How Playing Fantasy Sports Affects Your Taxes

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?  

Possibly, yes. 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.

To learn more about reporting gambling winnings, read our post

How do I report fantasy sports winnings?

Winnings are reported as “other income” on your tax return. The major leagues know to send you Form 1099-MISC, which has all the information you’ll need. They’ll send the same information to the IRS about your net profit, so make sure to report your winnings on your tax return. The IRS will know if you did not. 

What should I do if I didn’t get 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 2018, you could write off the entrance fees under miscellaneous deductions. But the tax laws changed under the Tax Cuts and Jobs Act 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 was last updated on 10/12/2022.

This article is intended to provide general information to the public and does not provide personalized tax, investment, legal, or business advice. You should seek the assistance of a professional for advice on taxes, investments, and any other financial, legal, or business matter pertinent to your individual situation.

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