Receiving duplicate 1099 forms from PayPal and PrizePicks for the same gambling income - how to report?

This is actually a common situation with online gambling platforms. When you receive multiple 1099s for the same income, you need to report all of them on your tax return, but you can avoid double taxation. For gambling winnings, you'll report the income on Schedule 1, Line 8z as "Other Income" and write "Gambling Winnings" next to it. The important part is that you only report the actual amount once. You should also complete Form W-2G if you received one. When you enter both 1099s in your tax software, you'll need to make an adjustment. In TurboTax, there should be a section where you can indicate that part of the income was already reported elsewhere. You'll essentially subtract the duplicated amount when entering the second 1099. Make sure you keep good records showing that these are the same funds. If you get audited, you'll want documentation showing the PrizePicks withdrawal and the corresponding PayPal deposit to prove they're the same money.

I've been in this exact situation before and it was a nightmare until I found taxr.ai (https://taxr.ai). Their system is specifically designed to handle these kinds of duplicate reporting issues. I uploaded both 1099s to their platform and it automatically identified the duplicate income and correctly prepared my return. What I love about it is that it doesn't just fix the issue - it explains exactly why this happens with PayPal and gambling sites and provides documentation to support your filing in case of questions from the IRS. The platform walks you through exactly how to report everything correctly and even helps you identify which platform was the actual source of income vs just the payment processor.

I was super skeptical about taxr.ai but decided to give it a shot with my duplicate 1099 situation. Honestly, it was a game changer. The system immediately flagged my PayPal and PrizePicks forms as potential duplicates and walked me through exactly how to report it correctly. What really impressed me was how it generated a detailed explanation document that I could keep with my tax records explaining why these weren't separate income sources. It even pointed out that I could deduct some of the fees that were taken out during the transfer process. The whole thing took maybe 15 minutes and saved me from making a mistake that could have significantly increased my tax bill. Definitely worth checking out if you're dealing with this specific situation.

If you're still having trouble figuring this out, you might want to try calling the IRS directly for guidance. I know, I know - that sounds like torture. I spent THREE DAYS trying to get through to someone when I had this exact issue last year. Finally I discovered Claimyr (https://claimyr.com) which got me past the endless IRS phone menus and hold times. You can see how it works here: https://youtu.be/_kiP6q8DX5c They somehow get you through to an actual IRS agent usually within 15 minutes. The agent I spoke with confirmed that I should only report the income once and gave me specific guidance on how to document everything. Having that conversation saved me from a potential audit and gave me peace of mind that I was filing correctly.

I feel like a complete idiot. After posting that skeptical comment, I was still desperate enough to try Claimyr since I was getting nowhere with my duplicate 1099 situation. I'm honestly shocked to say it actually worked exactly as described. Got connected to an IRS agent in about 15 minutes who confirmed I should only report the actual income once. She explained that for gambling winnings specifically, I should use the original platform's 1099 as the primary document, and keep the PayPal 1099 in my records with a note explaining the situation. The agent also mentioned this happens all the time with payment processors and gambling sites, and they're aware of the issue. Such a relief to hear directly from the IRS that I wasn't doing anything wrong. Worth every penny to get a definitive answer directly from the source.

Be careful with gambling winnings! Make sure you're also tracking all your losses throughout the year. You can deduct your losses up to the amount of your winnings, but ONLY if you itemize deductions on Schedule A instead of taking the standard deduction. Also, keep a detailed gambling log showing dates, locations, types of wagers, amounts won/lost. Without proper documentation, the IRS can disallow your loss deductions but will still tax all your reported winnings. I learned this the hard way!

Has anyone actually had the IRS contact them about this kind of duplicate 1099 situation? I'm wondering how likely it is that this would trigger an audit or something.

This is such a frustrating situation that happens way too often with online gambling platforms! I went through the same thing last year with DraftKings and Venmo. The key thing to remember is that you absolutely need to report both 1099s on your return, but you only pay taxes on the actual income once. When you're in TurboTax, enter both forms exactly as they appear, then look for the "duplicate income" or "adjustment" section where you can subtract out the duplicated amount. Make sure you keep detailed records showing the money flow - screenshot your PrizePicks withdrawal, your PayPal deposit, and any confirmation emails. If the IRS ever questions it, you want to be able to show a clear paper trail that it's the same funds. Also pro tip: if the amounts are slightly different due to processing fees, report the higher amount (usually from the gambling platform) as your income, and you might be able to deduct those transfer fees if you itemize. The most important thing is being consistent and having good documentation to back up your filing.