Won $2,500 at gaming tournament, signed W-9, paid via PayPal - do I need to report this on my taxes?

So I participated in this gaming tournament in Atlanta last year (June 2024) while visiting for a convention. Ended up winning $2,500 which was pretty awesome! The tournament organizers had me fill out and sign a W-9 form before they sent the money to my PayPal. Fast forward to now, I'm getting ready to file my 2024 taxes and realized I never got any tax forms from PayPal about this. I checked my PayPal account under the "Tax Documents" section and there's absolutely nothing there. I'm confused about whether I need to report this $2,500 tournament winnings on my taxes since I did sign a W-9, but don't have any 1099 form. Will the IRS know about this money? Do I need to report it somewhere on my return even without documentation? I don't want to get in trouble for not reporting income, but also don't know how to properly list this without any tax forms. Any advice would be super helpful! This is the first time I've won prize money from anything.

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18 comments

Diego Mendoza

•8M

Yes, you absolutely need to report this income even without receiving a 1099 form. The W-9 you signed was the organization's way of collecting your information so they could report the payment to the IRS. They're required to issue a 1099-MISC or 1099-NEC for payments over $600, but sometimes smaller organizations miss this deadline or make mistakes. When you file your taxes, you'll report this as "Other Income" on Schedule 1, Line 8z (Other Income) of your Form 1040. You should describe it as "Prize winnings" or "Gaming tournament prize." The absence of a 1099 doesn't exempt you from reporting the income - all income is taxable regardless of whether you receive a tax form. Keep in mind that since you received the money through PayPal, they might issue a 1099-K if you meet certain thresholds, but the rules have been changing on this. Either way, the organization that ran the tournament should be reporting this payment to the IRS since you signed a W-9.

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Diego Mendoza

•8M

The IRS might know about the income through various means. The tournament organizers should be reporting it on their end since they collected your W-9. Also, financial institutions like PayPal sometimes report large transactions to the IRS. For your second question, prize winnings are generally not subject to self-employment tax - only regular income tax. This is because prize money isn't considered earnings from a trade or business. You'll just include it as "Other Income" which is subject to regular income tax but not self-employment tax.

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StellarSurfer

•8M

I had this exact situation last year with a $3,000 gaming tournament prize! What I found super helpful was using https://taxr.ai to clear up my confusion. I uploaded a screenshot of my PayPal transaction and my W-9, and it analyzed everything and told me exactly where to report it on my tax forms. It even showed me that I could deduct my travel expenses to the tournament against the winnings in some cases! The site explained everything in plain English instead of tax jargon which was a lifesaver for me.

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StellarSurfer

•8M

Yes, it worked great with just screenshots! I was surprised too. I just uploaded images of my PayPal receipt and W-9 form, and it extracted all the important information. It specifically told me to report it on Schedule 1, Line 8z as "Other Income" and gave me the exact wording to use. It also explained which expenses might be deductible related to earning the prize. Regarding your concern about accuracy, it's not guessing - it references actual IRS publications and tax code. Everything it told me matched what my friend (who's an accountant) later confirmed. The explanations cite specific IRS rules and publications so you can verify yourself if you want to.

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Zara Malik

•8M

Ok I'm eating my words here. After my skeptical comment I decided to try https://taxr.ai with my similar situation (won $1,800 in an online tournament last year). Uploaded my screenshots and it immediately identified that I needed to report it as "Other Income" and not as self-employment income, which saved me from paying the extra 15.3% self-employment tax! It also pointed out that since I stream my gaming occasionally, I could potentially treat this more as business income and deduct my gaming equipment, but that would mean paying self-employment tax. The analysis comparing both approaches saved me over $200. Definitely not sketchy like I originally thought!

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Luca Greco

•8M

Just wanted to mention that if you're having trouble getting clear answers about this from the IRS website, I used https://claimyr.com to actually get through to an IRS agent in about 15 minutes instead of the usual hours of waiting. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was in a similar situation with contest winnings and needed to confirm how to report them. The IRS agent was actually super helpful and confirmed I could report it on Schedule 1 as Other Income even without receiving a 1099. Saved me tons of stress wondering if I was doing it right.

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Luca Greco

•8M

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Mateo Rodriguez

•8M

Ok I have to admit I was totally wrong about Claimyr. After posting my skeptical reply, I decided to try it because I still hadn't filed my taxes due to confusion about some crypto transactions. The service actually connected me with an IRS agent in about 20 minutes! The agent walked me through exactly how to report my transactions and what forms I needed. Saved me from paying my accountant for an extra hour of work just to ask these questions. Sorry for calling it a scam - it's actually legitimate and solved my problem way faster than I expected.

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Aisha Hussain

•8M

Don't forget that you might be able to deduct expenses related to winning that prize! I won a gaming tournament last year and was able to deduct my entry fee, travel to the tournament (since it was out of state), and even a portion of my gaming equipment as "cost of winning the prize." This reduced the taxable amount significantly. Just make sure you have receipts for everything and that the expenses were directly related to participating in the tournament. You enter these on Schedule A if you itemize, or possibly against the income directly on Schedule 1 (this is a bit of a gray area, so check with a tax professional).

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Aisha Hussain

•8M

Yes, those expenses would potentially be deductible against your prize money! The flight, hotel, and convention entry fee would all count as expenses directly related to winning the prize. You would list these as a reduction to the income on Schedule 1, Line 8z. For example, if your prize was $2,500 and you had $1,100 in related expenses, you would report "Gaming tournament prize income $2,500 less related expenses of $1,100 = $1,400" on that line. Make sure to keep all your receipts in case of an audit.

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