What's new
Fantasy Football - Footballguys Forums

This is a sample guest message. Register a free account today to become a member! Once signed in, you'll be able to participate on this site by adding your own topics and posts, as well as connect with other members through your own private inbox!

New 1099-K tax laws - PayPal, E-bay, etc. money received (1 Viewer)

JohnnyU

JohnnyU

Footballguy
Looks like PayPal, E-bay and others will now start sending you a 1099-K if you received $600 or more that you will have to pay taxes on, unless you can verify expenses.  Either way, it's more of a hassle to file your taxes.  I sent the following message to the leagues I commish.  Some carried over winnings to pay 2022 leagues and that is fine this year, but I won't allow that starting in 2023.  Plus I will need to figure out how as commish I want to receive league fees starting in 2023.

see this video - https://www.youtube.com/watch?v=X6PniwHEj-c&t=9s&ab_channel=NotYourDad'sCPA

Here is the message I sent my leagues:

Looks like if anyone receives more than $600 in PayPal they will have to pay taxes on it starting Jan 1 2022.  I know some of you are already paid for 2022 (don't worry you're fine), some partially, and some not at all.    For 2022 I would like anyone owing money to send me a check instead of sending to PayPal.  For 2023, for sure we won't be carrying over any winnings from 2022 to 2023 and beyond.  I am still figuring out what we will do for 2023 to get around this new tax law.
 

 
Last edited by a moderator:
I thought the $600 IRS rule was around for a while? I purposely built prizes im my league so they don't collectively go over $600 to any one person. I guess because we use LeagueSafe that also helps as well. 

 
Dacomish said:
I thought the $600 IRS rule was around for a while? I purposely built prizes im my league so they don't collectively go over $600 to any one person. I guess because we use LeagueSafe that also helps as well. 
Click to expand...
Prior to this year, it was $20,000 and 200 transactions.

Thanks Biden

 
Last edited by a moderator:
What if the money is sent "to a friend"?  Does it still count as "sales"?  I don't think what a commish does should count as "sales" so I hope this doesn't apply, at least to relatively small money leagues like $100 per team or less.

 
Dacomish said:
I thought the $600 IRS rule was around for a while? I purposely built prizes im my league so they don't collectively go over $600 to any one person. I guess because we use LeagueSafe that also helps as well. 
Click to expand...
It's always been there for casino, lotto, and race track winnings.

 
Dacomish said:
Fantasy Football winnings are essentially the same right? Gambling winnings? 
Click to expand...
actually the tax code is very specific about the reporting requirements of a 1099-G

$600 from horse racing

$1200 from bingo or keno

$5000 from poker

MOOT POINT bc FF winnings using PayPal, Venmo, et al, are reported via 1099-K

just pointing this out bc it’s a mistake to think you can assume anything about the tax code follows logic or a standard of reasonableness

 
Last edited by a moderator:
It does sound like this is just for commercial payments.  

I guess there's a discussion that your FF winnings are gambling winnings.  But unless your buddy/buddies that send you your winnings is going to tell the IRS that's what the money is for...

Probably need to make sure the commends don't say "Fantasy Football winnings"

 
I am like 93% sure this is only for business payments through venmo/paypal, and that it won't affect money "sent to a friend" which is how everyone sends FF winning.

Regardless, venmo/paypal have been cracking down on this in recent years even without the government and have stepped it up even more this year.  Probably good to start tracking your expenses for FF as well you can probably cancel out most of the winnings.

 
Last edited by a moderator:
I thought I was still fairly young, but it sounds like I'm officially old. Allow me to help.

There's this thing you can get from your bank called a "book of checks". The "checks" are little rectangular pieces of paper, and you can fill one out to a specific person, for a specific amount of money. When that specific person receives said check, he can take it to his bank, and "deposit" or "cash" it. Your bank will then deduct the amount of money listed on the check from your account, and his bank will add that same amount to his account.

Now, there are these things called "envelopes". Think of it like a paper pocket, that can hold small, relatively flat items, and then be sealed for secure transportation. There are these small squarish stickers called "stamps". They cost a little bit of money, not too much, and you can get them at a place called a "post office". This little sticker says that you paid for the US Postal Service to deliver an envelope and whatever is inside to whatever place you want. You'll need your own address the recipient's address (you can Google the proper address formatting) on the envelope, along with the stamp. You can start to see how this is coming together. If you put the person's winnings in the form of a check, into an evelope, with a stamp, and drop it in either your own mail box or a public mail box, you can actually send that person money securely.

 
eighsse said:
I thought I was still fairly young, but it sounds like I'm officially old. Allow me to help.

There's this thing you can get from your bank called a "book of checks". The "checks" are little rectangular pieces of paper, and you can fill one out to a specific person, for a specific amount of money. When that specific person receives said check, he can take it to his bank, and "deposit" or "cash" it. Your bank will then deduct the amount of money listed on the check from your account, and his bank will add that same amount to his account.

Now, there are these things called "envelopes". Think of it like a paper pocket, that can hold small, relatively flat items, and then be sealed for secure transportation. There are these small squarish stickers called "stamps". They cost a little bit of money, not too much, and you can get them at a place called a "post office". This little sticker says that you paid for the US Postal Service to deliver an envelope and whatever is inside to whatever place you want. You'll need your own address the recipient's address (you can Google the proper address formatting) on the envelope, along with the stamp. You can start to see how this is coming together. If you put the person's winnings in the form of a check, into an evelope, with a stamp, and drop it in either your own mail box or a public mail box, you can actually send that person money securely.
Click to expand...


I'm not following.

 
Anyone treat FF as a business for tax purposes?

Reading this made me think it shouldn't be that hard to call it a sole proprietorship and be able to deduct a lot of expenses.  However, it looks like a lot of times, they'll classify FF as a hobby--and thus take away a lot of the deductions. 

The line between business and hobby is where the whole thing seems to get really tricky.   

 
FreeBaGeL said:
I am like 93% sure this is only for business payments through venmo/paypal, and that it won't affect money "sent to a friend" which is how everyone sends FF winning.

Regardless, venmo/paypal have been cracking down on this in recent years even without the government and have stepped it up even more this year.  Probably good to start tracking your expenses for FF as well you can probably cancel out most of the winnings.
Click to expand...
Apparently it's tricky.  

If it's viewed as a hobby by the IRS, you can no longer deducts expenses as of 2018.  Which will be the case for most of us.  Though I would guess most of us aren't winning 600$ or more either.  

Being considered a business is the key to being able to deduct things.  This is from turbo tax

The IRS might consider your hobby a business when any or all of the following apply:

The things you do to run your hobby-business, like hiring knowledgeable employees and advertising, point to your intent to make a profit.

You earn your livelihood from the hobby.

You've made a profit for at least three of the past five years.

You hope to make a profit from some of your business assets down the road, like animals for breeding.

You've made a profit from a similar hobby in the past.
Click to expand...
https://turbotax.intuit.com/tax-tips/self-employment-taxes/4-tax-tips-for-money-making-hobbies/L89qz1GNj

 
jm192 said:
Being considered a business is the key to being able to deduct things. 
Click to expand...
You may deduct gambling losses (up to the amount of declared income from your 1099-G) provided you have documentation. However, this is only an option if you itemize.

Fantasy Football is gambling according to the tax code definition. It is neither a business nor a hobby business. You would not report the income or expenses in your schedule C (self-employment.) 

There are 3-4 thread bouncing around here & the FFA, not going to search for it, but in one of the threads someone advised that.

Source: I’ve been a CPA since 1997

 
I know last year I sold a bunch of my sports cards using EBay, just over 11K, under 50 total transactions, I guess I won’t have to pay taxes on those, but I won’t sell anymore now.  I don’t have any records of my purchases, these cards are mostly over 30 years old.  It will be a nightmare for regular people who use EBay to sell their sports collections and have absolutely no paper trail of what they paid for their cards.   I don’t foresee selling too often on EBay now, I wonder if they will loose a lot of sellers like me.  For Paypal, sending $$$ is fine if you send as a gift to friends and families, that money will not be required to report, at least that’s a bit of good news.

When playing the slot machines in the casinos, you can win any amount under $1200 on a spin and it’s tax free.  But if you win $1200 or more on any one spin, the machine alerts the casino staff and a employee comes to your machine and gets your ID/tax info and gives you your winnings in cash, a check if it’s a huge amount.   I just went to the casino yesterday and won about $1400 on the slots and won’t have to report any of it, I never won over $1200 on any one spin.  

 
To be clear, your FF payout may result in a 1099-K (revived this year) from Paypal etc. You would only receive a 1099-G if you had gambling winnings from bingo, Keno, horse track betting, poker, et al.

 
So I won one of my FFPC leagues this year (they’re obviously a business since they take a cut, and they also mention this $600 rule on their site). I assume I can just ask to withdraw $599 now and not deal with taxes and then worry about my balance next year. Yes?

 
joey said:
So I won one of my FFPC leagues this year (they’re obviously a business since they take a cut, and they also mention this $600 rule on their site). I assume I can just ask to withdraw $599 now and not deal with taxes and then worry about my balance next year. Yes?
Click to expand...
Could that be considered “structuring?”

any tax experts here?

 
joey said:
So I won one of my FFPC leagues this year (they’re obviously a business since they take a cut, and they also mention this $600 rule on their site). I assume I can just ask to withdraw $599 now and not deal with taxes and then worry about my balance next year. Yes?
Click to expand...
Nope. That would violate what the IRS calls constructive receipt. You don’t get to choose the year your income is reportable. You pay income tax on the year it was earned.

How Constructive Receipt Works 

An individual is considered to be in constructive receipt of income when they have the ability to control or utilize the funds, even if they do not have direct possession of them, or if it is guaranteed they will have the ability to draw upon the funds in the future.

 
BobbyLayne said:
Nope. That would violate what the IRS calls constructive receipt. You don’t get to choose the year your income is reportable. You pay income tax on the year it was earned.

How Constructive Receipt Works 

An individual is considered to be in constructive receipt of income when they have the ability to control or utilize the funds, even if they do not have direct possession of them, or if it is guaranteed they will have the ability to draw upon the funds in the future.
Click to expand...
Thanks. Glad I asked. 

 
Interestingly though, on the FFPC page it says: "If your withdrawal requests for the year total $600 or more, you will be redirected to complete an IRS W-9 form."

it doesn’t say "if you WIN more than $600…”. So it seems like FFPC's quote is against the IRS rules. 

 
BobbyLayne said:
@Kevrunner
Click to expand...
Yeah I understand now, thanks,  you made me do some research, and it’s pretty clear that all the casino winnings are taxable,  but I guess you get to subtract all losses. The government wants to make sure that any jackpots $1200 or more, will get reported.  I even saw someone win a huge jackpot but the attendant wouldn’t pay them their winnings because they couldn’t furnish an ID.

IRS WITHHOLDING

All casino winnings are subject to federal taxes.  However, the IRS only requires the casinos to report wins over $1,200 on slots and video poker machines or other games such as keno, lottery or horse racing. When you have a win equal to or greater than $1200, you are issued a W-2G form. This form lists your name, address and Social Security number. The casinos are not required to take out withholding tax on jackpots under $5,000 as long you supply your Social Security number. If you don’t provide your Social Security number, the casinos withhold 28 percent on small jackpots.

 
Last edited by a moderator:
Kevrunner said:
I guess you get to subtract all losses
Click to expand...
Yes, but only if you itemize.

Gambling winnings go on pg 1 of the 1040 abs gambling losses go on Schedule A.

With the dramatic increase in the Standard Deduction a few years ago, taxpayers who Itemize dropped from 31% to just under 12% (roughly, from 1/3rd to 1/8th.)

 
joey said:
Interestingly though, on the FFPC page it says: "If your withdrawal requests for the year total $600 or more, you will be redirected to complete an IRS W-9 form."

it doesn’t say "if you WIN more than $600…”. So it seems like FFPC's quote is against the IRS rules. 
Click to expand...
Consult your tax professional as I’m just a random internet guy…

My view would be “what’s the timing of the taxable event?” Let’s say I hold stock and they declare a dividend on 12/31. I don’t receive it until the following week. Still goes on the prior year’s return. Or if I sell stock and generate a capital gain or loss - the timing is not the settlement date or when it hits my account. It’s the date the transaction was completed.

If I win a contest on Draft Kings Fanduel, FFPC - when is it taxable? When I win (earn the income)? Or when I take the money out? I would argue it’s the former.

From the perspective of FFPC, their legal obligation is to ask for a W-9 and issue a 1099 for any withdrawal over $600. That does not absolve you of reporting the full amount in your 1040.

Could you skate around it by withdrawing less than $600? That’s an ethical dilemma. From a legal perspective you are required to include all gambling winnings on your tax return.

 
Last edited by a moderator:
Does anyone know how League safe fits into this 1099-K stuff?  Debating using it for the 4 leagues I commjish (3 football, 1 baseball) if it is a way around this.

 
Last edited by a moderator:
What about the commish receiving league fees?  If he receives money for FF payments of league fees he would be subject to getting a 1099-K from PayPal the way I read it.  Yes, I could prove I sent back those payments to the league, but I don't want the hassle.  Not sure if they send to family and friends option will change that.  How does League Safe fit into all of this?  As a commish I don't want PayPal sending me a 1099-K form for money the league pays their fees.   If this also applies to LS I will just do everything by check.

 
Last edited by a moderator:
@FBG Moderator @Joe Bryant

Could we please merge this and the PayPal thread? FYI - there is a third 1099-K/PayPal thread in the FFA.

JohnnyU said:
Does anyone know how League safe fits into this 1099-K stuff?  Debating using it for the 4 leagues I commjish (3 football, 1 baseball) if it is a way around this.
Click to expand...


Cross posted from yer other thread:

From their website:

If you’ve filed your 1099 (for those who have won over $599 on any contest entity like Fanball, CDM or NFC). 

https://help.leaguesafe.com/hc/en-us/articles/218016143-How-do-I-get-my-winnings-out-of-LeagueSafe-

From that I gather the contest entity issues the 1099, not League Safe.
 
 

 
JohnnyU said:
What about the commish receiving league fees?  If he receives money for FF payments of league fees he would be subject to getting a 1099-K from PayPal the way I read it.  Yes, I could prove I sent back those payments to the league, but I don't want the hassle.  Not sure if they send to family and friends option will change that.  How does League Safe fit into all of this?  As a commish I don't want PayPal sending me a 1099-K form for money the league pays their fees.   If this also applies to LS I will just do everything by check.
Click to expand...


1) apparently using PayPal for FF payouts violates their TOS (per Scott Fish)

2) they’re only issuing a 1099-K to people who have it linked to a business account. the intent of the legislation is to go after resellers (FB marketplace, eBay, etc.) Lots of people use Cash App, PayPal, Venmo, Zelle to reimburse for dinners or roommates shared housing expenses. those transactions or gifts to friends/family are exempt.

3) all gambling winnings are taxable - that’s nothing new. most people ignore it if they didn’t receive a 1099-K (threshold depends on what type of gambling - $600 for tracks, $1200 for slots, $5K for poker.) that’s everyday life reality but technically/from a legal perspective, all gambling winnings s/b reported on your 1040.

 
BladeRunner said:
So, does this new rule take effect for 2021 earnings/transactions?  Or 2022 and beyond?
Click to expand...


the new reporting requirement began 1/1/22. 1099-Ks being issued this month are for the 2021 calendar year.

all individual tax payers are calendar year, cash basis filers. if your FF season concluded Week 17 (Jan 3rd) then your gambling winnings are for the calendar year 2022,. you would report them on next year’s tax return.

this issue has come to the forefront bc this week PatPal has been putting a lot of commissioner accounts on hold if users are running FF dues and payouts through PayPal. that’s not a new thing. poker pro Chris Moneymaker had $12K frozen last spring bc he was using it for DFS. he got them to release it, but it is against their TOS.

 
JohnnyU said:
What about the commish receiving league fees?  If he receives money for FF payments of league fees he would be subject to getting a 1099-K from PayPal the way I read it.  Yes, I could prove I sent back those payments to the league, but I don't want the hassle.  Not sure if they send to family and friends option will change that.  How does League Safe fit into all of this?  As a commish I don't want PayPal sending me a 1099-K form for money the league pays their fees.   If this also applies to LS I will just do everything by check.
Click to expand...
Does anyone know how this affects commissioners receiving funds for league fees?  Please let me know if you know.  The way I read it is that PayPal will send me a 1099-K form if I receive more than $600.  I don't want the hassle from PayPal.  Some teams have already sent me payments for 2022, others just rolled their winnings to pay their fees (that's not an issue for 2022).  I asked everyone who hasn't paid their 2022 fees to just send me a check.  I'm still unclear if leaguesafe for 2023 and beyond is the answer as to whether the commish will get a 1099-K form for money received for league fees.

Edited:   For now I believe I'm just going to open another checking account for FF purposes only and transfer everything (league fees paid) in PayPal to it and do everything by mail / check.

 
Last edited by a moderator:
BobbyLayne said:
Consult your tax professional as I’m just a random internet guy…

My view would be “what’s the timing of the taxable event?” Let’s say I hold stock and they declare a dividend on 12/31. I don’t receive it until the following week. Still goes on the prior year’s return. Or if I sell stock and generate a capital gain or loss - the timing is not the settlement date or when it hits my account. It’s the date the transaction was completed.

If I win a contest on Draft Kings Fanduel, FFPC - when is it taxable? When I win (earn the income)? Or when I take the money out? I would argue it’s the former.

From the perspective of FFPC, their legal obligation is to ask for a W-9 and issue a 1099 for any withdrawal over $600. That does not absolve you of reporting the full amount in your 1040.

Could you skate around it by withdrawing less than $600? That’s an ethical dilemma. From a legal perspective you are required to include all gambling winnings on your tax return.
Click to expand...


This is my understanding as well.  Tax dates have always been income earned, not withdrawals.  If you sell a stock you owe taxes on it when you sell, not when you withdraw from Fidelity.

I actually hate that it works that way and think it should be done based on withdrawals (if I want to swap my Tesla stock to Apple I shouldn't lose money on the swap), but sadly that's the way it is.

 
I opened up a new savings account today and withdrew everything out of my PayPal account into my checking, which I will transfer to the new savings account.  I'm not taking any chances with PayPal with the rumors of freezing accounts.  Also, even if sending to family and friends circumvents the new tax law now, you can guarantee it won't forever.  I'm just going to do all league business by check until I know more.  I'm also not convinced LeagueSafe will be immune either.

 
BobbyLayne said:
the new reporting requirement began 1/1/22. 1099-Ks being issued this month are for the 2021 calendar year.

all individual tax payers are calendar year, cash basis filers. if your FF season concluded Week 17 (Jan 3rd) then your gambling winnings are for the calendar year 2022,. you would report them on next year’s tax return.

this issue has come to the forefront bc this week PatPal has been putting a lot of commissioner accounts on hold if users are running FF dues and payouts through PayPal. that’s not a new thing. poker pro Chris Moneymaker had $12K frozen last spring bc he was using it for DFS. he got them to release it, but it is against their TOS.
Click to expand...


@JohnnyU and @BobbyLayne

So, just to clarify, I have to report what I sold on eBay in 2021?  Cause I sold a lot just cleaning out my basement.

I was hoping the reporting would be for this year and forward, meaning anything sold in 2022 forward has to be reported.

 
BladeRunner said:
@JohnnyU and @BobbyLayne

So, just to clarify, I have to report what I sold on eBay in 2021?  Cause I sold a lot just cleaning out my basement.

I was hoping the reporting would be for this year and forward, meaning anything sold in 2022 forward has to be reported.
Click to expand...


Technically I think you were supposed to be doing that already anyway.

I'm not sure which year it is that we start getting the 1099's though.  I thought the opposite of JohnnyU and that it counted for 2021, but I'm not sure.  I guess we'll find out soon if we get one in the mail or not.

 
Last edited by a moderator:
FreeBaGeL said:
Technically I think you were supposed to be doing that already anyway.

I'm not sure which year it is that we start getting the 1099's though.  I thought the opposite of JohnnyU and that it counted for 2021, but I'm not sure.  I guess we'll find out soon if we get one in the mail or not.
Click to expand...
there were articles about this six months ago. folks are getting 1099-K from all the third party payment processors (Cash App, PayPal, Venmo, Zelle.) again, it’s mainly for resellers. 

Commissioner's should stop using PayPal for dues and payouts bc it’s a violation of their terms of service. lots of FF folks seeing their accounts put on hold this week.

 
BobbyLayne said:
there were articles about this six months ago. folks are getting 1099-K from all the third party payment processors (Cash App, PayPal, Venmo, Zelle.) again, it’s mainly for resellers. 

Commissioner's should stop using PayPal for dues and payouts bc it’s a violation of their terms of service. lots of FF folks seeing their accounts put on hold this week.
Click to expand...
My PayPal now has a zero balance after transferring to my bank.  I beat them to the punch.

 
FreeBaGeL said:
Technically I think you were supposed to be doing that already anyway.

I'm not sure which year it is that we start getting the 1099's though.  I thought the opposite of JohnnyU and that it counted for 2021, but I'm not sure.  I guess we'll find out soon if we get one in the mail or not.
Click to expand...
This change comes after President Biden signed the American Rescue Plan Act of 2021 (ARPA) into law on March 11th, 2021. According to Forbes, the bill specifies the minimum threshold has been lowered for Form 1099-K, a form filed by the Payment Settlement Entities (PSEs) to report gross amounts of all reportable payment transactions.  It starts January 2022.

 
You must log in or register to reply here.

Similar threads

E
Dynasty league LFM
Replies
2
Views
938
EpiccityTds
E
JohnnyU
Filled
Replies
6
Views
283
efactor
E
E
All Elite Football dynasty league. LFM
Replies
3
Views
474
nguyening1
N

Users who are viewing this thread

Total: 1 (members: 0, guests: 1)
Back
Top