Recently, a number of players have emailed us surprised to have received a 1099-K form from PayPal. The funds detailed mostly include funds received from withdrawals from HorseTourneys or other gaming entities that offer PayPal or Venmo as withdrawal options. In case you are not aware, Venmo is owned by PayPal, thus they are one and the same in terms of reporting. Please understand that these forms are NOT generated by HorseTourneys. We send our own 1099-MISC forms to those players that qualify for one.
All third-party payment providers such as PayPal and Venmo are required to file 1099-K forms with the IRS if funds sent to individuals exceeds certain thresholds. Once over $20,000, this threshold was reduced to $5,000 for 2024 and will reduce to $2,500 in 2025, and again down to $600 in 2026. That the thresholds are now much lower is the primary reason players are now receiving these forms.
All funds sent to individuals from businesses (like Bet Twice Consulting, LLC, the legal name for HorseTourneys) are classified as “goods and services.” For several years now, PayPal has not permitted businesses to send funds via “friends and family”, thus, any funds sent by a business to individuals now apply toward that 1099-K threshold.
While we cannot offer tax advice, if you do receive a 1099-K from PayPal, in most cases, taxes don’t need to actually be paid on this 1099-K. We suggest that you consult with a tax advisor on how to address your particular situation.
Moving forward, to avoid this being an issue for you this year and beyond, we highly recommend that you primarily use bank transfer (ACH) for withdrawals. Payments sent directly to player bank accounts are not subject to this kind of third-party payment reporting.
More information on this can be found on PayPal’s website.
Please contact us if you have any further questions.
McKay Smith
President
HorseTourneys.com
