The following is posted with the permission of Legal Blitz friend Patrick Guinan, CPA. Mr Guinan is one of the nation’s leading experts on DFS tax implications and proper filing for DFS players. You can find him here.
As some of you may know, FanDuel and DraftKings are delayed in sending out their 1099-MISC Forms to participants in order to file their winnings to the IRS and other taxing authorities. This is delaying the proper filing of tax returns of folks who know this and could cause MAJOR headaches for those who have filed and may not know this. I’m not going to comment or speculate as to why it is happening, but I have a few tips for anyone impacted by the 1099 delays.
First, I can’t emphasize this enough:
WAIT TO RECEIVE YOUR 1099-MISC FROM FANDUEL OR DRAFTKINGS BEFORE YOU FILE YOUR RETURN!!!!!
So many users on RotoGrinders understandably want to get a jump on filing their taxes. I don’t blame them especially if they are due a Refund. Many are very intelligent individuals, have great statistical and Microsoft Excel knowledge so they figure they’d calculate their Winnings and Entry Fee from the CSV files provided by the major sites. I’d recommend downloading the files anyway for purposes of corroboration and to better serve you as a client on how to file your return, not to mention they will help you be a better DFSer.
However, I would STRONGLY dissuade you from preemptively using that information to file your tax return based solely on that information. And here’s why? The 1099-MISC Form from FanDuel and DraftKings is also reported to the IRS. Say the amount you calculated does not agree with the Form. Now what? You can argue your amount is correct. You then would have to contact FanDuel and DraftKings Customer Support. Ok, the amount stands. Now you have another issue on your hands. AN AMENDED RETURN! So, that means you can just do a “do-over” and resend to the IRS and States, right? NOPE! You have to file what is called a 1040-X (plus other equivalent State Forms) and explain the differences between what you originally filed and what your tax return should look like.
Word of advice. Don’t get caught up in it. Technically what the sites did is perfectly legal. If I couldn’t get 1099s out, I would file a Form 8809, Application for Extension of Time To File Information Returns. In my view, this does not look good for the major DFS sites in the Grand Court of Public Opinion, which right now the DFS industry certainly needs to improve upon.