Frequently Asked Questions
Straightforward answers to the tax questions we hear most from DFS players, bettors, crypto investors, and gamblers.
Do I have to pay taxes on fantasy sports winnings?
Yes, all daily fantasy sports (DFS) and fantasy sports winnings are considered taxable income by the IRS, regardless of the amount. If you receive a 1099-MISC or 1099-K from DraftKings, FanDuel, or any other platform, you must report that income on your tax return. However, you may also be able to deduct entry fees, research subscriptions, and other related expenses. DFS Accounting Services specializes in maximizing those deductions to reduce your overall tax burden. Call (847) 537-0100 for a free consultation.
How are sports betting winnings taxed?
Sports betting winnings are taxed as ordinary income at both the federal and state level. The IRS requires you to report all gambling winnings, not just those reported on a W-2G. If you bet in multiple states, you may owe taxes in each state where you placed wagers. The good news: you can deduct gambling losses up to the amount of your winnings if you itemize. DFS Accounting Services helps sports bettors track their activity, claim legitimate deductions, and file correctly across all applicable jurisdictions.
Do I need to report cryptocurrency gains?
Yes. The IRS treats cryptocurrency as property, which means every sale, swap, or trade is a taxable event. This includes selling Bitcoin for USD, swapping one crypto for another, earning staking or mining rewards, and receiving airdrop tokens. You must calculate the cost basis and capital gain or loss for every transaction. DFS Accounting Services reconciles your exchange records, computes cost basis using FIFO, LIFO, or specific identification methods, and identifies tax-loss harvesting opportunities to minimize your liability.
Can I deduct my gambling losses?
Yes, you can deduct gambling losses — but only up to the total amount of your gambling winnings for the year, and only if you itemize deductions. This means if you won $20,000 but lost $25,000, you can deduct $20,000 in losses (not the full $25,000). For professional gamblers who elect under IRC Section 162, the rules are different and potentially more favorable. DFS Accounting Services helps you maintain proper records and determine the most advantageous filing position.
Do you work with clients nationwide?
Yes. DFS Accounting Services, a division of Jacobs & Newmark, P.C., serves clients across all 50 states. We operate virtually with secure document sharing, video consultations, and encrypted communication. Whether you are in New York, California, Nevada, or anywhere else, we handle the federal and multi-state filing complexities of DFS, sports betting, crypto, and gambling taxes.
How much does a consultation cost?
Your initial consultation with DFS Accounting Services is completely free. We will review your situation — DFS activity, sports betting records, crypto portfolio, gambling history — and give you a clear picture of what you owe, what you can deduct, and how we can help. No commitment, no pressure. Call (847) 537-0100 or book online to schedule.
What is the difference between a hobby and professional gambler for tax purposes?
The IRS distinguishes between hobby gamblers and professional gamblers. Hobby gamblers report winnings as 'other income' and can only deduct losses up to winnings when itemizing. Professional gamblers report on Schedule C, which allows them to deduct business expenses like travel, software, internet, and data subscriptions in addition to losses. However, professional status subjects you to self-employment tax. DFS Accounting Services evaluates your situation to determine which classification saves you the most money.
Do I need to pay estimated taxes on DFS or sports betting income?
If you expect to owe $1,000 or more in federal taxes from DFS, sports betting, crypto, or gambling income, you are generally required to make quarterly estimated tax payments. Failure to pay estimated taxes can result in penalties and interest. DFS Accounting Services provides year-round planning to help you calculate and make timely estimated payments so you avoid surprises at filing time.
Still have questions?
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