the 1099K.
lstone19
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Location: Nevada

Re: Paypal sent me a 1099-K [for legal gambling]

Post by lstone19 »

Rollo Tomasi wrote: Tue Feb 08, 2022 10:55 pm One thing to bear in mind is the wagered amount which is what PayPal will also include in the 1099K.

- I deposit $10K to a sports betting site
- I wager it and win $1k
- I withdraw $11k
- PayPal doesn’t know the difference and produces a 1099K for $11k, but I only won $1k

You don’t have itemise to show a win of $11k and a “loss” of $10k, you would just file the $1k as income and ignore the 1099K.
The problem that has developed is that 1099s come in two basic flavors: some report income while others report cash flow which may or may not be taxable. A 1099-K is a cash flow 1099 and as we're learning, some cash flow reported on a 1099-K is not only not taxable, there's really no proper place to report it on your tax return.

Income 1099s are ones like a 1099-INT, 1099-DIV, 1099-MISC, and 1099-NEC. Cash flow ones are 1099-SA, 1099-Q, and now 1099-K. 1099-B is a special case - in the past it was a cash flow 1099 but now with covered securities, it's both cash flow and income as the income from securities sales can now be determined from the information on a 1099-B. 1099-G is an even weirder - some 1099-Gs are income (such as ones for unemployment) while others are for cash flow (such as ones for state and local tax refunds) - that 1099-Gs cover lots of different government payments is probably why TurboTax (and I assume others but I have no experience) have different input areas for different types of 1099-Gs.

I mentioned the 1099-Q above. Many of us have experience with them and realized for some situations, particularly for higher income taxpayers, it does not go on your tax return anywhere. It's a cash flow 1099 and if none of it is taxable, there is no place to report that cash flow and show that it was not taxable. Our experience was never an IRS inquiry over six tax years with a 1099-Q and nothing reported on the tax return.

What the IRS will expect with the 1099-K is not clear. Some of the money reported on 1099-Ks are totally non-taxable money transfers not related to taxable income of any sort. In the gambling situation that this particular topic is about, the amount reported on the 1099-K is likely to be two things: taxable winnings from gambling and a transfer of money that had put on deposit at the gambling site now being returned to the customer. I disagree with the quote above. I don't believe PayPal knows anything about what was wagered. In the given Example, they are not including the amount wagered in the 1099-K, they are merely showing the amount transferred to you. I suspect if you sent $10,000 to the gambling site, decided not to place a bet at all, and sent the $10,000 back to you, you'd still get a 1099-K for $10,000.
J295
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by J295 »

Rollo Tomasi wrote: Tue Feb 08, 2022 10:55 pm One thing to bear in mind is the wagered amount which is what PayPal will also include in the 1099K.

- I deposit $10K to a sports betting site
- I wager it and win $1k
- I withdraw $11k
- PayPal doesn’t know the difference and produces a 1099K for $11k, but I only won $1k

You don’t have itemise to show a win of $11k and a “loss” of $10k, you would just file the $1k as income and ignore the 1099K.
Please explain your conclusion that itemization is not required, given the language in IRS Topic 419 (which is presumably supported by applicable code sections). Moreover, depending on the state involved, reductions for losses may not be permitted at all regardless of itemizing.
FoolishJumper
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Location: Midwest

Re: Paypal sent me a 1099-K [for legal gambling]

Post by FoolishJumper »

J295 wrote: Wed Feb 09, 2022 7:56 am Please explain your conclusion that itemization is not required, given the language in IRS Topic 419 (which is presumably supported by applicable code sections). Moreover, depending on the state involved, reductions for losses may not be permitted at all regardless of itemizing.
I think you are misunderstanding Rollo's example. The theoretical gambler bet $10k once, they won $1k on that bet, and they immediately cashed out via Paypal and never bet again. That is absolutely a case of reporting $1k under gambling income on Sch 1, Line 8b and not reporting that 1099K anywhere on their tax return. This is 100% supported by the IRS and even if they audit you (which just means they send you a letter in the mail and you respond with evidence showing that you only had a single bet that made you $1,000, which turned into a $11k 1099-K from Paypal), that is the only correct way to report this situation.

The problem is that is a very unlikely scenario for a gambler who has a $51k 1099-K from Paypal. They likely had many, many bets (possibly across a range of sportsbooks & online casinos) - some winning and some losing (and the IRS is aware that this scenario is very common and there will be many 1099-K's tied to such examples this year and definitely for 2022 and they will likely scrutinize them more closely) and even if they lost money overall, non-itemizers will end up paying the IRS more money than if they had never bet at all! These reporting requirements all stem from ensuring people like OP and small online businesses are correctly reporting their earnings. Unfortunately (in the case of gambling) the tax law is extremely unfavorable to online gamblers - people with a sole proprietorship don't have to report their costs as itemized personal deductions, they just report them as cost of their business earnings - gambling losses are literally the cost of earning gambling winnings...
Rollo Tomasi
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by Rollo Tomasi »

lstone19 wrote: Wed Feb 09, 2022 2:44 am
Rollo Tomasi wrote: Tue Feb 08, 2022 10:55 pm One thing to bear in mind is the wagered amount which is what PayPal will also include in the 1099K.

- I deposit $10K to a sports betting site
- I wager it and win $1k
- I withdraw $11k
- PayPal doesn’t know the difference and produces a 1099K for $11k, but I only won $1k

You don’t have itemise to show a win of $11k and a “loss” of $10k, you would just file the $1k as income and ignore the 1099K.
I disagree with the quote above. I don't believe PayPal knows anything about what was wagered. In the given Example, they are not including the amount wagered in the 1099-K, they are merely showing the amount transferred to you. I suspect if you sent $10,000 to the gambling site, decided not to place a bet at all, and sent the $10,000 back to you, you'd still get a 1099-K for $10,000.
I'm not sure what you disagree with or if you have misread. I said that Paypal would not know the difference and give you a 1099-K for the entire amount so I think we are making the same point?
J295 wrote: Wed Feb 09, 2022 7:56 am Please explain your conclusion that itemization is not required, given the language in IRS Topic 419 (which is presumably supported by applicable code sections). Moreover, depending on the state involved, reductions for losses may not be permitted at all regardless of itemizing.
In the example that I'm making, there is no "loss". I don't know OPs exact win/loss record (and sounds like he doesn't either), but I just wanted to point out that you need to factor in the wager which is not taxable or reportable - the "win" is always minus the initial wager. If the $51k he has withdrawn via Paypal is largely made up of his initial wagers then his reporting requirement may be a bit simpler, and may not even be worth itemizing unless he has lots of losses.
sonosoldi3112
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by sonosoldi3112 »

please amend your post

51.000 means nothing
lstone19
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Location: Nevada

Re: Paypal sent me a 1099-K [for legal gambling]

Post by lstone19 »

Rollo Tomasi wrote: Wed Feb 09, 2022 9:31 am
lstone19 wrote: Wed Feb 09, 2022 2:44 am
Rollo Tomasi wrote: Tue Feb 08, 2022 10:55 pm One thing to bear in mind is the wagered amount which is what PayPal will also include in the 1099K.

- I deposit $10K to a sports betting site
- I wager it and win $1k
- I withdraw $11k
- PayPal doesn’t know the difference and produces a 1099K for $11k, but I only won $1k

You don’t have itemise to show a win of $11k and a “loss” of $10k, you would just file the $1k as income and ignore the 1099K.
I disagree with the quote above. I don't believe PayPal knows anything about what was wagered. In the given Example, they are not including the amount wagered in the 1099-K, they are merely showing the amount transferred to you. I suspect if you sent $10,000 to the gambling site, decided not to place a bet at all, and sent the $10,000 back to you, you'd still get a 1099-K for $10,000.
I'm not sure what you disagree with or if you have misread. I said that Paypal would not know the difference and give you a 1099-K for the entire amount so I think we are making the same point?
We may well mean the same thing but you said "the wagered amount ... PayPal will also include in the 1099K" whereas I said I think PayPal is reporting the amount transferred to the person and has no knowledge of whether it was wagered or not. As such and to tie it back to what I was saying in my long post, 1099-Ks report cash flow, not income.
rkhusky
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by rkhusky »

J295 wrote: Wed Feb 09, 2022 7:56 am
Rollo Tomasi wrote: Tue Feb 08, 2022 10:55 pm One thing to bear in mind is the wagered amount which is what PayPal will also include in the 1099K.

- I deposit $10K to a sports betting site
- I wager it and win $1k
- I withdraw $11k
- PayPal doesn’t know the difference and produces a 1099K for $11k, but I only won $1k

You don’t have itemise to show a win of $11k and a “loss” of $10k, you would just file the $1k as income and ignore the 1099K.
Please explain your conclusion that itemization is not required, given the language in IRS Topic 419 (which is presumably supported by applicable code sections). Moreover, depending on the state involved, reductions for losses may not be permitted at all regardless of itemizing.
Topic 419 says you have to report your winnings. It is not clear if the 1099-K is actually reporting winnings, or if it is some other number.

Itemization is only necessary if you want to claim losses.

I also do not think that state rules govern what is reported on the federal tax forms.
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by mikemagz11 »

I received one last year and this year as well for over $100k.

It's basically just for withdraws and doesn't include deposits. This form actually doesn't mean anything really as the only thing that should matter is tax forms sent directly from online casinos.

I plan on writing my winnings off which can only be done by itemizing.
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by rkhusky »

mikemagz11 wrote: Wed Feb 09, 2022 3:49 pm I plan on writing my winnings off which can only be done by itemizing.
You mean writing your losses off?
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by mikemagz11 »

rkhusky wrote: Wed Feb 09, 2022 5:13 pm
mikemagz11 wrote: Wed Feb 09, 2022 3:49 pm I plan on writing my winnings off which can only be done by itemizing.
You mean writing your losses off?
Correct, my mistake.
Paul78
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by Paul78 »

J295 wrote: Wed Feb 09, 2022 7:56 am
Rollo Tomasi wrote: Tue Feb 08, 2022 10:55 pm One thing to bear in mind is the wagered amount which is what PayPal will also include in the 1099K.

- I deposit $10K to a sports betting site
- I wager it and win $1k
- I withdraw $11k
- PayPal doesn’t know the difference and produces a 1099K for $11k, but I only won $1k

You don’t have itemise to show a win of $11k and a “loss” of $10k, you would just file the $1k as income and ignore the 1099K.
Please explain your conclusion that itemization is not required, given the language in IRS Topic 419 (which is presumably supported by applicable code sections). Moreover, depending on the state involved, reductions for losses may not be permitted at all regardless of itemizing.
If you only claim winnings then I don't think itemization is required. But assuming the OP even if he had a mild net gain (say 2k for the year) it generally comes with a lot of loses (ie for example winning bets of 22k and losing bets of 20k so net gain of 2k) so he will likely get screwed and have to itemize as otherwise he just has to report the 22k in winnings and can't report any of the loses.
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by Starfish »

sonosoldi3112 wrote: Wed Feb 09, 2022 10:17 am please amend your post

51.000 means nothing
Do you promise to add something useful?
The topic goes ahead, everybody understood the international symbols used. Dot vs comma, metric system, long vs short billion, it's everybody's duty to know what they mean. And if you don't now you have the opportunity to learn.
calwatch
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by calwatch »

Offsetting each individual bet is a very conservative way of reporting. You can use session reporting but may have to justify it to the IRS. For example, if someone walks into a casino and plays slots and video poker, moving between machines but staying in the same casino, the IRS has declared that a session. Thus, if someone wins a jackpot, gets a W-2G (the form for casinos to report winnings), but loses it all before they exit, they legally could report zero for that trip, although the IRS is going to flag for audit.

Look at IRS Memorandum 2008-011: https://www.irs.gov/pub/irs-utl/am2008011.pdf
A key question in interpreting § 165(d) is the significance of the term “transactions.” The statute refers to gains and losses in terms of wagering
transactions. Some would contend that transaction means every single play in a game of chance or every wager made. Under that reading, a taxpayer would have to calculate the gain or loss on every transaction separately and treat every play or wager as a taxable event. The gambler would also have to trace and recompute the basis through all transactions to calculate the result of each play or wager. Courts considering that reading have found it unduly burdensome and unreasonable. [...]

The better view is that a casual gambler, such as the taxpayer who plays the slot machines, recognizes a wagering gain or loss at the time she redeems her tokens. We think that the fluctuating wins and losses left in play are not accessions to wealth until the taxpayer redeems her tokens and can definitively calculate the amount above or below basis (the wager) realized.
[...]
Likewise, a casual gambler who enters a casino with $100 and loses the entire amount after playing the slot machines has a wagering loss of $100, even though the casual gambler may have had winning spins of $1,000 and losing spins of $1,100 during the course of play.


Therefore, one could argue that all bets at one online gaming establishment are considered one session. Hypothetically you deposit $2,000 at the start of the year, win a (net) amount of $12,000, place $12,000 of losing bets, and cash out the same $2,000 at the end of the year. Under the liberal session interpretation that would be zero gain or loss and nothing would be reported.

This would not match the slot machine analogy, which states that a session cannot extend past a day (as defined by the taxpayer) nor beyond the doors of an existing casino. So it is up to the taxpayer to use their best judgment and pay any penalties or interest if they get it wrong. Still, I think the session analogy is a great analogy to use and it comes straight from the IRS.
calwatch
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by calwatch »

Michigan's tax administrator has used court decisions to extend the "per session" methodology to all games, per casino, per day. https://www.michigan.gov/documents/trea ... 8743_7.pdf
Though lacking any formal IRS guidance, courts have interpreted the IRS’s position to extend to other casino games in which it is impractical and
burdensome to track gains on a per-bet basis. The Department agrees with and follows this interpretation of IRC 165(d) and accepts per-session reporting for all casino games. Acceptance of per-session reporting does not mean that a casual gambler may offset separate session winnings
earned throughout the year with separate losses incurred throughout the year as does a professional gambler.


Thus, even if you take a meal break (or some other break) during the day, Michigan interprets court guidance as a continuation of the same session and so losses can be offset from gains for that type of game, for that day.
Bgmac77
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by Bgmac77 »

mikemagz11 wrote: Wed Feb 09, 2022 3:49 pm I received one last year and this year as well for over $100k.

It's basically just for withdraws and doesn't include deposits. This form actually doesn't mean anything really as the only thing that should matter is tax forms sent directly from online casinos.

I plan on writing my winnings off which can only be done by itemizing.
Hello im wondering how you made out with reporting your paypal withdrawls total. I had no idea that withdrawls from gaming sites to paypal... paypal recognized them as payments and reports them. Please if you have a minute and get this message please let me know what you did. I dont mind paying taxes on winnings but i have a net loss and paypal doesnt differentiate as im sure you know. This is in sane i used paypal as a secure bank account now im gonna get a 1099k for tens of thousands. Please help if you can thanks
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by criticalmass »

w30442bob wrote: Thu Jan 27, 2022 12:26 pm [Moved into a new thread from: Paypal sent me a 1099K [for eBay sales] --admin LadyGeek]

PayPal sent me a 1099 K says I made 51.000 or so.
For $51.00 I wouldn't worry about it very much. Even at a high marginal rate, the tax on $51 is a rounding error.
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by Monster99 »

criticalmass wrote: Sat Dec 10, 2022 11:56 pm
w30442bob wrote: Thu Jan 27, 2022 12:26 pm [Moved into a new thread from: Paypal sent me a 1099K [for eBay sales] --admin LadyGeek]

PayPal sent me a 1099 K says I made 51.000 or so.
For $51.00 I wouldn't worry about it very much. Even at a high marginal rate, the tax on $51 is a rounding error.
International standard is a period instead of a comma, so actually $51,000.....
j.click
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by j.click »

2023 prediction: with the proliferation of online betting and the implosion of crypto, the 2022 filing season is going to be a doozy and we will enjoy MANY more posts such as this one,,,
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by lstone19 »

Part of the problem here is that the 1099-K is reporting cash flow, not taxable income, with no good way for many taxpayers to show on their tax return how much, if any, of that cash flow is taxable.
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by nisiprius »

w30422bob, by $51.000 do you mean "Fifty-one thousand US dollars?"


Monster99 wrote: Sun Dec 11, 2022 7:12 am
criticalmass wrote: Sat Dec 10, 2022 11:56 pm
w30442bob wrote: Thu Jan 27, 2022 12:26 pm [Moved into a new thread from: Paypal sent me a 1099K [for eBay sales] --admin LadyGeek]

PayPal sent me a 1099 K says I made 51.000 or so.
For $51.00 I wouldn't worry about it very much. Even at a high marginal rate, the tax on $51 is a rounding error.
International standard is a period instead of a comma, so actually $51,000.....
There isn't any single "international standard." (And the "$" symbol. by itself, is used for other currencies besides the US dollar, so seeing a $ doesn't mean someone is necessarily adhering to US conventions). The use of three zeros after the "." suggests that it is being used as a thousands separator and not a decimal separator, but this is not anything to play "gotcha" about.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
London
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by London »

I was curious how 1099s on gambling winnings were issued a few years ago. So I reached out to a friend who wrote one of the most used accounting text books in the country. He sent me back a very easy, concise description. When I thanked him, he replied “don’t thank me, I had to google it. My own writing on this is way too hard to understand”.

My only point here is; for $51k ask an expert.
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by criticalmass »

Monster99 wrote: Sun Dec 11, 2022 7:12 am
criticalmass wrote: Sat Dec 10, 2022 11:56 pm
w30442bob wrote: Thu Jan 27, 2022 12:26 pm [Moved into a new thread from: Paypal sent me a 1099K [for eBay sales] --admin LadyGeek]

PayPal sent me a 1099 K says I made 51.000 or so.
For $51.00 I wouldn't worry about it very much. Even at a high marginal rate, the tax on $51 is a rounding error.
International standard is a period instead of a comma, so actually $51,000.....
Sorry for the confusion, I thought I was responding to a US Investors Personal Finance forum. Where did you find the international standard?
toddthebod
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by toddthebod »

lstone19 wrote: Sun Dec 11, 2022 8:06 am Part of the problem here is that the 1099-K is reporting cash flow, not taxable income, with no good way for many taxpayers to show on their tax return how much, if any, of that cash flow is taxable.
Many taxpayers should be able to throw the 1099-k in the trash. It is an "information return." There is no requirement to report non-taxable "income" on your return.
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by Nate79 »

1099-K should not be ignored. It should still be reported to avoid a red flag that could lead to an audit. The matching to 1099-K will be for particular focus of the IRS.
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by lstone19 »

Nate79 wrote: Sun Dec 11, 2022 11:54 am 1099-K should not be ignored. It should still be reported to avoid a red flag that could lead to an audit. The matching to 1099-K will be for particular focus of the IRS.
One thing that could be tried (and I just tried it in TT) is to show the full amount of the 1099-K as other income with a description such as "1099-K amount" followed by a second other income negative amount with a description such as "1099-K non-taxable income." That way you have the full 1099-K amount shown on your return but only the taxable amount, if any, passes through as taxable income.

But given that 1099-K amounts could end up in a lot of different places on your return, I have no idea how the IRS might do matching as it can end up or be split across Schedule C, D, and E as well as Schedule 1 Other Income (and probably some place else as well).
7eight9
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by 7eight9 »

criticalmass wrote: Sun Dec 11, 2022 11:12 am
Monster99 wrote: Sun Dec 11, 2022 7:12 am
criticalmass wrote: Sat Dec 10, 2022 11:56 pm
w30442bob wrote: Thu Jan 27, 2022 12:26 pm [Moved into a new thread from: Paypal sent me a 1099K [for eBay sales] --admin LadyGeek]

PayPal sent me a 1099 K says I made 51.000 or so.
For $51.00 I wouldn't worry about it very much. Even at a high marginal rate, the tax on $51 is a rounding error.
International standard is a period instead of a comma, so actually $51,000.....
Sorry for the confusion, I thought I was responding to a US Investors Personal Finance forum. Where did you find the international standard?
ISO 4217
The integer part of Amount must contain at least one digit. A decimal comma is mandatory and is included in the maximum length. The number of digits following the comma must not exceed the maximum allowed for the specified currency.
https://www.iso20022.org/15022/uhb/mtn9 ... 20currency.
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PharmerBrown
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by PharmerBrown »

j.click wrote: Sun Dec 11, 2022 7:27 am 2023 prediction: with the proliferation of online betting and the implosion of crypto, the 2022 filing season is going to be a doozy and we will enjoy MANY more posts such as this one,,,
Plus the expansion of the IRS should lead to more audits/inquiries into these exact situations.
fareastwarriors
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Re: Paypal sent me a 1099-K [for legal gambling]

Post by fareastwarriors »

PharmerBrown wrote: Sun Dec 11, 2022 3:41 pm
j.click wrote: Sun Dec 11, 2022 7:27 am 2023 prediction: with the proliferation of online betting and the implosion of crypto, the 2022 filing season is going to be a doozy and we will enjoy MANY more posts such as this one,,,
Plus the expansion of the IRS should lead to more audits/inquiries into these exact situations.
With implosion of meme stocks, cryptos, and likely gambling losses, more people are getting some tax deductions!
:P
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