Flag On the Play! Fantasy Sports Have Real Penalties

An estimated 57 million to 75 million people join fantasy football leagues through hosting sites like Draftkings, Yahoo!, ESPN and FanDuel every year. Just like the NFL draft, a fantasy draft allows you to pick and choose players from different positions and teams to put together the best team possible. Dedicated members know if you draft the right teams, you could win big by the end of the season.  

But did you also know that you are accountable for reporting those earnings to the IRS?  

Do I have to pay taxes on fantasy sports winnings?  

The income from fantasy sports is treated just like any other cash prize or gambling win. If your net profit from playing fantasy football is $600 or more, you will need to report your winnings as “other income” on your tax return. The major leagues know to send you Form 1099-MISC to report these winnings. The IRS also receives this information about your net profit. Make sure to report them on your tax return, because the IRS will know if you did not. 

What if I didn’t receive a 1099-MISC?  

If you don’t receive Form 1099-MISC from your fantasy sports host site, it does not mean you are free from tax liability. You will still be accountable for your income if it is over $600. It’s always a good idea to keep track of your winnings to report them accurately on your tax return.   

Are there tax deductions for fantasy sports?  

Currently, there are no tax deductions for fantasy league winnings. Before the Tax Cuts and Jobs Act (TJCA), you could write off the entrance fees under miscellaneous deductions. The tax laws changed in 2018 and got rid of miscellaneous deductions like this one. Learn more about it here.  

Can I claim gambling losses for fantasy sports?  

The general rule for claiming gambling losses is that you can never deduct more for losses than you report for income. So, if you win $1,000 and lose $1,500 in another league, your deduction is limited to just $1,000. You can’t deduct your losses without reporting your wins. Also note that to report gambling losses, you must choose to itemize your deductions instead of taking the standard deduction.   

Need a coach for filing your income taxes? TaxSlayer makes filing simple and easy. We’ll ask the right questions to help you get the maximum refund when you file.   

This article is up to date and accounts for tax law changes for tax year 2019. 

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