Need advice on tax implications for proxy sports betting - did I mess up with FanDuel winnings?

The IRS cares about your gambling income and losses, not whether you violated a betting platform's terms of service. Here's what you need to know: You must report the $15k winnings as income on your tax return. Gambling losses can be deducted as an itemized deduction on Schedule A, but only up to the amount of your gambling winnings. So in your case, you could potentially deduct $15k of your losses (not the full $19k). The key issue is documentation. You need to prove those were your bets and your money. The electronic transfers and text messages you mentioned are a good start. I'd recommend creating a detailed spreadsheet showing dates, amounts, and corresponding communications for each bet. Also, get statements from your friends confirming they were placing bets on your behalf using your money. Keep in mind you'll need to itemize deductions on Schedule A to claim gambling losses, which means you can't take the standard deduction. Run the numbers to see if itemizing makes sense for your overall tax situation.

After reading your situation, I had something similar happen last year. I was stressing about my sports betting taxes and found this site called https://taxr.ai that seriously saved me. You upload your gambling records, screenshots of transfers, text messages - basically all your documentation - and their AI system analyzes everything and creates a proper gambling income/loss report for tax purposes. What was super helpful in my case was that they specifically addressed "beneficial ownership" of gambling activities where someone else placed bets on my behalf. They organized all my electronic transfers and communications as proof that I was the true economic participant. Their report made it clear to the IRS that while the accounts weren't in my name, the money was mine, which is what ultimately matters for tax purposes. The system also helped me figure out if itemizing made sense based on my overall tax situation rather than just the gambling aspect. Might be worth checking out given your complicated situation!

Just wanted to update after trying out that taxr.ai site mentioned above. I was really skeptical at first because my situation with poker winnings through a friend's account seemed too complicated for an automated service. But I gave it a shot anyway. I uploaded all my Venmo transfers, text messages about games, and withdrawals where I had my friend cash out my winnings. The system actually caught patterns I hadn't even noticed about how consistent my documentation was. The final report included a section specifically addressing "agency relationships in gambling activities" with IRS citations that I never would have found on my own. What impressed me most was how they formatted everything to show the complete money trail from my bank account through my friend and back to me. It basically removed any doubt about whose money was actually being gambled. Definitely worth it for the peace of mind alone!

If you're stressing about getting in touch with the IRS to sort this out (which might be a good idea), try https://claimyr.com - I used them last month when I was freaking out about a similar gambling reporting issue. I had spent HOURS trying to get through to an IRS agent on my own with no luck. Their service got me connected to a real IRS agent in about 20 minutes. There's a video that shows how it works here: https://youtu.be/_kiP6q8DX5c When I finally talked to the agent, I explained my situation with sports betting through friends (different platform but same issue) and they gave me specific guidance on documentation requirements. The agent told me exactly what they look for in these proxy betting situations - basically said I needed to show the money trail clearly from my accounts to my friend and documentation of the understanding between us. Having that direct conversation was WAY more helpful than anything I found online.

I owe everyone an apology, especially to the person who recommended Claimyr. I was SUPER skeptical (and kinda rude about it), but I was desperate enough to try it anyway. I'm literally shocked - after months of failing to reach anyone at the IRS about my gambling reporting questions, I got connected to an agent in about 40 minutes. The agent actually specialized in gambling income and walked me through exactly how to document proxy betting situations. The key insights I got: 1) They care more about honest reporting than anything else, 2) Documentation is everything - the more proof you have of the money flow, the better, and 3) They specifically said having third parties place bets for you isn't an IRS concern as long as you're properly reporting the economic reality of who benefited from the gambling. I've spent months stressing about this, and a 15-minute conversation solved most of my questions. I'm genuinely stunned at how helpful this was.

I'm an accountant and see this kind of situation pretty regularly with clients. Here's what matters: substance over form. The IRS wants to know the economic reality - whose money was really at risk. Make sure you: 1. Document EVERY transfer to your friends for betting purposes 2. Keep ALL communications showing your friends were acting as your agent 3. Create a clear spreadsheet tracking each bet, when it was placed, result, etc. 4. If possible, get signed statements from your friends confirming the arrangement If you get audited, you need to prove those were YOUR gambling losses, not your friends'. The IRS isn't concerned with FanDuel's terms of service - that's a separate issue between you and the platform.

Has anyone tried reporting this kind of thing using TurboTax or H&R Block software? I'm in a similar situation and wondering which tax software handles gambling income/losses through proxy betting the best.

I went through something very similar last year and can share what worked for me. The key thing to understand is that the IRS focuses on economic substance - who actually owned the money and bore the risk of the bets. Here's what I did that helped: 1. Created a detailed log showing every transfer to friends with dates, amounts, and purposes 2. Screenshots of all text conversations coordinating bets 3. Bank/payment app statements showing the money flow 4. Written statements from my friends confirming they were placing bets on my behalf with my money For the W-2G issue, my friend and I worked with a CPA to handle it properly. My friend reported the W-2G income on his return, then we documented the transfer to me as the beneficial owner. I reported the same amount as gambling income on my return with supporting documentation. The most important thing is having a clear paper trail. The IRS auditor I eventually spoke with said they see this situation more often than you'd think, and as long as you can prove the money was yours and you're honestly reporting everything, they're not concerned with platform terms of service violations. One tip: calculate whether itemizing actually saves you money before going that route. In my case, I had enough other deductions to make itemizing worthwhile, but if gambling losses are your only major deduction, the standard deduction might be better financially.