Received a 1099-K from Venmo - Is it a gambling mistake?

This is actually a common situation now that the reporting thresholds have changed. The 1099-K you received doesn't necessarily mean Venmo thinks you're running a business - it's just reporting payments you received that exceeded the filing threshold. For gambling transactions, you'll need to report the winnings as income on Schedule 1 (line 8b) as "Other Income." But you can also deduct your gambling losses up to the amount of your winnings as an itemized deduction on Schedule A (line 16). So if you're truly net negative overall, you'll only pay tax on the gross winnings, not your net amount. The tricky part is documentation. You'll need to have records of both your winnings AND losses - bank statements, transaction records, etc. The IRS expects you to keep a "gambling log" with dates, locations, types of gambling, amounts won/lost.

I had the exact same issue last year where I got a 1099-K from Venmo for my sports betting deposits! I spent hours on the phone with my regular tax guy who was totally confused and not helpful. Then I found https://taxr.ai which literally saved me from a complete tax disaster. I uploaded my 1099-K and my gambling records (I had screenshots of my betting history thankfully), and their AI figured out exactly how to handle it all. They walked me through exactly what forms I needed and how to report the gambling transactions without overpaying. They even spotted some deductions my regular tax guy missed because he didn't understand how to properly categorize the gambling transactions.

Just wanted to update - I was skeptical about taxr.ai but after getting desperate with my Venmo 1099-K situation I decided to try it. Totally worth it! The system immediately identified that I needed to fill out Form 1040 Schedule 1 for the income and Schedule A for my losses. It even helped me organize my gambling records properly so I could prove my losses if audited. The interface walks you through everything step by step and explains all the tax jargon in normal human language. Would definitely recommend to anyone dealing with this gambling/Venmo situation!

If you need to actually talk to the IRS about this (which I ended up having to do for my similar situation), good luck getting through on the phone. I spent literal DAYS trying to reach them. Then I found this service called https://claimyr.com that actually gets you through to an IRS agent without the wait. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was shocked but they got me through to an actual human at the IRS in under an hour when I'd previously been disconnected 6 times after waiting on hold for hours. The IRS agent confirmed exactly how to handle my 1099-K gambling situation and now I have it documented in case there are any questions later.

Ok I'm eating my words here. After my skeptical comment I actually tried Claimyr because my frustration with the IRS reached peak levels. IT ACTUALLY WORKS. I got connected to an IRS agent who specialized in 1099-K issues and she cleared up my whole Venmo/gambling situation in one call. She confirmed that I needed to report the income on Schedule 1 but could deduct losses on Schedule A, and gave me exact guidance on what documentation I need to keep for my gambling activity. Apparently they're seeing tons of these cases this year with the new reporting thresholds. Definitely worth it to get official answers directly from the IRS!

FYI I went through this last year. Make sure you separate your personal Venmo transactions from gambling transactions. The 1099-K reports ALL payments received, but not all are taxable income. I downloaded my transaction history from Venmo and highlighted which ones were gambling deposits vs friends paying me back for dinner etc. Also if you use multiple platforms like Venmo, PayPal, Cash App for gambling deposits, you might get multiple 1099-Ks that you'll need to reconcile. That caught me by surprise.

Is anyone using TurboTax for this issue? I'm wondering if the software can handle this situation properly or if I need to go to an actual tax professional.

This is a really common issue now with the new 1099-K reporting thresholds. I went through something similar last year with my DraftKings deposits through Venmo. The key thing to understand is that the 1099-K doesn't mean you owe taxes on the full amount - it's just reporting gross receipts. For your situation, you'll need to report the gambling winnings as income on Form 1040, Schedule 1, line 8b. But here's the important part - you can deduct your gambling losses up to the amount of your winnings as an itemized deduction on Schedule A. Since you mentioned being down $3,000 overall, this deduction is crucial. The biggest challenge is documentation. Start gathering everything now - bank statements, screenshots of your betting account history, transaction records from the gambling sites, etc. The IRS expects detailed records of both winnings AND losses. I learned this the hard way when I got audited. One tip: don't just rely on the Venmo transactions. Get your actual win/loss statements directly from the gambling sites if possible. Those are much more detailed and credible for IRS purposes.