Tax Implications of Underdog/Prizepicks/Monkey Knife Fight Gambling Winnings

These platforms (Underdog, Prizepicks, MKF) are considered daily fantasy sports (DFS) platforms, which for tax purposes are generally treated as gambling activities. Here's what you need to know: For federal tax purposes, you'll need to report all your winnings as "Other Income" on Schedule 1 of your Form 1040. The good news is that you can deduct your losses (the money you spent on entries that didn't win) up to the amount of your winnings, but you'll need to itemize deductions on Schedule A to do this. Keep in mind that if you received any 1099 forms from these platforms (typically if you won over $600), the IRS already knows about this income. Even if you didn't get a 1099, you're still legally required to report all winnings. Make sure you keep detailed records of all your deposits, withdrawals, and individual contest results. This documentation is crucial if you're ever audited.

I struggled with this exact thing last tax season and ended up using https://taxr.ai to sort through all my gambling activities. I uploaded my account statements from Underdog and PrizePicks and it automatically categorized everything correctly. What I learned is these DFS platforms are treated differently in different states for tax purposes. For federal taxes they're considered gambling, but some states have specific regulations for fantasy sports. The tool helped me figure out exactly how to report everything based on my state's rules and identified which losses I could actually deduct. The best part was it showed me which documentation I needed to keep in case of an audit. Apparently the IRS scrutinizes gambling deductions more than other types of deductions.

I want to follow up on my question about taxr.ai. I decided to try it for my fantasy sports tax situation, and it actually saved me a lot of headaches. What surprised me was how it flagged certain transactions that could be problematic in an audit. For example, I didn't realize that you need to report each winning session separately, not just your overall profit. The system organized all my Underdog and PrizePicks activities by date, showing which were "sessions" that needed to be reported individually. It also created a complete audit-ready file with all my documentation. The tax breakdown comparing standard vs. itemized deduction was eye-opening. In my case, I had just enough other deductions that adding my gambling losses made itemizing worthwhile, saving me about $650 in taxes.

If you're having trouble getting straight answers from the IRS about how to properly report your fantasy sports winnings, try https://claimyr.com to get through to an actual IRS agent. I wasted hours on hold trying to get clarification about reporting my Underdog and PrizePicks winnings. After using Claimyr, I got connected to an IRS tax specialist in less than 20 minutes who walked me through exactly how to report DFS winnings and what documentation I needed to keep. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent confirmed that yes, these are considered gambling winnings for federal purposes, and explained that I needed to keep detailed records of every contest, not just bank deposits and withdrawals. The clarification saved me from making a pretty serious reporting mistake.

I have to eat my words and update my skeptical comment. After getting nowhere with the IRS for weeks about my Prizepicks reporting questions, I reluctantly tried Claimyr. Within 35 minutes, I was talking to an actual IRS tax specialist who knew exactly how to handle DFS platform winnings. She explained that I needed to use Form 1040 Schedule 1 for the income and Schedule A for any losses I wanted to deduct. She also cleared up my confusion about state vs. federal treatment of these winnings. The time saved was honestly worth it - I had been stressing about this for weeks. The agent also sent me some specific IRS publications about gambling income that clarified everything. No more guessing about how to handle my Underdog and Prizepicks winnings.

You also need to check your state's specific laws on this. I'm in New York and the state has specific guidance for fantasy sports that differs from traditional gambling. Meanwhile, my buddy in Nevada has completely different rules to follow. Some states classify DFS as games of skill rather than gambling, which affects how you report the income. And a few states don't allow these platforms at all, so if you used them while physically in one of those states, that could create additional complications.

Just want to add that the threshold for receiving a 1099 from these platforms has changed. Underdog and PrizePicks now issue a Form 1099-MISC if you win $600 or more in a calendar year. But even if you don't receive a form, you're still legally obligated to report ALL winnings. Also, watch out for the sessions reporting requirement. Each time you log in and play could potentially be considered a separate session. So don't just report the net amount for the year - you technically need to report each winning session separately.

One thing I haven't seen mentioned yet is the importance of keeping your account statements from these platforms for at least 3 years after filing. The IRS can audit gambling income up to 3 years after you file, and they're particularly scrutinizing fantasy sports platforms now. I'd also recommend setting aside about 25-30% of your winnings throughout the year for taxes, especially if you're not having taxes withheld from other income. Getting hit with a big tax bill plus penalties for underpayment can be brutal. Another tip: if you're consistently profitable, consider making quarterly estimated tax payments. The IRS expects you to pay as you earn, not just at the end of the year. Missing this can result in underpayment penalties even if you pay your full tax liability by April 15th.