How to Report Your DraftKings Winnings on Your Taxes
If you’re an avid sports fan and have been using DraftKings to make some extra money, then you might wonder how you should report your winnings come tax season. Although gambling winnings are subject to taxes, there are certain guidelines that you should follow to ensure that you don’t end up paying more or less than you should. In this article, we’ll explore the process of reporting your DraftKings winnings on your taxes.
DraftKings Winnings and Taxes
Firstly, let’s talk about gambling winnings for tax purposes. The IRS considers all gambling winnings as taxable income. This means that any prize money or earnings you receive from DraftKings is subject to federal income tax. It doesn’t matter how much you win – all winnings must be reported on your tax return.
Reporting Your DraftKings Winnings
When it comes to reporting your DraftKings winnings, there are a few key steps you need to follow. Firstly, you’ll need to keep track of all your winnings throughout the year. You can do this by using the transaction history feature on your DraftKings account. This will allow you to see exactly how much you’ve won in total.
Next, you’ll need to report your winnings on your tax return. If you’ve won more than $600 in a year, DraftKings will send you a Form 1099-MISC by January 31st of the following year. This form will detail all of your winnings and is required by the IRS to be filed with your tax return.
If you’ve won less than $600, you’ll still need to report your winnings on your tax return, but you won’t receive a Form 1099-MISC from DraftKings. Instead, you’ll need to manually enter the total amount you’ve won on the ‘Other Income’ section of your tax return.
Deducting Your DraftKings Losses
If you’ve lost money while playing on DraftKings, you might be able to deduct those losses from your taxable income. However, there are certain requirements that must be met in order to do so.
Firstly, you can only deduct gambling losses if you itemize your deductions on your tax return. This means that you’ll need to opt for the ‘itemized deductions’ option rather than the standard deduction. Secondly, you can only deduct losses up to the amount you’ve won. For example, if you’ve won $1,000 on DraftKings but lost $500, you can only deduct up to $500 in losses.
Conclusion
In summary, reporting your DraftKings winnings on your taxes is a relatively straightforward process. By keeping track of your winnings and losses throughout the year and reporting them accurately on your tax return, you’ll be following the guidelines set out by the IRS. Remember, all gambling winnings are taxable income, and you should always consult with a tax professional if you’re unsure about the process.
