Affiliates (February 18, 2018)

The idea behind my book and the DFS Taxes Blog is to keep the Casual or small business Daily Fantasy player to be well informed with taxes and beyond.  I picked affiliates I feel will get your taxes filed accurately.  The biggest one is 1040.com who is affiliated with Drake Software who I have used for years.

          I also picked Lending Tree seeing a lot of DFS Grinders are looking to be homeowners.  I have signed up for them.  Even if you have your BFF as a mortgage guy, you can use their rates as a negotiating tool.

 

2018 IRS Withholding Tables Released (February 16, 2018)

2018 IRS WIthholding Tables

So this is what W-2 Employers will withhold from your paychecks this year eventually if they haven’t already done so. In many cases, more will receive extra in their paychecks. While this maybe great for someone who doesn’t play Daily Fantasy Sports, remember the lower amount of withholding doesn’t necessarily mean lower tax liabilities for you. In fact the gap between what is credited as tax payments and what is actually owed could GREATLY increase leaving you with issues next year.

Players Guide to DFS Taxes has a comprehensive Chapter on Tax Rates for DFS related income so you can plan accordingly and not be in for sticker shock. Remember, as I also mentioned in the book, the sites do not withhold tax crediting payments when you actually file your return. It is your responsibility.

And as I always say, get those State payments in before the end of the year. You can still allocate State and Local taxes between your Itemized Individual deductions (subject to $10,000 cap) and that derived from DFS. In years past, I would put all amounts on the Schedule A.

SALT On the Wound (February 12, 2017)

For some of you in DFS, next year could be rough for you tax-wise.  For some it could be great.  For hobby players, there is NOWHERE on Itemized Deductions you can deduct ANYTHING DFS related.  No Miscellaneous Itemized for Gamblers.  No Miscellaneous Deductions Subject to 2% AGI floor for Hobby DFSers.  Filing as a Schedule C could qualify you for a 20% business income deduction on your Schedule C.

Now about SALT or State and Local Taxes.  Next year as an Individual, you are capped at $10,000 and that’s if you Itemize.   When I talk in the book about Planning for what you owe your State and Local governments, nothing has really changed.  You now CAN, as a business opposed to a Hobby, attribute State and Local taxes derived from DFS income as a business deduction.  Anything from Wages or Property taxes has to go on the regular Itemized Deductions.  I will get into more how you would prepare this in next year’s version.

Few Things to Keep in Mind for Next Year (February 11, 2018)

For starters, the tax rate table has changed so the amount you owe the Feds will significantly change.  Here is the released 2018 Tax Table for your planning:

Tax Brackets and Rates, 2018
Rate For Unmarried Individuals, Taxable Income Over For Married Individuals Filing Joint Returns, Taxable Income Over For Heads of Households, Taxable Income Over
10% $0 $0 $0
12% $9,525 $19,050 $13,600
22% $38,700 $77,400 $51,800
24% $82,500 $165,000 $82,500
32% $157,500 $315,000 $157,500
35% $200,000 $400,000 $200,000
37% $500,000 $600,000 $500,000
2018 Standard Deduction and Personal Exemption
Filing Status Deduction Amount
Single $12,000
Married Filing Jointly $24,000
Head of Household $18,000

 

Change of Direction (February 10, 2018)

Want to start by saying I had to retire from Daily Fantasy Sports tax preparation.  With my personal health issues and a growing young family (toddler and an infant), I would be doing a disservice as a sole practitioner staying on as such. I talked to the guys at DFS Accounting, LLC in Chicago and they are happily taking on new clients and some of my former clients as well.  I want to put the DFS Community in great hands.

That being said, I still want to be involved in DFS and the taxes and laws related to it.  My new change in direction is to write Annual DFS Tax Guides and eventually when we get online poker and sports betting, I will look to create tax guides from them as well.

Next year’s book will have far more details on the 2017 Tax Cuts and Jobs Act implications on Daily Fantasy Sports.  Spoiler Alert- The act tends to STRONGLY favor DFS as a Business versus a Hobby!  I’ve even thought of a 2017.2 version during the summer with additional tax planning advice.  My head was even spinning as the TCJA was moving through Congress.

My inspiration for the book is I found some potential clients did not have the means to pay a professional tax preparer or the amount on their 1099 Box 3 did not justify such additional services for a normal wage earner and mortgage who typically prepared their own return on TurboTax.

If you are confused by what I wrote or have a very large in Box 3 of your 1099, I would seek a DFS tax accountant.  Or even if you have a good CPA who has been with your small business for many years, you may need to educate him or her on DFS implications.  My book clears a lot of misconceptions up.

 

My emails are:  patrick.guinan@dailyfantasytaxes.com and patrickguinancpa@gmail.com

Should You Take DFS Losses on Your Taxes? (January 19, 2017)

Even those amongst us who spend a lot of time on DFS as an activity can have a losing calendar year. That being said quite a few have asked me if they can write off their DFS losses and related expenses against their Wages, Business and Other Income. The answer is yes and no. Again, look at the Hobby Loss factors from above in particular 3 of 5 years being profitable. If you’re calling me asking whether you can take $10,000 in DFS Losses against $70,000 in Wages on your Adjusted Gross Income and have never been profitable in the past, my short answer is I’m not going to feel comfortable taking the loss if you come to me pretty much without a PLAN. This means, if you’re not running DFS activities in a business-like manner nor do you have a business plan per se, I will likely treat your loss as a Hobby and call it what it is.

That being said, Daily Fantasy Taxes can work on a Business Plan tailor made for your needs.  As a large volume player, this can be an integral part of your overall strategy where you COULD take losses in bad years.  We’d all like to be profitable in this DFS endeavor.  However, even in the best of circumstances and strategies, one can still be faced with substantial defeats and nasty cold streaks.

1099-MISC Delay from FanDuel and DraftKings and What You Can Do (3/1/2016)

FanDuel and DraftKings 1099-MISC Delays!

Today I’m writing about the delay in 1099 issuance from FanDuel and DraftKings and what you need to do.  I said it numerous times on RotoGrinders- DON’T PANIC AND FILE YOUR RETURN YET! Reason I say this is the sites will issue a 1099-MISC to both you and the IRS.  The IRS is looking for the 1099-MISC amount you reported to match.  And if they don’t?  You will likely receive a notice if the amount reported is less than the 1099.

I as a player and tax practitioner am LIVID this delay happened.  This shortens my filing season and puts pressure on many a Grinder.  I even saw people posting they just had to get their returns done because they or their children needed to fill out a FAFSA form, expecting a much needed refund, etc.  And so you may have already filed.  Here’s the thing, not all is lost.  You can file what is called a 1040-X and related State Tax forms to correct your DFS related income.  I’m sensing some will not even realize they are due a 1099-MISC as well.  Again, that’s why the 1040-X is there.

The 1040-X is not a particularly easy form to fill out and it requires a line by line explanation as to why your return needed to be corrected.  It could also get interesting if you or I find your activities constitute a business rather than a hobby.  Ok, so you get your 1099-MISC and I or your tax practitioner is slammed running against the April 15th deadline.  You think all is lost there, right?  WRONG!  I can file a Form 4868, Application for Automatic Extension making the new return filing due date of October 15th.  You still have to pay any taxes due on April 15th, but we can make a payment with the Extension.  At least if the Extension is filed, late filing penalties are eliminated.

Despite all that went down with 1099s, don’t feel like you are under more pressure yourself.  Yes, you would like your refund sooner than later.  But getting your return right is more important.  Also, we have options to keep potential interest and penalties to a minimum or zero. I can discuss many options with you if needed.  Contact me for a consult or tax preparation.

Patrick Guinan, CPA

2016 Daily Fantasy 1099-MISC Stampede!!!! (February 8, 2016)

STAMPEDE!!!!!!

As some of you may know, FanDuel and DraftKings are delayed in sending out their 1099-MISC Forms to participants in order to file their winnings to the IRS and other taxing authorities.  This is delaying the proper filing of tax returns of folks who know this and could cause MAJOR headaches for those who have filed and may not know this.  I’m not going to comment why it is happening or speculation, but I have a few tips for current readers or any potential clients of mine.  I can’t emphasize this enough:

WAIT TO RECEIVE YOUR 1099-MISC FROM FANDUEL OR DRAFTKINGS BEFORE YOU FILE YOUR RETURN!!!!!

Yep, I said it Bold and in Gold!  So many users on RotoGrinders understandably want to get a jump on filing their taxes.  I don’t blame them especially if they are due a Refund.  Many are very intelligent individuals, have great statistical and Microsoft Excel knowledge so they figure they’d calculate their Winnings and Entry Fee from the CSV files provided by the major sites.  I’d recommend downloading the files anyway for purposes of corroboration and to better serve you as a client on how to file your return not to mention they will help you be a better DFSer.  However, I would STRONGLY dissuade you from preemptively using that information to file your tax return based solely on that information.  And here’s why?  The 1099-MISC Form from FanDuel and DraftKings is also reported to the IRS.  Say the amount you calculated does not agree with the Form.  Now what?  You can argue your amount is correct.  You then would have to contact FanDuel and DraftKings Customer Support.  Ok, the amount stands.  Now you have another issue on your hands.  AN AMENDED RETURN!  So, that means you can just do a “do-over” and resend to the IRS and States, right?  NOPE!  You have to file what is called a 1040-X (plus other equivalent State Forms) and explain the differences between what you originally filed and what your tax return should look like.

SPECULATION

Word of advice.  Don’t get caught up in it.  Technically what the sites did is perfectly legal, if I as a Tax Practitioner did what I would do if I couldn’t get 1099s out would do and that is file a Form 8809, Application for Extension of Time To File Information Returns.  In my view, this does not look good for the sites in the Grand Court of Public Opinion, which right now the DFS industry needs improvement.

 

January 4, 2016- Tax Updates and DFS

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.

2015 NFL Week 1: Big Winners. Uncle Sam wants a piece.

Week 1 Daily Fantasy Football and Your Taxes

I’m excited for Week 1.  For me, this is Christmas morning.  FanDuel has the $5 Million NFL Sunday Millions.  DraftKings has the $10 Million Millionaire Maker.  That is a total of $15 million in GUARANTEED prizes!  Not to mention both sites’ other contests with some high prizes.  There are 572,500 DraftKings slots and 229,885 FanDuel slots.  Guaranteed means even if they don’t fill, the prizes respective to place are still there.  What does this mean for you?  There’s overlay and the sites will take some losses.  In reality, that’s wishful thinking for us players.  But what if you’re lucky anyway?

 

For FanDuel and DraftKings, there are placement tiers with respective payouts.  If you win 250th or better on FanDuel or 600th or better on DraftKings, you will likely be receiving a Form 1099-MISC from the site operators.  This means you have to know where to report that amount on your taxes.  For the most part, if this was the only contest you entered all year, just put in on Line 21 as Other Income and call it a day, right?  Maybe.  But what if the amount is towards the top of the pile?  For DraftKings, over 200th place would fetch a cool $2,000… and rising towards to eventual $2 Million for 1st place!  Now your taxes get a little more complicated.  You should make Estimated Tax Payments.  Would the IRS see this as a For-Profit Business rather than a Hobby?  Then you need to have a discussion with myself or a tax practitioner (CPA, EA).

 

Not only does Uncle Sam want a share, but also States and possibly localities.  I’m writing from the City of Brotherly Love Taxes, Philadelphia, PA soooo… as a Hobby I’m looking at School Income Tax (SIT) cause my sky high City Wage Taxes weren’t enough or as a Business the dreaded Business Income and Receipts Tax (BIRT, otherwise known as Business Privilege Tax).  Ohio and NYC among others have some interesting snafus as well.

 

Win Big on FanDuel or DraftKings on Week 1?  Contact dailyfantasytaxes.com or call (866)668-4650 for a consultation.

www.dailyfantasytaxes.com