| 0 |
Subject: tax question
Posted by: cancermoon
- [60262515] Sun, Feb 08, 2004, 23:46
Hey If someone wins money playing TSN, do they really have to put it on their taxes? or if they don't bother will the tax department not notice or care anyway??? Does anyone here know how seriously the TAX people take fantasy sports winnings? |
| 1 | Perm Dude
Dude
ID: 30792616
Sun, Feb 08, 2004, 23:48
|
If you win, you fill out a w-2 form for TSN, who then forwards that to the IRS.
Since the IRS already knows if you win and how much you win, it's probably in your best interest to make sure that your 1040 form matches what they already know your income to be.
pd
|
| 2 | cancermoon
ID: 60262515
Mon, Feb 09, 2004, 00:10
|
Is there a certain amount that you don't need to declare?? For example if a friend of mine didn't have to declare casino winnings under 1100$ or something.
|
| 3 | ukula
ID: 1112998
Mon, Feb 09, 2004, 09:31
|
cancermoon - email me
|
| 5 | Gman15
Dude
ID: 1531677
Mon, Feb 09, 2004, 09:36
|
W-2? Do you work for TSN? If you did, then TSN would prepare the W-2, not the other way around.
If you win more than US$600, TSN should send you Form 1099. Technically, you should report your winnings even if you don't receive Form 1099 from TSN.
|
| 6 | Perm Dude
Dude
ID: 30792616
Mon, Feb 09, 2004, 10:24
|
Gman, TSN would send you a 1099, with the total they sent a person that year in non-employee compensation. But they won't send out anything if you don't fill out a w-9 form (it was a typo above when I said w-2).
pd
|
| 7 | Gman15
Dude
ID: 1531677
Mon, Feb 09, 2004, 11:17
|
Was it also a typo when you wrote that TSN forwards your Form W-2 (rather W-9) to the IRS? If you don't complete Form W-9 when requested and required, TSN should subject your winnings to backup withholding. As I wrote above, TSN should only prepare and send Form 1099 to you and the IRS if your winnings are US$600 or greater. Otherwise, there is no real way for the IRS to know how much you won unless they audit TSN. However, that does not excuse your responsibility to report those winnings. Perhaps you should quit writing rather than continuing to supply misinformation.
cancermoon - are you a foreign person as it relates to the U.S.? If you are, I'm not sure any of what we wrote here applies to you.
|
| 8 | Perm Dude
Dude
ID: 30792616
Mon, Feb 09, 2004, 11:29
|
Gman, if you don't fill out the w-9 with TSN, they will not send you a check (and hence, no 1099). Yeah, I know that technically they cannot refuse to pay your money (they can only subject that money to backup withholding and send that money to the IRS) but in the real world a company like TSN will simply refuse to pay out anything if you don't submit a properly filled-out w-9. Ask them, if you don't believe it.
And TSN does not pay foreign citizens any prize money.
Misinformation? I apologized for the typo, but if we're keeping a misinformation tally with regard to TSN....
|
| 9 | Guru
ID: 330592710
Mon, Feb 09, 2004, 11:48
|
While we're on the topic, does anyone know if entry fees may be netted against winnings? For example, suppose someone wins $1000 playing TSN games, but spends $100 to enter those games. Is the proper reportable income $1000, or $900? If it is $900, is it appropriate to simply net the fees against reported income, or are the fees deducted elsewhere?
|
| 10 | Gman15
Dude
ID: 1531677
Mon, Feb 09, 2004, 11:58
|
I don't need to ask TSN about tax laws or their policies. TSN should subject your winnings to backup withholding and pay the net to you if you don't supply a properly completed Form W-9. You should also receive a Form 1099 if there has been backup withholding regardless of the amount of your winnings. I'm not sure what real world you are referring to, but a company as large as TSN should know how to comply with laws (tax or otherwise).
Who was your comment directed to: "And TSN does not pay foreign citizens any prize money."? My comment was directed to cancermoon.
You should have taken my earlier advice.
|
| 11 | Perm Dude
Dude
ID: 30792616
Mon, Feb 09, 2004, 12:07
|
Gman, stop. TSN requires you to fill out the forms as a condition of their rules. You don't fill out the form, you don't get the payment because it's a condition of the contest that you agree to when you enter. It's not a tax withholding question, since TSN has sidestepped the question entirely. Just as for foreign payments: TSN does not make them. The points about withholding, as the point about being a foreign person, is all moot, since it would not come up in this particular case.
This shouldn't turn into a pissing contest, Gman. But continue to give moot advice while telling me to (basically) shut up isn't an endearing characteristic from a guy I've long admired on the boards here.
pd
|
| 12 | Perm Dude
Dude
ID: 30792616
Mon, Feb 09, 2004, 12:29
|
Guru, I think Gman should chime in on that since it's outside my normal areas. My top-of-the-head thoughts are that you would only use net winnings if (a) you would consider these gambling winnings (and I'm not sure TSN would agree with that--they would send you a W2G form instead of issuing a 1099 if they categorized these as gambling winnings) and (b) you would need to itemize deductions in order to use net.
Again, this is not my area, but it might give you a starting point.
pd
|
| 13 | ukula
ID: 1112998
Mon, Feb 09, 2004, 12:32
|
Guru brings up an interesting point, one that I brought up last year in a similar thread.
I'm hoping some people other than the North-Going Zax (Gman15) and the South-Going Zax (permdude) are reading this and can contribute to this discussion. That was a Dr Seuss reference in case you didn't know.
If you win $1000 from TSN you'll get a 1099-MISC (other income). If you win $1000 at Saratoga (on a single bet), they will withhold 20% and send you a W-2G (gambling winnings). You can get the 20% back when you file you taxes if you have proof (losing tickets) of losses equal to $1000.
Fantasy sports are usually referred to as a "game of skill", but aren't horse racing, blackjack, and poker games of skill? If you win $1000 at those you will get the W-2G and be able to offset the winnings with proof of losses. With a 1099-Misc you can't offset the winnings. Shouldn't winnings from fantasy sports be considered "gambling income"?
Let's assume that they can't be considered gambling income for whatever reason. Can we then consider fantasy sports a hobby and thus deduct hobby expenses up to the amount of hobby income? If you can, then you can say that the entry fees, subscriptions to Rotowire, magazines, etc can be used to offset the fantasy income.
To me it's a big gray area, but you should be able to offset the fantasy income one way or another. Just my opinion.
|
| 14 | Gman15
Dude
ID: 1531677
Mon, Feb 09, 2004, 13:12
|
(11) I'm not a lawyer and I don't work for TSN. I can't find the Official Rules and Regulations of TSN games so I can't dispute that TSN may not pay your winnings if you don't submit a properly completed Form W-9. I have trouble understanding how a company can have such a rule when it violates a law (or several laws). I don't believe my comments are moot - I would like TSN to read them.
Regarding your observation in paragraph 2 - please send me an e-mail.
I'll not comment on the netting of expenses against your winnings. I should have known better than to start in the first place.
|
| 15 | Perm Dude
Dude
ID: 30792616
Mon, Feb 09, 2004, 13:36
|
will do. I'm leaving the office fairly soon, but will check my email late tonight.
pd
|
| 16 | R9
Leader
ID: 2624472
Mon, Feb 09, 2004, 16:42
|
Just as for foreign payments: TSN does not make them. Just a small correction here, payments to Canadians are most likely considered foreign. They still make us fill out the US tax forms, for whatever reason, even though they don't apply to us at all. I'm assuming its required at their end.
I do believe cancermoon is American though anyway...
I should have known better than to start in the first place. You're probably right. If you can't be bothered to help out someone who posted a tax question in a thread titled "Tax Question" then you probably shouldn't have posted at all. Maybe I'm missing something, but what's so wrong with Guru's and ukula's questions? If I ever win anything decent-sized prize I'll probably be looking up the applicable Canadian rules myself...
|
| 17 | cancermoon
ID: 60262515
Mon, Feb 09, 2004, 17:19
|
Yes I am from Olympia, I was just unsure as to whether it is something the tax department takes seriously if a fantasy player doesn't report their 50$ league winnings. Or even 300-500$ winnings. I am guessing if i ever won over $1000 I'd have to include it in my taxes.
I realise we fill out that tax form when claiming prizes, I just didn't know if the tax department would even know I won money unless they audited TSN, and then even if they audited them, will they care about the winners, or just care about TSN themselves.
|
| 18 | Gman15
Dude
ID: 1531677
Mon, Feb 09, 2004, 18:14
|
R9 - my comment had nothing to do with the questions from Guru or ukula.
cancermoon - you should report your winnings, no matter what $ amount. If audited, the IRS (tax department) would look at both TSN and the winners. The IRS would pursue the winners who did not report their winnings if they felt the audit $ justified their work.
|
| 19 | The Pink Pimp
ID: 523451913
Mon, Feb 09, 2004, 19:06
|
Ukula,
If winnings from fantasy baseball are ever interpreted as gambling income, then any major league player or manager who has ever been in a cash payout fantasy league while he was playing big league ball is guilty of gambling and must be barred for life.
Would you like a grain of salt to take this with?
|
| 20 | cancermoon
ID: 60262515
Mon, Feb 09, 2004, 19:55
|
I thought TSN was considered as gambling income, and that is why they can't pay some people who live in areas with strict gambling laws.
If you are paying a stake with no certainty of recieving anyting in return then you are gambling i suppose. I call it investing.
|
| 21 | Taxman
ID: 22133818
Mon, Feb 09, 2004, 22:05
|
The anti-gambling laws are on a state by state basis under the police power of the federal constitution (which kinda has been interpreted to mean that the states have all the powers (right to regulate gambling is one of them as is same sex marriages, the leash laws for animal control, etc.) not specifically reserved to the federal government within the Constitution. The state gambling laws are for the purpose of attacking an entity or person via criminal prosecution and have absolutely nothing to do with whether or not, for federal income tax purposes, winning fantasy game money is considered gambling income or not.
There is no question that the winnings are income and must be reported. I haven't researched it, but my (rather large) gut reaction is that the winnings are NOT gambling proceeds but represent earnings subject to self-employment taxes (meaning that in the Guru's example of $1000 income and $100 entry fees, the taxpayer may not net and report the $900, but should file a schedule C (Self Employment Income) ... (and there is a short form Schedule C) reporting ALL income at the top and deducting appropriate (section 212 or section 162 )expenses incurred directly relating to the income. If this was a hobby, expenses would be limited to income. If this was not a hobby, then expenses in excess of winnings could be deducted and such a loss used to offset income from other areas in your tax return (i.e. against w-2 salary). Included in deductible expenses would be a reasonable allocation of the expense of buying and operating your computer(s), DSL/dialup costs and fees paid for research to sites such as Rotowire (unfortunately, GuruPatron payments are not deductible either as a business expense, or as a charitable donation). So much for my take on the subject.
Good job Perm Dude. You were "bottom line" correct in your assessments. You may not be a tax lawyer, but we all know that you are taxing.
|
| 22 | Perm Dude
Dude
ID: 30792616
Mon, Feb 09, 2004, 23:22
|
Heh heh, yeah, Taxman. You know it.
I didn't know they were sending payments to Canada, too, R9. Thanks for the information. Are they requiring Social Security Numbers for Canadian payments? I have a client (a British writer) who had her payment subject to witholding because she didn't provide a TIN when she filled aout her tax form. Pain in the ass it all is...
pd
|
| 23 | Ref
Donor
ID: 539581218
Tue, Feb 10, 2004, 13:25
|
My accountant does exactly what Taxman said in graph 2.
|
| 24 | Species
Leader
ID: 7724916
Tue, Feb 10, 2004, 14:44
|
I'm glad I read this thread. I've won my share of winnings and would love to offset at least some of this income with the cost of winning the prize. Maybe I can throw in some auto expense for travelling to the games and the cost of tickets for WATCHING some of the games my players played in! ;-)
|
| 25 | Taxman
SuperDude
ID: 29463114
Fri, Feb 13, 2004, 19:20
|
Ref...glad to know that you have a cerebral accountant ;>)
Species...possible, but would be a stretch to win the arguement against the "ordinary, necessary and re-ocurring" expense standard for business expenses and is not a "direct" cost such as the entry fee paid to TSN. But hey, if you are going for it, keep the receipt for beer and hot dogs. If you are going to win, win big but when you lose, you will lose bigger..(penalties and interest) With the exception of the Queen of Mean, no one guys to jail for taking "over the top" unallowable deductions. They only send you away for not reporting ALL your income.
I've always thought that NOT reporting all income was a stupid move, because you can (it's possible to) get more money..but you just can't get more time. Or as the good Dr. Doom likes to say, "only two things in life are for sure" (and he also likes to name our tag team entries the same (or the answer...Death and Taxes).
|
| Rate this thread: | If you wish, you may rate this thread on scale of 1-5. Ratings should indicate how valuable or interesting you believe this thread would be to other users of this forum. A '5' means that this thread is a 'must read'. A '1' means that this is a complete waste of time. If you have previously rated this thread, rating it again will delete your previous rating. If you do not want to rate this thread, but want to see how others have rated it, then click the button without entering a rating, or else click here. |
|
|
Post a reply to this message: (But first, how about checking out this sponsor?)
|