It’s that time of year again. Most of us are licking our wounds after our NFL DFS losses. This season was CRAZY to say the least. The excessive use of RBBCs (Running Back By Committee), Injuries and who knows who comes out of nowhere as a result. You would think that was solely Bill Belichick’s domain, but other teams have caught onto the concept. This includes my beloved Philadelphia Eagles despite signing major bust DeMarco Murray for a king’s ransom. And there were also coaching scripts that made expensive “chalk” plays look like duds at the end of the day. But that being said, there were many winners in the DFS Arena this season. There were also some of you who are brave enough to play other sports such as NHL, PGA and CFB where info is harder to find and NBA where the time comittment is intense.
So now onto something interesting if you’re NOT licking your wounds. DFS Tax Updates ! I have to put to rest the fact that ANY income from a DFS site is taxable and reportable, even if $1. The question has been asked repeatedly on Forums. That said, you will receive a Form 1099-MISC from any site you win over $600. If you have any losses on other sites, you can’t simply “Net” them on Line 21 or Gross Income either. Say you win $5,000 on DraftKings and Lose $4,900 on FanDuel. The whole $5,000 has to show up on either Line 21 of the 1040 or Gross on the Schedule C, depending on what path you choose. If you have questions or just want me to do your taxes for you, call me or another tax CPA. There’s also the hobby vs. business aspect to consider as well if you’re a serious “Grinder”. There are also some provisions that COULD apply for your DFS Activities and some I’ll mention that are generally important to all taxpayers, DFS players or not.
Taxpayers can, according to Reg. Section 1.263(a)-1(f), deduct Assets Costing less than $2,500 immediately. For a Serious DFS Grinder, this would primarily apply to any computer equipment purchased for DFS activities such as your 6th monitor to analyze stats! I should also mention this is $2,500 per Invoice. So you buy 10 really good monitors for $500 a piece plus a powerful $2,499 server for number crunching. Still good for the safe harbor. So, say you opt for the $8,000 server? Well, it would have to be Capitalized rather than expensed, but Section 179 would likely kick in for the same effect as expensing it anyway more likely. Again, myself or another CPA can assist you with that,’
There have also been some Individual provisions made permanent for 2015 tax year:
- Enhanced Additional Child Tax Credit
- Enhanced American Opportunity Credit at $2,500 maximum for all 4 years of postsecondary education.
- Itemized Deduction for State and Local Sales Taxes in lieu of State Income Taxes. HUGE help in States like TX, FL, WA.
What could get interesting this year are some of the potential tax proposals states are floating around to tax the Rake of residents of their state along with licensing fees. Some of which seem rather exorbitant. In particular one floated in Pennsylvania calling for a “Shotgun” partnership for a “Tournament Vendor” such as FanDuel, DraftKings (might be able to swing it)….. FantasyAces, DraftPot (see ya later) with a PA based land casino. The land Casino would pay a $5 million licensing fee for such privilege and the “Vendors” would pay $1 million. This along with a 14% tax rate on Net Revenues (Entry fees-Prizes). In my opinion, it’s either a lack of education of the industry of our elected officials or the Casinos are truly in their pockets forcing their hands. Stay tuned and keep on your elected officials whether in Pennsylvania or anywhere in the USA in particular NY, CA and IL among others.