1099's

[Head 2 Head]

Why would I get a 1099 when my winnings were less than my entry fees for the same league that I had winnings in?

[KJ Duke]

It's required by IRS, however you can write off the full amount so it has no impact on your taxable income.

[bvoorhees13]

This income goes on a schedule C as income from a sole proprietorship?

Also, I didn't report my net losses from previous years. Should I have been filing schedule Cs with no income and only expenses? Can I carryover 2009 and 2010 entry fees as an expense?

[Roy's Outlaws]

The I.R.S. consider winning as gambling winning so as of now there is no carry over of losses or expenses. But since the I.R.S. wants to consider winning from Fantasy Sports as gambling winning then you can right off gambling loses up to the amount you won. That includes casino losses,tourament entry fees,losing lottery tickets, Fantasy entry fees. But makes sure you can prove these deductions with receipts. Good chance they will want to see prove.

[Edwards Kings]

It's required by IRS, however you can write off the full amount so it has no impact on your taxable income.

KJ, have you treated the winnings as "hobby" in the past even though you get a 1099-MISC, or do you record with other 1099-MISC with expenses being subject to the 2.5% AGI floor?

Thanks!

[Captain Hook]

I am surprised every time there is a new thread and new questions and answers on this.....well maybe someone who hasn't done an organized, paperwork required league would have a question.

But for all you guys who do this every year, sometimes two sports a year, insert obligatory mileage will vary PLEASE check with your tax provider first, I can't see why you aren't setting this up as a side business, offsetting all your income with not only entry fees but preparation (subscriptions, books, websites - whatever you pay for that dispenses information that aids in increasing your income). It's easy clean and in the years where you don't win is a nice loss to take.

[Edwards Kings]

It's easy clean and in the years where you don't win is a nice loss to take.

Not necessarily. Loss carryovers imply a business and I do not believe the casual participant would qualify. But that is only my opinion.

I agree you should ask your tax professional, but in my case, I do my own taxes. This is the first year I have been fortunate enough to get a 1099-MISC for this contest so I am left with only the one question (hobby or not). Hardly worth taking it to and paying someone who might really know (as in I would not trust this question to HR Block!).

So anyway, just asking for some cheap advice from a friend. Either way, I will choose one of my two options this weekend and be done with it.

[TParsons]

Unless you're a professional gambler, your winnings need to be reported as "other income." Losses (entry fees) would be an itemized deduction on Schedule A.

[KJ Duke]

It's required by IRS, however you can write off the full amount so it has no impact on your taxable income.

KJ, have you treated the winnings as "hobby" in the past even though you get a 1099-MISC, or do you record with other 1099-MISC with expenses being subject to the 2.5% AGI floor?

Thanks!

I've been using hobby income. I wish the IRS would clarify what income this should be in a clear and fair way, but they seem to prefer unnecessarily vague. Hobby seems defendable - not the most tax-advantaged but not the worst either.

[Edwards Kings]

Thanks Perry, TParsons, and Kevin! Clear as mud!

And that is the way the IRS wants it.

[Head 2 Head]

Unless you're a professional gambler, your winnings need to be reported as "other income." Losses (entry fees) would be an itemized deduction on Schedule A.

I agree that is the proper way to do. However, as I don't itemize (take the standard deduction) the addition to "other income" for return of entry fee is the issue. I donated a "triple play live" last year along with satellites drafts and got a 1099 for leagues that returned entry or less. I am not even saying all my NFBC leagues should be combined - just that the 1099 should be "net" income for the league that pays off. The current method seems wrong to me, and the reason I am not signed up for the Main (currently) in 2012.

[Greg Ambrosius]

Unless you're a professional gambler, your winnings need to be reported as "other income." Losses (entry fees) would be an itemized deduction on Schedule A.

I agree that is the proper way to do. However, as I don't itemize (take the standard deduction) the addition to "other income" for return of entry fee is the issue. I donated a "triple play live" last year along with satellites drafts and got a 1099 for leagues that returned entry or less. I am not even saying all my NFBC leagues should be combined - just that the 1099 should be "net" income for the league that pays off. The current method seems wrong to me, and the reason I am not signed up for the Main (currently) in 2012.

I don't know what to say other than as game operators we report the amount you won from us and there are certainly ways to tell the government what expenses were needed on your part to earn that income. Fanball took out your entry fees from winnings, but they also did it only for that certain winning entry. I'm not sure if that's the right way or the best way or not. All I know is that what we are doing now is no different from the first 7 years we reported winnings to the government and most players in our contest knew how to itemize their expenses in accordance with the winnings. In this case, it seems like itemizing is the way to go. But if not and you're worried about paying taxes on your winnings that don't take out your entry fees, then I'm not sure what else we can do. Sorry, but I'd have to think we'll report winnings in the same manner in 2013 that we did in 2012.

[Head 2 Head]

Unless you're a professional gambler, your winnings need to be reported as "other income." Losses (entry fees) would be an itemized deduction on Schedule A.

I agree that is the proper way to do. However, as I don't itemize (take the standard deduction) the addition to "other income" for return of entry fee is the issue. I donated a "triple play live" last year along with satellites drafts and got a 1099 for leagues that returned entry or less. I am not even saying all my NFBC leagues should be combined - just that the 1099 should be "net" income for the league that pays off. The current method seems wrong to me, and the reason I am not signed up for the Main (currently) in 2012.

I don't know what to say other than as game operators we report the amount you won from us and there are certainly ways to tell the government what expenses were needed on your part to earn that income. Fanball took out your entry fees from winnings, but they also did it only for that certain winning entry. I'm not sure if that's the right way or the best way or not. All I know is that what we are doing now is no different from the first 7 years we reported winnings to the government and most players in our contest knew how to itemize their expenses in accordance with the winnings. In this case, it seems like itemizing is the way to go. But if not and you're worried about paying taxes on your winnings that don't take out your entry fees, then I'm not sure what else we can do. Sorry, but I'd have to think we'll report winnings in the same manner in 2013 that we did in 2012.

First off - I find it interesting it took 11 days for "NFBC" to answer a "Ask the NFBC a Question".

From your post:

Fanball took out your entry fees from winnings, but they also did it only for that certain winning entry.

what we are doing now is no different from the first 7 years

These two statements contradict:

What you are doing now is different form the first 7 years as you did not take out your entry fees from winnings in 2011. I have any issue with paying taxes on the return of my entry fee (or less) in an event being " taxable income".

[Greg Ambrosius]

When you win an NFBC Main Event league title, you win $5,600. I understand it took $1,400 to enter that contest, but the amount of money that STATS will pay you is $5,600. By itemizing your taxes you can tell the government what the cost of entry is and other expenses it took you to win $5,600, but we still have to report what we paid you in winnings, in earned income. Again, that's exactly how Krause's/F+W did it from 2004-2009. Fanball did it differently in 2010, but last year STATS reported the total amount just like we did during the first six years.

We don't list within our prize grids the amount minus the entry fee. We list what we'll pay you when you win. That's the number we pay you at season's end and thus that's the number we have to report to the government as earnings. Again, the itemized section of your tax form allows you to claim the rest as expenses needed to earn that income, which can include entry fees.