PayPal 1099-K from sports betting at Hard Rock - tax reporting question

So I'm in a bit of a situation with my taxes this year. I received a 1099-K from PayPal showing $9,860 in transactions, but these are all deposits I made to my Hard Rock sports betting account. I didn't get a W-2G form since I didn't hit any wins big enough to trigger the reporting threshold. I do have my complete win/loss statement from Hard Rock that breaks everything down - what I deposited, what I withdrew, my total wins, and my total losses for the year. I'm confused about how to report this correctly. I understand the 1099-K is just tracking money movement through PayPal, not actual income. I started using HRBlock software and it seems to be saying I shouldn't add the 1099-K amount as income, but rather report the actual gambling wins/losses separately? Can someone help me understand the right way to handle this on my taxes? I don't want to accidentally report my deposits as income and pay taxes on money that isn't actually earnings.

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20 comments

CosmosCaptain

•8M

You're right that this is going to be a common issue this year! The 1099-K just shows money moving through your PayPal account - it doesn't distinguish between income, deposits, transfers, or refunds. For gambling activities, what matters for tax purposes is your actual gambling wins and losses, not the total transactions. You should report your gambling winnings as "Other Income" on Schedule 1, and your gambling losses can be claimed as an itemized deduction on Schedule A (but only up to the amount of your winnings). Your win/loss statement from Hard Rock is the key document here. It shows your actual gambling activity rather than just money moving through PayPal. The 1099-K amount shouldn't be reported as income simply because PayPal processed the transactions. Make sure you keep all documentation (win/loss statements, transaction records) to support your tax filing in case of questions from the IRS. The IRS knows these 1099-K forms often don't reflect actual taxable income.

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CosmosCaptain

•8M

Yes, you should still acknowledge the 1099-K on your return, but you don't report the full amount as income. Most tax software has a section specifically for reconciling 1099-K amounts with your actual taxable income. This tells the IRS "Yes, I received this form, but here's why it doesn't match my reported income." Even if your losses exceeded your wins, you must still report all your gambling winnings as income on Schedule 1. Your losses are then reported separately as itemized deductions on Schedule A, but only up to the amount of your reported winnings. Unfortunately, you can't use gambling losses to offset other types of income.

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Omar Fawzi

•8M

After getting totally confused by a PayPal 1099-K for my sports betting last year, I found this awesome tool at https://taxr.ai that saved me so much stress. I uploaded my 1099-K and my betting platform's win/loss statement, and it automatically separated the actual taxable portions from just money movements and explained exactly how to report everything. What's cool is it specifically has a gambling transactions analyzer that understands the difference between deposits, withdrawals, actual wins and losses. It showed me how much should go on Schedule 1 vs Schedule A, and explained why the 1099-K amount wasn't my taxable income. Definitely worth checking out if you're dealing with this PayPal/betting situation.

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Omar Fawzi

•8M

Yes, it works with Hard Rock statements! I've seen it handle statements from Hard Rock, BetMGM, DraftKings, FanDuel and others. The system recognizes different statement formats and extracts the relevant information. What makes it different is it's specifically designed to handle these gambling/payment processor mismatches that regular tax software struggles with. Regular tax software basically makes you figure out the reconciliation yourself, while this tool actually analyzes the statements to show the correct reportable amounts. It's built by tax attorneys who focus on these specific issues that general tax software doesn't handle well.

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Diego Mendoza

•8M

I was really skeptical when I first heard about taxr.ai, but I decided to try it after spending hours getting nowhere with TurboTax. Holy crap, it actually worked perfectly! My situation was almost identical - PayPal 1099-K for about $12k from FanDuel that was mostly just me depositing money. The tool analyzed my statements and showed me that of my $12,000 in transactions, only about $3,200 were actual wins that needed to be reported as income. It created a detailed reconciliation report explaining why the 1099-K amount wasn't all taxable, and gave me step-by-step instructions for exactly how to enter everything in my tax software. Saved me from potentially overpaying thousands in taxes on money that wasn't even income! Definitely worth checking out if you're dealing with this sports betting/PayPal situation.

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Anastasia Romanov

•8M

I had the EXACT same problem last year and spent WEEKS trying to get through to the IRS for clarification. Busy signals, disconnects, hours on hold... it was a nightmare. Eventually I found https://claimyr.com which got me connected to an actual IRS agent in about 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent confirmed what others are saying - the 1099-K is just reporting transactions, not income. They walked me through exactly how to report my actual gambling winnings separately from the PayPal transactions. Such a relief to get an official answer directly from the IRS! Apparently they're dealing with tons of confused taxpayers with this exact PayPal/gambling situation.

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Anastasia Romanov

•8M

It uses technology to basically wait on hold for you. It continuously calls the IRS using their system and when it finally gets through to an agent, it calls your phone and connects you. So instead of you personally waiting on hold for hours, their system does the waiting for you. No, it's not a priority line or anything sketchy - it's just automating the most frustrating part of calling the IRS, which is the waiting. I was skeptical too, but when I actually got connected to a real IRS agent who answered my questions about my 1099-K gambling situation, I was pretty impressed. They don't sell your info - they make money from the service fee.

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Sean Kelly

•8M

I need to eat my words here. After my skeptical comment yesterday, I was still desperate for IRS clarification on my PayPal gambling 1099-K, so I tried Claimyr as a last resort. I was SHOCKED when my phone rang 20 minutes later with an actual IRS agent on the line! The agent confirmed that the 1099-K just shows money movement through third-party processors and I should only report my actual gambling winnings from my win/loss statement. She explained exactly how to reconcile the differences on my return. For anyone dealing with this PayPal sports betting situation - being able to get official clarification directly from the IRS saved me so much stress. I would've been up all night worrying about getting audited for not reporting the full 1099-K amount. Definitely worth it just for the peace of mind.

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Zara Malik

•8M

Quick tip from someone who dealt with this last year - make sure you double check which transactions on your win/loss statement are from 2025 vs. any deposits you might have made in late 2024 that got processed in 2025. My 1099-K included some December transactions that confused everything until I sorted out the exact dates. Also keep in mind that if you won ANY single bet that paid out $600+ AND was at least 300x your wager, you should have received a W-2G for just those specific bets, separate from your other activity. Sometimes those W-2Gs get lost or forgotten by the sportsbook.

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Mia Rodriguez

•5M

I went through this exact situation last year with my Hard Rock account and PayPal 1099-K. The key thing that helped me was creating a detailed spreadsheet that matched up my PayPal transactions with my Hard Rock win/loss statement by date. What I found was that the 1099-K included not just my deposits, but also some withdrawals that got processed back to PayPal, which made the total even more confusing. The actual taxable amount was way less than what the 1099-K showed. One thing to watch out for - make sure your Hard Rock win/loss statement covers the exact same tax year as your 1099-K. Sometimes there's a day or two difference in how they calculate the reporting period, and those end-of-year transactions can throw everything off. I ended up using the gambling reconciliation worksheet that comes with the tax software to show the IRS exactly why my reported income was different from the 1099-K amount. Keep all your documentation - the win/loss statement, the 1099-K, and any records of your actual deposits/withdrawals. The IRS is seeing a lot of these cases this year so they're pretty familiar with the situation.

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Fiona Gallagher

•4M

This is really helpful advice about creating a detailed spreadsheet to match transactions! I'm dealing with a similar situation but with multiple payment methods - I used both PayPal and my debit card for deposits to Hard Rock. Did you have to track down 1099-K forms from multiple processors, or was PayPal the only one that sent you a form? I'm worried I might be missing other 1099-K forms that haven't arrived yet. Also, when you mention the gambling reconciliation worksheet - is that something built into most tax software, or did you have to find it separately? I'm using FreeTaxUSA and haven't seen anything like that yet, but maybe I'm looking in the wrong place.

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