How Do I Apply the Gambling Sessions Method for Federal Tax Deductions?

Thanks for the help, but I'm still not sure I understand completely. If I'm using the sessions method and my winning sessions total $815k, can I only deduct the $246k losing sessions? Or can I deduct up to $815k from my total losses of $3.1m? I feel like I'm missing something since my actual net result was negative for the year.

When using the sessions method, you must be consistent - so you would report the $815k as income and can only deduct the $246k in losing sessions on Schedule A. You cannot mix methods by using sessions for income but total losses for deductions. The sessions method considers each gambling session as a complete unit. When you calculate that you had $815k in winning sessions and $246k in losing sessions, those are the only figures that matter for tax purposes. Your total transaction losses of $3.1m aren't relevant once you've chosen the sessions method.

Does taxr.ai handle state taxes too? My state doesn't allow gambling loss deductions at all, and I'm worried about how to report consistently between federal and state returns.

How reliable is this for DraftKings specifically? I've heard horror stories about people getting their calculations wrong and facing huge penalties. Does it create documentation that would stand up in an audit?

Yes, taxr.ai handles state taxes as well. They'll show you how to properly report your gambling activity on both federal and state returns, even for states that don't allow gambling loss deductions. They make it clear which numbers go where to maintain consistency while following different rules. For DraftKings specifically, it works perfectly. The system is designed to process statements from all major gambling platforms. What I found most valuable was the audit-ready documentation it creates - a detailed report showing your session calculations, methodology, and relevant tax court cases that support this approach. It's exactly the kind of documentation you'd need if the IRS ever questions your gambling tax treatment.

How does this service actually work? I've tried calling the IRS gambling hotline multiple times and just get disconnected or wait for hours. Do they somehow bypass the queue?

Yeah right. There's no way to "skip the line" with the IRS. This sounds like a scam to me. If it was that easy, everyone would be doing it. Did you actually get through or are you just promoting something?

The service works by using an automated system that continuously calls the IRS until it gets through, then connects you immediately when a line opens up. It's not "skipping" the queue - it's just handling the frustrating repeated calling and waiting for you. I was extremely skeptical too before trying it. But I had spent nearly 3 weeks trying to get through on my own with no success. With Claimyr, I was connected to an IRS agent within about 15 minutes. The agent was able to verify my specific situation with the gambling sessions method and confirmed I was handling it correctly. They actually exist to prevent scams by helping people get official answers directly from the IRS instead of potentially questionable advice online.

Does anyone know if screenshots of my betting history from the FanDuel app are sufficient documentation? I didn't keep a separate gambling diary but I can export all my transaction history.

Screenshots alone probably aren't ideal, but they're definitely better than nothing. The best approach is to export your complete transaction history from FanDuel and then organize it into sessions yourself with clear documentation of your methodology. The IRS wants to see that you're being consistent and reasonable in how you define your gambling sessions. Many tax professionals recommend defining a session as a calendar day for online betting platforms, but whatever method you choose, stick with it and document your reasoning. If you use software or a service to help calculate sessions, keep copies of those reports too as supporting documentation.

Is there a specific dollar amount or frequency that automatically qualifies you as a professional gambler? I placed bets almost daily and had over 6,000 transactions last year.

There's no specific dollar amount or frequency threshold that automatically makes you a professional gambler. The IRS uses a "facts and circumstances" test based on nine factors from the Supreme Court case Groetzinger v. Commissioner. Key factors include: whether you carry on gambling activities in a businesslike manner, whether you maintain books and records, whether you have other income sources, the time and effort you spend, your expertise in the activity, your history of income/losses, and whether you depend on gambling income for your livelihood. Having 6,000 transactions shows significant activity, but frequency alone isn't enough. You'd need to demonstrate that you approach gambling as a business - keeping detailed records, having a systematic approach, treating it as your primary occupation, etc. Most importantly, you need to show a genuine profit motive over multiple years. I'd strongly recommend consulting with a tax professional who specializes in gambling taxes before claiming professional status. The penalties for incorrectly claiming professional gambler status can be severe, and the IRS audits these returns at much higher rates.

This is really helpful, especially the point about multi-day tournaments. I think I may have made an error in my session calculations because I did participate in some multi-day DFS contests on FanDuel. Should those be treated as a single session even if they span multiple calendar days, or should I split them by the days I made entries? Also, when you mention keeping FanDuel transaction exports - do you know if there's a specific format the IRS prefers, or are CSV downloads sufficient? I want to make sure I have everything properly documented in case of questions later.

For multi-day tournaments or contests, the general approach is to treat the entire tournament as a single session since it's one continuous gambling event, even if it spans multiple calendar days. The key is that you're participating in one contest with a single entry fee and one potential payout. However, if you made multiple separate entries on different days for the same tournament, you might need to evaluate each entry separately. The most important thing is consistency - whatever method you choose for defining sessions with multi-day events, apply it the same way throughout your entire year. Document your reasoning clearly. As for file formats, CSV downloads from FanDuel are perfectly acceptable for IRS documentation. The IRS doesn't specify a particular format - they just want to see complete, accurate records of your gambling activity. What matters most is that your records show the date, type of wager, amount wagered, and outcome for each transaction. Keep both the original CSV files and any spreadsheets you created to calculate your sessions, along with notes explaining your methodology. I'd also recommend printing key summary reports to have physical backups, since online gambling platforms sometimes change their historical data access over time.

This is exactly the kind of clarity I needed! I was wondering about the consistency requirement across different bet types. I had been treating my sports bets differently from my daily fantasy contests, which sounds like it could be problematic. One follow-up question - when you mention that H&R Block might not handle the sessions method properly, did you end up having to file amendments or corrections? I'm worried that if I override the software's calculations, I might trigger additional scrutiny from the IRS. How did you document the override in your filing to make it clear you were using an accepted methodology rather than just trying to reduce your tax burden? Also, did your CPA have any specific recommendations for how to present the sessions method calculations if you do get audited? I want to make sure I'm prepared with the right documentation format.

I didn't have to file amendments, but I did have to be very careful about documentation. When overriding H&R Block's automatic calculations, I attached a detailed statement explaining my use of the sessions method, including references to relevant Tax Court cases like Shollenberger v. Commissioner and Mayo v. Commissioner that establish this methodology. For audit preparation, my CPA recommended creating a comprehensive package that includes: 1) Your complete gambling transaction history from the platform, 2) A detailed spreadsheet showing how you calculated each session with clear methodology notes, 3) A summary comparing your sessions method results to the raw W-2G totals, and 4) Citation of the legal precedents supporting this approach. The key is showing that you applied a reasonable, consistent methodology throughout the year rather than manipulating numbers to reduce taxes. Document everything as if you're already being audited - clear dates, consistent session definitions, and logical explanations for your approach. One tip: consider having your session calculations reviewed by a tax professional before filing. The small upfront cost can save enormous headaches if the IRS ever questions your methodology. They can also help ensure your documentation meets professional standards and would hold up under scrutiny.

This is really valuable insight about the "economic substance" aspect - I hadn't thought about it that way before. Your point about promotional credits is especially relevant since FanDuel gave me several bonus credits throughout the year that I used for additional betting. When you mention aligning session calculations with when you actually had access to winnings, did you run into any issues with pending withdrawals or delayed settlements? I had some larger payouts that took 2-3 days to clear, and I'm wondering if those should be counted in the session when the bet was placed/won or when the funds actually became available in my account. Also, did your tax attorney provide any specific guidance on how to handle those promotional bonuses in the session calculations? I received probably $15k worth of various bonuses and free bets throughout the year, and I'm not sure if those should be treated as separate income or just factored into the overall session results when used.

For pending withdrawals and delayed settlements, the general rule is to count winnings in the session when the gambling event concluded (when you won the bet), not when funds actually hit your account. The delay is just a processing issue, not part of the gambling activity itself. However, document these timing differences clearly in case questions arise. Regarding promotional bonuses, my experience has been that free bets and bonus credits should be treated as having a $0 basis when calculating session results. So if you use a $100 free bet and win $300, your session gain is $300, not $200. But if you lose the free bet, there's no loss to record since you had no money at risk. Cash bonuses that become withdrawable after meeting wagering requirements are different - those should be treated as income when they become unrestricted. The key is consistency and clear documentation. I kept a separate log of all promotional activity and how it was integrated into my session calculations. This level of detail really helped when my CPA was preparing my return and gave me confidence that everything would hold up if questioned. One more tip: consider reaching out to a gambling tax specialist rather than a general CPA if your gambling activity is substantial. The specialized knowledge is worth the extra cost for complex situations like this.