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 that 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?    

Yes! Income from fantasy sports is treated just like any other cash prize or gambling win. You should report all net profit from playing fantasy football on your tax return.

Learn more: Reporting Gambling Winnings and Losses for Taxes 

How do I report fantasy sports winnings?  

The major leagues typically send Form W2-G with all the information you’ll need to report winnings. However, depending on the how your winnings are classified with the payer, you may receive Form 1099-MISC. You can report winnings from a 1099-MISC as “Other Income” on your tax return. If your winnings are paid using a third-party platform like Venmo or PayPal, you may receive winnings reported on Form 1099-K.

The payer will also send the same information to the IRS about your net profit, so make sure to report your winnings on your tax return. Ensuring your tax forms match IRS records will help to process your refund as quickly as possible.  

What should I do if I didn’t get a W2-G or 1099-MISC?     

If you don’t receive Form W2-G or 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. It’s always a good idea to keep track of your winnings to report them accurately on your tax return.     

Read also: The Best Way to Organize Receipts and Records for Tax Time 

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. However, the tax laws changed under the Tax Cuts and Jobs Act and eliminated miscellaneous deductions like this one.    

Learn more: Need-to-Know Tax Reform 

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.     

Disclaimer:
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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