Football season is almost here, which means it's time to break out those fantasy football picks! Fantasy sports, including fantasy football and fantasy basketball, are extremely popular with sports fans. These programs allow fans to create their own teams, manage their own rosters, and compete against their real-life and online friends for cash and prizes.

While fantasy sports are becoming a popular pastime, they may also pose a hidden tax risk. In some cases, you may actually owe taxes on your winnings, if they exceed a certain amount. Here's a primer on the tax impact of fantasy sports winnings.

Does the IRS Tax Fantasy Sports Winnings?

The IRS tax code does not explicitly include fantasy sport winnings as income, so there is no tax law on the books that says the IRS taxes winnings. However, the agency does require that taxpayers report prizes and cash winnings from other sources as soon as they exceed $600 in a tax year. Under this requirement, most taxpayers report their fantasy sports winnings as miscellaneous income.

If you spend money on your fantasy sports league and you also win money during the same year, you could potentially write off your costs as "losses". However, this only works if you earn prizes or cash. The IRS allows individuals to write off losses to the extent of their winnings only.

How to Report Fantasy Sports Winnings on a Tax Return

Since the IRS does not classify fantasy sports winnings as gambling proceeds, you'll need to report them as "Other Income". If you win more than $600 in cash or prizes during the year, you'll likely receive a Form 1099-MISC. To report the income, enter the total from the Form 1099-MISC on the line marked "Other Income" on the front page of Form 1040 or Form 1040A. Even if you don't get a Form 1099-MISC in the mail, you'll want to report your winnings if they cross the $600 threshold.

When you sign up for your fantasy league this year, be sure to read the terms and conditions of your program carefully. The organization should inform you that it will send a Form 1099-MISC at the end of the year if you've won a certain amount.

If you enjoy playing fantasy sports, don't be afraid to keep making your picks! A good way to protect yourself from tax troubles is to keep a record of your winnings through the year. If they exceed $600, include them on your tax return so you can keep playing without worry!