Do I need to report sports betting winnings from my friend using my account for tax purposes?

But wouldn't the friend also need to provide proof they were the actual gambler? Like what happens if the IRS questions this arrangement? Does OP need some kind of written agreement with the friend?

Thanks for the advice! So basically I need to show the income but then also show it wasn't actually mine? Would it help if I got some kind of signed statement from my friend acknowledging that he used my account and received all the winnings? I'm worried the IRS might think I'm trying to avoid paying taxes if I just claim it wasn't my income.

Yes, you should definitely document this arrangement. Create and keep a simple written statement signed by both you and your friend explaining the situation - that you allowed him to use your account, but all deposits came from him and all withdrawals went to him. Keep bank statements showing the money movement if possible. For the second question, you're right to be cautious. The proper way to handle this is not to ignore the 1099, but to report it and then offset it. This creates a paper trail showing you acknowledged the form but properly attributed the income. Your friend should include a note with his return explaining he received this gambling income that was reported on someone else's 1099.

How exactly does taxr.ai work? Does it actually look at the tax documents or do you have to input all the information manually? I've got a similar situation but with cryptocurrency mining that someone else did using my account.

I'm skeptical about these tax tools. Wouldn't it be safer just to hire an actual accountant who specializes in gambling income? This seems like a risky situation that could trigger an audit.

The tool uses document analysis technology to read your tax forms directly. You just upload your 1099-MISC and any supporting documents like account statements, and it identifies the nominee income situation automatically. It saved me from having to manually input everything. For cryptocurrency mining, it absolutely works for that too. The underlying tax principle is the same - income reported under your SSN that actually belongs to someone else. The system can handle various types of nominee income situations and provides the proper reporting guidance.

How does this Claimyr thing actually work? Don't you still have to wait on hold for hours? I've tried calling the IRS like 5 times this month and never got through.

Yeah right, nothing gets you through to the IRS faster. Sounds like a scam to me. I've been trying to reach them about an amended return for 3 months now.

Nope, no waiting on hold for hours. The service basically navigates the IRS phone system for you and holds your place in line. When they reach an actual human agent, you get a call connecting you directly. I was skeptical at first too but the whole process took about 15 minutes from start to finish. They use some kind of system that keeps trying different IRS pathways until they get through, which is apparently way more efficient than us regular folks calling and getting disconnected. I had been trying for almost 2 weeks before this and couldn't get past the automated system.

Wouldn't the friend need to itemize deductions to claim the gambling losses though? Most people just take the standard deduction, so tracking losses might not even help them tax-wise.

You're absolutely right about itemizing. For gambling losses to be deductible, the friend would need to itemize deductions on Schedule A instead of taking the standard deduction. With the standard deduction being $13,850 for single filers in 2025, many people won't benefit from itemizing unless they have significant other deductions like mortgage interest or charitable contributions. What the friend could do instead is report the "net" gambling winnings as their income - so $2,400 rather than the full $9,200. The IRS generally accepts this approach for casual gamblers, though having documentation of all transactions is still important in case of audit.

Good point! I live in Pennsylvania and they don't allow you to deduct gambling losses against winnings for state tax purposes. Had to pay state tax on the full amount of winnings even though I had overall net losses for the year.

Thanks for sharing your experience. State tax treatment varies widely with gambling income. States like Pennsylvania, as you mentioned, don't allow loss deductions, while others like Nevada have no state income tax at all. Some states like New Jersey allow losses but only up to the amount of winnings. The original poster should definitely check their specific state tax rules. Even with the nominee income situation, some states might require different documentation or forms than the federal solution we've discussed. The state tax authorities won't automatically know about the arrangement reported on the federal return.

This is really solid advice, especially about getting everything documented before filing. I'm curious though - what specific documentation would be most convincing to the IRS if they do audit this situation? Just bank statements showing the money flow, or would you need something more formal like a notarized agreement between the two parties? Also, is there a specific way the friend should note on their return that they're reporting income from someone else's 1099?

For documentation that would hold up in an audit, I'd recommend a comprehensive package: 1) A signed written agreement between you and your friend detailing the arrangement, including dates and amounts. While notarization isn't required, it does add credibility. 2) Bank statements from both parties showing the deposit/withdrawal patterns - this is crucial evidence that the money never touched your personal accounts. 3) Screenshots or records from the betting platform showing the transaction history tied to your account but funded by your friend's bank. Regarding how your friend should report it - they should include the gambling income on their Schedule 1 and attach a statement explaining "Gambling winnings reported on third party's 1099-MISC under [your name] and SSN." This creates a clear paper trail connecting both returns. The IRS computer systems can then match up that both parties acknowledged the arrangement rather than it appearing like you're trying to dodge income that should be yours.

This coordination aspect is so important and something I hadn't really thought about! Is there any way to verify that your friend actually filed their return correctly before you submit yours? Like could you ask them to show you their completed return, or would that be overstepping boundaries? I'm in a similar situation and really want to make sure we both handle this properly to avoid any IRS issues down the road.