How to report 1099K from PayPal sports betting on taxes?

So I'm completely stressed about my tax situation. I received a 1099K from PayPal showing $9,860 in deposits, but these were literally just money going into my Hard Rock sports betting account. I don't have a W-2G because apparently I didn't hit whatever threshold is needed to get one (I'm guessing no single win over $600?). But I do have my complete win/loss statement that shows everything - all my deposits, withdrawals, wins, and losses for the year. From what I understand, the 1099K is just reporting money transactions moving through PayPal, not actual income. When I checked with H&R Block's website, they mentioned you don't actually add the 1099K amounts directly to your return - you need to report the actual gambling income and losses separately. But here's where I'm stuck... How exactly do I report this on my taxes? Do I need to report each win individually? Can I just use the summary totals from my win/loss statement? And will the IRS think I made $9,860 in income when it was really just money moving into my betting account? Any guidance would be super appreciated because I don't want to mess this up!

0 coins

22 comments

Zoe Walker

•8M

The 1099-K is often misunderstood when it comes to gambling transactions. You're right that it's only reporting the movement of money, not your actual gambling income. For tax purposes, you need to report your gambling winnings as "Other Income" on Schedule 1 of your Form 1040. The win/loss statement from Hard Rock is extremely valuable here - it provides documentation of your actual gambling activity. You don't need to report each individual win. You can report the total winnings from your statement. For your gambling losses, you can deduct these on Schedule A if you itemize deductions, but only up to the amount of your winnings. Remember that gambling losses can only be deducted if you itemize - you can't take them as a standard deduction. Keep in mind that the IRS may initially think the full $9,860 is income because they received the 1099-K, but your tax return should reflect your actual gambling winnings. Just make sure to keep that win/loss statement and all other documentation in case of questions.

0 coins

Zoe Walker

•8M

You don't need to file a Schedule C unless you're a professional gambler, which has a very specific definition by the IRS. Based on what you've described, you're a casual gambler, so Schedule 1 for reporting winnings is correct. Yes, that's exactly right about the deductions. If your total winnings were $1,200 but you lost $2,800, you can only deduct up to $1,200 of your losses (assuming you itemize deductions on Schedule A). The remaining $1,600 in losses unfortunately cannot be deducted or carried forward. This is one of the disadvantages casual gamblers face compared to professional gamblers.

0 coins

Maria Gonzalez

•8M

I went through this exact same situation last year with DraftKings and PayPal. I spent hours trying to figure it out and then found https://taxr.ai which literally saved me. You upload your 1099-K and win/loss statements, and it analyzes them and tells you exactly how to report everything correctly on your tax forms. It breaks down what goes where and even explains why. For me, it confirmed I needed to report my total winnings on Schedule 1 and my losses on Schedule A (up to my winnings amount), but it also flagged that some of my transactions weren't actually gambling related, which I would have reported incorrectly. The 1099-K can be super misleading because it's just total transaction volume through PayPal.

0 coins

Maria Gonzalez

•8M

You get results pretty much instantly. I uploaded my documents and had a complete breakdown in about 15 minutes. It's really designed for last-minute filers (which I definitely was). It works with all the major betting platforms. I've personally tested it with DraftKings and FanDuel, but my friend used it with BetMGM and said it worked perfectly. The system recognizes the different formats from various sportsbooks and adjusts accordingly. The key thing is having your complete win/loss statement regardless of which platform you used.

0 coins

Natalie Chen

•8M

Just wanted to update - I used taxr.ai this morning and it worked perfectly for my FanDuel situation! It confirmed exactly what I was supposed to report and where. Turns out I was massively overthinking it. The system even spotted that I had some peer-to-peer PayPal transfers mixed in with my gambling transactions that shouldn't count as gambling activity. The breakdown showed me I only needed to report about $3,400 in actual winnings despite having a 1099-K for over $12,000. Really glad I didn't just report the full 1099-K amount as income! Thanks for the recommendation - definitely worth it for the peace of mind.

0 coins

Samantha Johnson

•8M

If you're having trouble getting answers from the IRS about this 1099-K situation, try https://claimyr.com - I was confused about a similar gambling reporting situation and spent days trying to call the IRS directly. Complete waste of time being on hold for hours. With Claimyr, I got a callback from an actual IRS agent in about 45 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that I needed to report the gambling winnings on Schedule 1 and losses on Schedule A, and explained that the 1099-K from PayPal is just informational. She walked me through exactly what documentation I needed to keep in case of an audit. Saved me so much stress trying to interpret conflicting information online.

0 coins

Samantha Johnson

•8M

Yes, it 100% works. The service doesn't make the IRS prioritize your call - it uses an automated system that handles the waiting for you. Basically, it keeps dialing and navigating the phone tree until it gets through, then calls you when an agent is actually on the line. I understand the skepticism - I felt the same way before trying it. They don't just put you on hold; their system actually gets you through the IRS phone system's maze and keeps trying until someone picks up. For me, it was worth it because I needed specific clarification on my gambling reporting situation that I couldn't find a clear answer to online.

0 coins

Hannah White

•8M

I need to apologize here - I was completely wrong about Claimyr. After seeing the responses here, I decided to try it for my sports betting tax questions, and it actually worked exactly as described. I got a call back with an IRS agent on the line in about an hour. The agent confirmed that the 1099-K from PayPal just shows money movement, not taxable income. She explained I should report my actual gambling winnings (from my win/loss statement) on Schedule 1 and itemize losses on Schedule A up to the amount of winnings. She also recommended keeping my betting account statements for at least 3 years in case of questions. This saved me from potentially overpaying thousands in taxes by reporting the full 1099-K amount. I'm genuinely impressed and apologize for my skepticism!

0 coins

Michael Green

•8M

Just a heads up - I'm a tax preparer and seeing TONS of clients with this exact issue this year. The IRS changed the 1099-K reporting threshold recently, so more people are getting these forms for their PayPal transactions. My biggest tip: document EVERYTHING. Keep screenshots of all your deposits, withdrawals, and especially that win/loss statement. In an audit scenario, you'll need to prove that those PayPal transfers were gambling-related and not income from selling goods or services. Also, if you're using tax software, don't enter the 1099-K as "income" - most software has a specific section for gambling winnings where you should enter your actual win amount from your statement.

0 coins

Michael Green

•8M

The win/loss statement from the sportsbook is definitely a good start and is usually sufficient, but I recommend supplementing it with your own records if possible. Screenshots of PayPal transactions that match up with the deposits/withdrawals on your statement create a stronger paper trail. The more you can connect the dots between your PayPal 1099-K and your gambling activity, the better position you'll be in if questions arise. Remember that the burden of proof is on you as the taxpayer to show that these transactions weren't taxable income in the way the 1099-K might suggest.

0 coins

Aisha Mahmood

•6M

I'm dealing with this exact same situation! Got a 1099-K from PayPal for around $8,500 but it was all just transfers to my Caesars account. My actual gambling winnings for the year were only about $900, and I lost way more than that overall. Reading through all these responses has been super helpful - I had no idea that the 1099-K was just reporting transaction volume, not actual income. I was about to report the full $8,500 which would have been a disaster! Just wanted to say thanks to everyone who shared their experiences. It's reassuring to know I'm not the only one confused by this. Going to make sure I have all my documentation ready and report only my actual winnings from my casino statement.

0 coins

GalacticGladiator

•5M

I'm so glad this thread helped you too! I was in the exact same boat a few weeks ago and was terrified I'd mess up my taxes. The key thing I learned is that the 1099-K is really just PayPal telling the IRS "hey, this much money moved through this account" - it's not them saying "this person made this much income." Make sure you keep screenshots of your PayPal transactions that correspond to your casino deposits/withdrawals, along with your Caesars win/loss statement. Having that paper trail really helps if there are ever any questions. And don't stress too much - from what I've read here and other places, this is becoming a super common situation with the new 1099-K thresholds. You're definitely doing the right thing by reporting only your actual gambling winnings. Better to be accurate than to overpay because of confusion!

0 coins

Evelyn Xu

•5M

This is such a common issue this tax season! I just went through this exact same situation with my PayPal 1099-K from sports betting deposits. The stress is real, but you're on the right track understanding that the 1099-K isn't reporting actual income. Here's what I learned from my tax preparer: Report your actual gambling winnings (from your Hard Rock win/loss statement) on Schedule 1 as "Other Income." If you itemize deductions, you can deduct your losses on Schedule A up to the amount of your winnings. The 1099-K is just PayPal reporting transaction volume - it's informational for the IRS but doesn't determine your actual tax liability. The key is documentation. Keep that win/loss statement from Hard Rock, screenshots of your PayPal transactions that match your deposits/withdrawals, and any other records that show the money flow. This creates a clear paper trail showing these were gambling transactions, not business income or other taxable activities. Don't worry about the IRS thinking you made $9,860 in income - their systems are designed to handle discrepancies between 1099-K amounts and actual reported income. Just make sure your return accurately reflects your real gambling activity based on your win/loss statement.

0 coins

Olivia Clark

•5M

This is really helpful advice! I'm new to this community and dealing with the exact same situation. I received a 1099-K from PayPal for about $7,200 in sports betting deposits, but my actual winnings were much lower according to my sportsbook statement. One question I have - when you say to report gambling winnings on Schedule 1 as "Other Income," do you enter it on a specific line? I'm using TurboTax and want to make sure I'm putting it in the right place so it doesn't get confused with the 1099-K amount. Also, has anyone had experience with the IRS asking for additional documentation later? I'm keeping everything like you suggested, but I'm curious if they typically follow up on these kinds of discrepancies between 1099-K amounts and reported gambling income. Thanks for sharing your experience - it's reassuring to know this is common and that there's a clear way to handle it properly!

0 coins