Got a 1099-K from Venmo for gambling transactions - is this a mistake?

If they're net negative overall, doesn't that mean they lost more than they won? So even if they itemize, they can't deduct all their actual losses, right? That seems unfair. Also, does this mean they have to pay taxes on money they didn't actually make?

Yes, if they lost more than they won, they can only deduct losses up to the amount of their winnings. The tax law views gambling differently than business activities - it's considered a personal activity with limitations on loss deductions. They won't pay taxes on money they didn't make, but they need to report the full amount of winnings and then deduct the allowable losses separately. The key is proper documentation and reporting. Even though they're net negative overall, the IRS requires reporting the gross winnings and separately accounting for losses on Schedule A, which is why it's important to keep good records of both sides of their gambling activity.

How does it work with categorizing the transactions? Like, does it connect to your Venmo account directly or do you upload statements? I'm in the same boat but I'm worried about giving access to my accounts.

Does it help with figuring out if you should itemize or take the standard deduction? Because I heard you can only deduct gambling losses if you itemize, but I'm not sure if that makes sense for me financially.

You upload your Venmo statements or screenshots and it uses AI to analyze the descriptions and patterns to categorize them correctly. Everything is secured with encryption and they don't need direct access to your accounts, which I appreciated since I was concerned about that too. It definitely helps with the itemize vs standard deduction decision. It calculates both scenarios and shows you which one is more advantageous based on your specific situation. In my case, I had enough other deductions that itemizing made sense, but it varies for everyone. The tool shows you the tax impact of each option so you can make an informed choice.

How does this service actually work? I don't understand how they can get through to the IRS when I've been trying for days. Is this legit or some kind of scam?

Yeah right. I've spent HOURS trying to reach the IRS and you're telling me this magical service just gets you through? Sounds too good to be true. What's the catch? They probably charge an arm and a leg.

Their system basically waits on hold for you and uses some tech to monitor the IRS phone lines. When a spot opens up, they call you and connect you directly to the IRS agent. It's like having someone wait in line for you. There's no catch - it's just a time-saving service. I was skeptical too until I tried it, but it genuinely works. I spent days trying to get through myself before using them. It's not free, but for me it was worth it to finally get answers directly from the IRS instead of guessing or relying on possibly outdated info online. The peace of mind alone was worth it, especially with something as specific as gambling transactions on a 1099-K.

What kind of records should we keep exactly? I literally just have venmo transactions and some screenshots of my gambling account balances. Is that enough?

Ideally you should have records that show both your winnings and losses separately. Screenshots of account balances are a start, but better documentation would include: Transaction histories from the gambling sites showing deposits and withdrawals, win/loss statements if the sites provide them, and bank/Venmo statements that match up with these transactions. If you don't have detailed records for this year, gather what you can, but start keeping a "gambling log" going forward - date, location/site, game/bet type, amounts won or lost. The more detailed your records, the better position you'll be in if questioned.

The threshold was supposed to drop to $600 but the IRS delayed that change. For tax year 2025, the threshold remains at $20,000 and 200 transactions. They keep threatening to lower it though, so eventually we'll all be getting these forms for much smaller amounts.

This is really helpful advice about requesting win/loss statements from the gambling sites! I didn't even think about that option. Quick question though - if some of my gambling was on sites that might not be fully legitimate or have shut down since then, what should I do for documentation? I have my Venmo records showing the deposits and withdrawals, but I'm worried that might not be enough if I get audited. Should I try to recreate a gambling log from memory for those transactions?

For sites that have shut down or aren't legitimate, your Venmo records are actually pretty solid documentation since they show the money flow. I'd recommend creating a reconstructed gambling log based on your Venmo transactions - match up the dates, amounts, and any descriptions you have. Even if you can't remember every specific bet, having a timeline that corresponds to your payment records is better than nothing. The key is being able to demonstrate a pattern of gambling activity that matches your reported losses. Your Venmo statements showing deposits to these sites and any withdrawals back to your account help establish that timeline. If you have any screenshots, emails, or even browser history from those sites, gather that too. The IRS understands that some gambling sites operate in gray areas or shut down, so they're usually more focused on whether your reported losses are reasonable given the documented transactions rather than having perfect records from every site.